Both parents share the responsibility to ensure the care, welfare and development of their child, and child support exists to ensure that occurs from a financial perspective. It’s grounded in the belief that it generally leads to more positive outcomes for children following a divorce or separation of their parents, and covers the costs of housing, clothing, food and education.
All relationships and family structures differ, so a one-size-fits-all does not exist when it comes to which parent pays what following a separation. However, Services Australia use a formula for calculating each parent’s responsibility and determine the cost of caring for and raising children, considering various factors.
What’s considered when working out the appropriate amount of child support?
Services Australia has developed a formula for child support that ensures both parents contribute financially to the care of their children that’s proportionate to their income and capacity to pay. Put simply, it considers:
- The incomes of both parents (individually and combined), typically using information from the Australian Taxation Office (ATO).
- The percentage of care of each parent, which is how often each parent cares for the child/children. There are five levels of care:
- Below regular care (0% to less than 14% of the time).
- Regular care (14% to 35% of the time).
- Shared care (35% to 65% of the time).
- Primary care (65% to 86% of the time).
- More than primary care (above 86% of the time).
- The child’s age.
- If one or both parents has legal duties to another child from a past or new relationship.
- The costs associated with each child.
From here, a formula is used to determine the amount of child support needed and which parent pays and receives it.
How do Services Australia determine who pays and who receives?
Child support is worked out by comparing how much each parent earns and how much care they provide. If a parent earns more but cares for the child less frequently, they’ll typically pay child support, and vice versa. If a parent earns more and provides more care, they are still expected to contribute by the formula may result in a nominal payment.
Can a non-parent carer apply for child support?
Yes, non-parent carer’s, such as grandparents, aunts or uncles, may be entitled to child support if they can prove they care for a child for at least 128 nights per year and they are not the partner of either parent of the child (i.e., they cannot be married or in a de facto relationship with one of the parents).
In cases of child support payments to non-parent carers, both parents must provide child support payments unless one parent has passed away or there are special circumstances that prohibit this, such as an unknown identity of one or both of the parents.
Can child support payments impact borrowing capacity?
Whether you’re the payer or receiver of child support, it will most likely be taken into consideration when applying for a loan or mortgage. If you’re the payer, it will likely diminish your borrowing power. If you’re the receiver, it will likely increase your borrowing power. And they’ll ask for evidence either way! Failure to pay child support will negatively impact your credit score, too.
What if one parent doesn’t have an income?
When a parent is assessed for child support, Services Australia considers their ability to pay based on multiple factors, not just income, even if that contribution is minimal. Beyond regular wages or self-employment income, government benefits and assets, such as savings or a property, will also be considered.
In many cases, Services Australia will strive to ensure both parents contribute, even if one parent can only provide the minimum payment. However, if even the minimum payment is unachievable, that parent can apply to further reduce it to no payment until their financial situation improves if they can prove their income is below the threshold set by Services Australia. This system helps to ensure the best interests of the children are met, while also prevent parents from being unfairly penalised for situations beyond their control, such as health issues or unemployment.
What happens if mine or my ex-partner’s circumstances change after the agreement has been made?
If your circumstances change since your last assessment, telling Services Australia immediately is an important first step (whether you’re the payer or receiver of the child support!). This could include a change in income, such as a loss of job or obtaining a second job, or a change in circumstances, such as having another child with another partner.
Do I have to go through a formal process to set up child support payments?
No, not necessarily. An informal arrangement about child support payments can be made, known as self-management. However, we highly recommend you always seek legal advice when determining a child support agreement to ensure its legally binding and both parents are receiving or paying the correct amount to support the best possible outcome for their child.
