Stage 3
Most notable of the final stage changes is the introduction of a new formula for the calculation of child support, however there are also other specific changes:
New child support formula
A new formula is introduced which:
- Is based on Australian research on the costs of children. The formula takes account of the fact that older children cost more. The aim is to treat both parents� incomes and living costs more equally. The formula takes into account the fact that the amount parents spend on their children depends on their income. It will also ensure that children from first and second families will be treated more equally.
- Adopts a more complex form of calculations than the existing formula. Rather than looking primarily to a fixed proportion of the payer�s income, the new formula proceeds on the basis that the parents should share rateably in the actual costs of the child from their overall resources.
- Adopts an 'income shares' approach so both parents will have the same amount deducted as self-support (this amount will be increased to 1/3 of the Male Total Average Weekly Earnings). Both parents' incomes will be taken into account in establishing the costs of the children, and the resulting costs will be apportioned.
The following other issues are also taken into consideration:
- The proportions of care must be ascertained for rateable apportionment of expenditure.
- Parents who care for their children for 14 per cent or more of the time will be recognised as contributing to the costs of the children through their care.
- The income definitions used to calculate child support and family tax benefit will be aligned (for example fringe benefits and foreign income). The child support income definition will be broadened to include certain tax-free pensions and benefits that already apply for family tax benefit.
- Resident parents will keep all of their family tax benefit if a non-resident parent has care of their child for less than 35 per cent of nights in a year.
Minimum payments for all children
Non-resident parents will be required to pay child support of $6 per week to each family they are required to pay child support to, rather than dividing it between them.
Parents who deliberately minimise their income to avoid paying child support (payers who claim to have very low incomes, but actually have higher real incomes or resources) will have to pay $20 per child per week, unless they can prove their incomes are in fact very low.
Exclusion of income
For the first three years after separation parents will be able to have income from second jobs and overtime (up to 30% of total income) excluded from child support calculations, when the extra money that they are earning is used to help with re-establishment costs.
Support of step-children
Parents who have financial responsibility for step-children (because no other person can provide support for them) will be able to have the children treated as a dependants when their child support liability is calculated.
Parents who want to reconcile
Parents will be able to suspend child support payments for a period of six months if they reconcile.
If the reconciliation fails, the resident parent will then be able to reinstate the assessment without having to make a new application (as currently required).
To find out more, please contact our Family Law team.