Money is often one of the hardest parts of separating when there are children involved. Both parents still have a duty to support their kids, even when they no longer live together. In Australia, most child support is worked out by Services Australia using a formula set out in law. Knowing how that formula works can take some of the stress out of the process.
This article explains the basics in plain terms. It covers who can apply, what the formula looks at and how care arrangements change the result. It also looks at private agreements and what you can do if your situation changes. It is general information only, so your own circumstances may lead to a different outcome.
Who can apply for a child support assessment
Either parent can apply to Services Australia for a child support assessment. Another carer, such as a grandparent or other relative who looks after the children, can also apply. Once an application is made, Services Australia uses what it calls a formula assessment. The formula is set out in the Child Support (Assessment) Act 1989, which is federal law and applies across Australia.
Child support is separate from parenting arrangements. Where the children live and how often they see each parent is a different question. If you have a teenager with strong views, our article on what age a child can choose which parent they live with covers that side of things. The two areas do connect, though, because the amount of care each parent provides feeds directly into the child support figure.
What the formula looks at
The formula considers a handful of key factors. These are each parent’s income, their combined income, how much time each parent cares for the child and the age of the child. The income of a carer who is not a parent is not counted. Each parent’s income is treated in the same way, whichever parent earns more.
The costs of children used in the formula come from research into how much Australian parents spend on their kids. Services Australia updates these figures each year. The age of each child is also part of the calculation. Services Australia explains this on its formula page.
The formula can also take into account other children a parent supports. This includes biological or adopted children from a past or new relationship. Stepchildren are treated differently and generally need a court order to be included. Our article on adopting someone aged 18 or older explains how adoption creates a legal parent and child relationship in other settings.
The steps in the basic formula
The Department of Social Services Child Support Guide sets out the steps of the basic formula. Each one is tied to a section of the Child Support (Assessment) Act. The steps run in a set order, and each result feeds into the next. Here is the order in short form.
- Work out each parent’s child support income.
- Add them together to get the combined child support income.
- Work out each parent’s income percentage, which is their share of the combined income.
- Work out each parent’s percentage of care for the child.
- Convert that care percentage into a cost percentage.
- Take the cost percentage away from the income percentage to get the child support percentage.
- Work out the costs of the child, then multiply by any positive child support percentage to get the annual amount.
In simple terms, a parent pays child support when their share of care is less than their share of the combined income. A parent receives child support when their share of care is more than their share of income. Services Australia explains this on its page about how the child support formula works out who pays. The basic formula applies to parents who have only one child support assessment.
How care arrangements change the result
Care is counted by the number of nights a year a child is in each parent’s care. Victoria Legal Aid sets out the bands used to convert nights into a cost percentage. A parent with fewer than 52 nights a year is below regular care and gets no cost percentage. From 52 to 127 nights is regular care, which gives a cost percentage of 24 per cent.
From 128 nights a year the arrangement is treated as shared care. Between 176 and 189 nights, each parent is given a cost percentage of 50 per cent. From 238 nights a year the arrangement is primary care, with a cost percentage of 76 per cent. A parent with 314 nights or more is above primary care and has a cost percentage of 100 per cent.
Because care has such an effect, it pays to keep good records. Victoria Legal Aid suggests keeping a diary of when the children are with you. You should also tell Services Australia as soon as care arrangements change. Some changes cannot be backdated, so a delay can cost you money.
Making your own child support agreement
Parents do not have to rely only on the formula. They can make a child support agreement instead. There are two kinds, called limited agreements and binding agreements. Legal Aid Queensland explains the difference on its page about limited and binding child support agreements.
A limited agreement can only be made when an assessment is already in place. The agreed amount must be equal to or more than the assessment. Either parent can end it after three years. It can also be ended if the notional assessment changes by more than 15 per cent.
A binding agreement can be for any amount the parents agree on, higher or lower than the formula. Each parent must get independent legal advice before signing it. Each lawyer signs a certificate, and those certificates are attached to the agreement. Legal advice is also needed before ending a binding agreement, which shows how seriously the law treats them.
Reaching an agreement usually means some give and take. Our article with negotiating tips for a better outcome may help you prepare for those talks. Keep the focus on what the children need. A calm and practical approach often leads to an arrangement that lasts.
When circumstances change
Life rarely stays still after separation. Incomes go up and down, new partners arrive and care patterns change. You must tell Services Australia about changes that could affect child support. Child support debts and overpayments generally have to be paid back, so it is better to report changes early.
A big change in income, such as losing a job, can affect an assessment. If your job ended in a way that seemed unfair, our article on making a case for unfair dismissal covers your options at work. For child support, the key step is to update Services Australia promptly. That way the assessment reflects what you actually earn.
Sometimes the formula does not fit a family’s special circumstances. Victoria Legal Aid notes there are ten reasons you can rely on to ask for a change of assessment. Both parents must give full disclosure of their finances, and any change must be fair to everyone. Within 18 months of the assessment, you apply to Services Australia. From 18 months to seven years, you apply to the Federal Circuit and Family Court of Australia.
Frequently asked questions
Does the other parent’s new partner’s income count?
The formula is based on each parent’s own child support income. The income of a carer who is not a parent is not used in the formula. If you are unsure what counts as income in your case, Services Australia can explain how it applies to you.
Can we agree to no child support at all?
A binding child support agreement can be for any amount both parents agree on. Each parent must first get independent legal advice and a signed lawyer’s certificate. Legal advice is also needed before a binding agreement can be ended, so think it through carefully before you sign.
Why did my assessment change when nothing happened?
The costs of children used in the formula are updated each year. The age of a child is also a factor in the formula. Either of these can change your assessment, even if your income and care stay the same.
Do we need a court to sort out child support?
Most child support is handled by Services Australia rather than a court. A court becomes involved in some situations, such as a change of assessment sought more than 18 months after the assessment. A lawyer can tell you which path suits your situation.
This article is general information about child support in Australia and is not legal advice. Laws and processes change over time, and every family is different. Please speak with a qualified family lawyer about your own situation.