Reading time: 3 minutes

Separating from a partner can be a painful time, and when it comes to the legal side of things, it can be even harder to reach an agreement, especially when children are involved. If separating parents cannot agree on the custody and financial care of the child, the Child Support (Assessment) Act 1989 (Cth) (“Act”) provides a formula for determining a fair division of child support. If you apply for a child support assessment with the Child Support Agency (“CSA”), it’s prudent to know beforehand the criteria the CSA use to determine a child support assessment, especially when it comes to your taxable income. This article will run through the legislative criteria the CSA uses to determine estimates based on each parent’s taxable income.

The Legislative Framework

Firstly, it is important to be aware of the legislative framework that allows for a child support assessment. The Act sets out various criteria and formulas that are used by the CSA to reach a fair and reasonable child support assessment. Any application for a child support assessment is made through the CSA.

Adjusted Taxable Income

The income used to calculate child support payments is called the “adjusted taxable income”. Section 43(1) of the Act outlines exactly what components are factored into in the adjusted taxable income, including:

  1. Taxable income;
  2. Reportable fringe benefits;
  3. Target foreign income;
  4. Net financial investment loss;
  5. Tax-free pensions or benefits; and
  6. Reportable superannuation contributions.

The above components are taken into consideration for the last completed financial year so it is important to lodge a tax return or submit the relevant forms disclosing your income.

Calculation

The CSA calculation is not based solely on your adjusted taxable income. Firstly, the CSA determines a total amount through both parents’ combined adjusted taxable income. The parents’ proportion of the total amount is determined in light of the parents’ percentage of care and the costs of caring for the child or children.

Length of a Child Support Assessment

The child support assessment can be valid for up to 15 months. A party can lodge new information with the CSA relating to a change in their circumstances (e.g. redundancy) to request a change in child support assessment. The reason, however, for the 15 month period of validity is to allow the CSA to consider any changes in both parents’ financial situation at frequent and incremental times. If you are unhappy with a child support assessment, there is a review process available to you.

Key Takeaways

When applying to the CSA for a child support assessment, your taxable income and the taxable income of your partner is taken into account in reaching a final determination. If you are thinking of allowing the CSA to make a determination on your child support assessment, it would be useful to contact LegalVision’s taxation lawyers on 1300 544 755 or fill out the form on this page.

Webinars

Construction Contract Essentials

Thursday 12 August | 11:00 - 11:45am

Online
Understand how construction contracts are drafted and how to protect your construction business.
Register Now

Startup 101: Understanding Cap Tables and ESOPs

Thursday 19 August | 11:00 - 11:45am

Online
Cap tables and employee share option plans are essential for fast-growing startups. Learn more with this free webinar.
Register Now

Expanding to NZ: Structuring Your Business For Success

Thursday 26 August | 2:00 - 2:45pm

Online
Launching a business in New Zealand? Understand how to structure your business for success with this free webinar.
Register Now

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • 2020 Excellence in Technology & Innovation – Finalist – Australasian Law Awards 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice – Winner – Australasian Lawyer 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards 2021 Law Firm of the Year - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer