Child support
The only thing separated parents uniformly agree on is that the child support system in Australia is unfair. It can be a major source of ongoing conflict between separated parents.
The child support section on the website for the Department of Human Services (DHS) can be found at www.humanservices.gov.au/customer/dhs/child-support. You can both make a claim for child support and pay your child support online.
Child support is calculated according to the number of nights of care each parent has, the number of children the couple has, any other children the paying parent has, the age of the children, and the incomes of both parents.
The DHS has an online child support calculator, which we discussed previously, and can be found here: www.processing.csa.gov.au/estimator/About.aspx.
There are three ways to pay or be paid child support—through a private collection agreement, via self-management, or through the DHS, which is run by the federal government.
Self-management
Collecting via a self-management agreement can work well if you have a cooperative relationship. Some paying parents much prefer self-management, because it means the payroll officer at their workplace doesn’t have access to intimate details of their life, which is fair enough, and it means that a mutual decision can be made for the benefit of your family, not according to some calculator.
Neither party has to register with the DHS. Self-management means the amount to be paid and the way in which the money is to be paid are managed between the parents. You can pay and be paid as much or as little as you both decide upon. It could mean, for example, that one parent pays the school fees and the other parent the medical expenses.
You can’t choose self-management if you receive more than the base rate of the family tax benefit. Unless you have registered with the DHS, unpaid amounts can’t be collected by child support, although you can change to private collection or collection through the DHS at any time.
Do use self-management if you’re a billionaire, but don’t use self-management if you find it hard to stand up to your ex or if there’s a power imbalance between you. At the very least, make sure you do the child support estimate. Just be aware that threats to cut off child support, or to stop paying school fees, or to take you to court for sole custody if you don’t agree to this, that or the other are not uncommon with self-managment, can be effective control mechanisms, and are also, frankly, economic abuse.
Private collection
This is where the parent who is paying the child support does so based on a child support assessment agreement or a court order (yes, the courts can order child support payments in ‘special circumstances’, such as when one of you is a millionaire and the other is a stay-at-home parent). In this option, there’s little other interaction with the DHS, unless the paying parent doesn’t cough up the cash.
Do use private collection if you’re on speaking terms with one another and have a pretty mature approach to finances and a good understanding of what raising kids costs, but don’t use private collection if you can’t discuss financial matters without it degenerating into a shouting match that can be heard from space.
Collection via the Department of Human Services
This is where the government agency in charge of child support collections both assesses and collects (or, really, passes on) the child support money from the payer to the payee. The DHS can also get ‘garnishee orders’ whereby if there’s a history of non-payment, child support is taken directly from the wages and/or tax return of the paying parent and paid to the receiving parent. Some people underreport their income in order to avoid their child support responsibilities, which is a crappy thing to do, because the people who really lose are the children. There are very few single parents living the high life on their child support payments, after all.
Do use the DHS to collect if you and your ex hate each other with the burning intensity of a thousand suns, but don’t use the DHS to collect if you’ve already got a standover man doing it for you. There’s no need to be greedy. Just kidding, we don’t condone standover men (plus we hear they are quite expensive).
Generally speaking, if the parents have equal time with the children, child support may not be payable unless there is a disparity in income, but all child-related expenses (such as medical, child care or after-school care) should be split down the middle. Anyone who thinks that child support actually pays half the expenses of raising kids is deluding themselves. Getting out of paying child support is probably the worst of all possible reasons for trying to get equal parenting time and almost always ends in tears.
Payment to third parties
If you have less than 14 per cent of care, you can ask the DHS to accept that payment to third parties is the equivalent of paying child support. The payments have to actually relate to the care of the children, and the most common are school fees or payments to the mortgage over the home the children are living in.
Child support special assessment
Sometimes the usual formula is not appropriate for a family situation, and an application can be made to change the child support assessment in special circumstances. It’s not at all funny or immature that lawyers often refer to child support Special Assessment Applications as Spec Ass Apps.
The form is available on the Human Services website.74 For each category, the child support officer making the decision must work out if it will be just and equitable for you, your ex and your child or children, and must consider factors such as the nature of the duty to maintain a child, the needs of the child, the income, earning capacity, property and financial resources of the child and the parties, the commitments of the parties to support themselves or other children or people, and any hardship caused to the child, the payer, the payee and any other child or person the payer or payee has a duty to support.
The reasons for changing a child support assessment in special circumstances are set out on the form, with examples:
Reason 1 |
The costs of spending time with or communicating with the children are more than 5 per cent of your adjusted taxable income amount (this includes your child care bill, if that bill is more than 5 per cent of your income). |
This can be a bit of a kick in the guts for a parent who is literally left holding the baby—the other parent gets to ask the DHS to reduce their payments because they moved away and spending time with the kids suddenly costs more. All of the circumstances will be taken into account, though, including any hardship it may cause to the payer, the payee and the child. |
Reason 2 |
The child(ren) has special needs. |
An assessment can be changed if one parent has a lot of out-of-pocket costs for the child or children (after rebates and NDIS), such as orthodontic work, medication and medical expenses. |
There are extra costs in caring for, educating or training the child(ren) in the way both parents intended. |
This is the school fee ground, although it is also commonly used for nanny-related expenses. If you and your ex agreed that the children go to a private school and/or have a private nanny and your ex refuses to contribute towards the fees, then you can ask that the child support formula be changed to include these fees. Factors such as the earning capacity and commitments of both parents are taken into account. So if you are earning $50 000 a year and your ex is earning $350 000 and your ex is demanding that you pay half of the school fees as well as your mortgage, the disparity of income will be taken into account. |
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Reason 4 |
The child(ren) has income, an earning capacity, property and/or financial resources. |
If a child is working full time and meeting many of their own expenses, then this may be taken into account. So if your seventeen year old is earning a full-time wage, this can be factored into the assessment. Or perhaps your seven-year-old is a YouTube star and their channel makes more in one day than you do in a month. |
Reason 5 |
You have provided money, goods or property for the benefit of the child(ren). |
If you are paying the mortgage on the house that your ex and the children are living in, and you have not been ordered to do this, then that can be taken into account in a change of assessment. |
Reason 6 |
The costs of child care for child(ren) under twelve years of age are more than 5 per cent of your adjusted taxable income amount. |
Child care is incredibly expensive and if it reaches more than 5 per cent of your taxable income, then this should be taken into account. |
Reason 7 |
You have out-of-the-ordinary necessary expenses to support yourself. |
These have to be reasonable. You cannot claim that your loan on your superyacht or Lamborghini prevents you from paying child support. High medical costs for yourself can be taken into account. |
Your ex is earning more or is able to earn more, or they have resources such as super that they can draw on. |
If your ex seems to be earning a lot more than their taxable income, especially if they are self-employed or own a company, or earn Defence Reserve pay (this does not get included in taxable income), then the child support officer can go through bank statements, and talk to accountants and other third parties. The sorts of things that business owners do to make their tax affairs efficient (perfectly legally) can simply be ignored by the child support officer, who can just deem that you or your ex is earning more. If your ex lets the DHS know that they are now not earning an income, but you are aware that they have received a redundancy, you can ask for a special assessment under this ground. A redundancy will be picked up in your ex’s next tax return, but this is cold comfort to a parent receiving no child support for up to a year. If your ex has retired and tells the DHS that they are no longer receiving an income, you can ask the child support officer to take into account that multimillion-dollar super they now have access to. |
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Reason 9 |
You have a duty to support another person. |
If your spouse or child from another relationship has medical needs, you can ask the child support officer to take these into account. |
Reason 10 |
You have a responsibility to support a resident child. |
If you are supporting a stepchild who lives with you most of the time, has lived with you for two continuous years and the child’s biological parents are unable to support them, then you can ask the DHS to take this into account. Any decision still has to take into account any hardship caused to your ex and your biological children. |
74 www.humanservices.gov.au/sites/default/files/documents/cs1970-1512en.pdf.