Child support is a financial contribution made by a parent towards the cost of raising their child after separation. In Australia, the child support system is administered by Services Australia (formerly the Child Support Agency) under the Child Support (Assessment) Act 1989 (Cth). The system uses a formula to calculate each parent's share of the costs of the child, based on their income, the time the child spends with each parent, and the age of the child.
At Reid+Alexander, we advise parents on all aspects of child support - from understanding initial assessments to negotiating agreements and seeking changes when circumstances shift. Our goal is to ensure that arrangements are fair, workable, and in the best interests of the children involved.
How Child Support Is Calculated
The child support formula takes into account several factors to determine each parent's liability. Understanding these elements is the first step to assessing whether your current arrangement is accurate:
- Income of both parents: Services Australia uses each parent's adjusted taxable income. This includes salary and wages, business and investment income, and certain other amounts. A self-support amount is deducted to account for each parent's own basic living costs.
- Cost of the child: The combined income of both parents is used to determine the estimated cost of raising the child, based on tables that vary by the child's age and the number of children.
- Care percentage: The proportion of nights (or hours) each parent has the child directly affects the amount payable. A parent who has the child for more than 52 nights per year receives a cost percentage credit.
- Income shares: Each parent's share of the combined income determines their percentage of the child's costs. The difference between each parent's cost share and their care-based credit produces the amount one parent pays to the other.
If your income or care arrangements have changed significantly since your assessment was made, your child support amount may no longer be accurate. It is important to notify Services Australia of changes promptly, as adjustments are not always backdated.
Child Support Agreements
Parents can make their own child support arrangements through formal agreements, rather than relying solely on the administrative assessment. There are two types of child support agreement under Australian law:
- Binding child support agreements: These require both parties to have received independent legal advice before signing. They can set child support at an amount above or below the formula assessment. Once made, they are difficult to set aside and override the administrative assessment.
- Limited child support agreements: These do not require independent legal advice, but the amount of child support must be at least equal to the administrative assessment. They can be terminated by either party if the assessment changes by more than 15 percent.
Choosing the right type of agreement depends on your circumstances, the level of certainty you need, and whether you want flexibility to adjust in the future. We advise on the advantages and risks of each option.
Changing a Child Support Assessment
Circumstances change, and the child support system provides several pathways to adjust an assessment when it no longer reflects reality:
- Administrative change of assessment: Either parent can apply to Services Australia for a departure from the formula assessment based on special circumstances. Grounds include high costs of contact, the income or earning capacity of a parent not being accurately captured, or the financial circumstances of a parent being materially different from what the formula produces.
- Objection: If you disagree with a decision made by Services Australia, you can lodge a formal objection within 28 days. The objection is reviewed by a different officer.
- Appeal to the Administrative Review Tribunal: If an objection is unsuccessful, you can seek review by the Administrative Review Tribunal (ART), which conducts a fresh hearing of the matter.
- Court order: In limited circumstances, the Federal Circuit and Family Court can make orders that depart from the formula assessment, particularly where complex financial arrangements are involved.
"Accurate child support arrangements ensure that both parents contribute fairly to the costs of raising their children, and that children's needs remain at the centre of financial decisions."
Whether you need help understanding your assessment, negotiating an agreement, or seeking a variation, our team provides clear, practical advice on all child support matters. Contact us to discuss your situation.