The Child Support Scheme
- Shared care and eligibility for Family Tax Benefit (FTB)
- How child support received for a child of a previous relationship will affect family assistance
- Child support agreements
- How a child support agreement will affect family assistance
- What is a CSA notional assessment and how does it affect FTB?
- Extending the time for taking reasonable maintenance action from 28 days to 13 weeks
- How does child support affect my rate of Family Tax Benefit Part A?
- Alignment of Care
Family assistance and child support are linked. The amount of child support received or paid, shared care arrangements, and whether reasonable action is taken to obtain child support can all affect the rate of Family Tax Benefit (FTB) Part A. This means that when changes are made to one it can affect the other.
Since 1 July 2008, several aspects of the child support and family assistance systems were changed in order to align the two more closely. Depending on your circumstances, particularly if you share the care of your children or make your own arrangements about child support, your family assistance may be affected.
The major features include:
- a child support formula that changes the way child support payments are calculated, ensuring more balanced assessments, encouraging shared parenting and recognising the costs of contact;
- ensuring a minimum payment is made for each child support case;
- treating income from second jobs and overtime more equally to assist parents with re-establishment after separation;
- ensuring fairer treatment of parents with dependent step-children when calculating their child support liability;
- simplifying the 'change of assessment' rules for altering the amount of child support that is payable;
- improving the arrangements for parents who wish to make agreements for ongoing child support or lump sum payments;
- making the child support rules easier for parents who are trying to get back together;
- more closely aligning the income definitions used to calculate child support and family assistance, to ensure more consistent treatment of certain tax-free amounts and foreign income.
More information on Child Support Scheme Reforms and Changes to Family Assistance
Shared care and eligibility for Family Tax Benefit (FTB)
A parent who has care of a child for less than 35 per cent of the time will not be eligible for the child related components of FTB.
Instead of receiving FTB, a parent who has care of a child between 14 per cent to less than 35 per cent of the time will have the costs of the child taken into account in working out how much child support the parent will pay. This level of care is called regular care and will be counted as meeting 24 per cent of the costs of raising the child for child support purposes. For most payers, this will reduce the amount of child support paid.
A parent with regular care of a child will continue to be eligible for the rent assistance component of FTB Part A and may also be eligible other government benefits, such as:
- Child Care Benefit;
- Child Care Rebate
- Health Care Card
- The lower threshold for the Medicare safety net
- Additional Remote Area Allowance paid with social security income support payments (e.g. Newstart Allowance)
A parent who has shared care of a child for 35 per cent to 65 per cent of the time will be eligible for a share of the child related components of FTB. This includes fortnightly or lump sum payments and FTB supplements.
How child support received for a child of a previous relationship will affect family assistance
If you receive child support for a child from a previous relationship, and you also have care of a child from a different relationship or your current relationship, the child support you receive only affects the maximum amount of FTB Part A for the child from your previous relationship.
In working out the rate of FTB, the additional amount of child support that is disregarded for extra children in your care will be limited to the children for whom you or your current partner are entitled to apply for child support.
This affects the maintenance income test that applies in working out the rate of FTB Part A.
Example:
Jane has care of Thomas - her son from her previous relationship with Michael - and for whom she receives child support. Jane is currently in a relationship with David and they have a child, Lucy. In working out Jane's FTB Part A rate, the child support amount received for Thomas will only affect the maximum amount of FTB Part A that could be received for Thomas.
Child support agreements
Separated parents can make agreements regarding how much child support is to be paid, rather than using the amount under the child support legislation. They can also make agreements regarding the way in which child support is paid, for example through periodic cash payments, non-cash payments (e.g. mortgage or rental payments, or school fees) or a lump sum payment (including by way of property settlement).
Binding child support agreements
- A binding agreement can be for any amount of child support that parents agree to, even if this amount is less than the child support formula amount.
- For an agreement to be registered as a binding child support agreement, each parent must obtain independent legal advice about the effect of the agreement and the advantages and disadvantages of making one.
- A binding child support agreement can only be terminated if both parents agree to do so after getting independent legal advice, or by a court order.
Limited child support agreements
- The Child Support Agency can also register a limited child support agreement, which can be made without obtaining legal advice.
- In a limited agreement the amount of child support payable must at least be equal to the child support formula amount.
- There must be a Child Support Agency administrative assessment in force before a limited agreement can be registered.
- A limited child support agreement can be terminated if the parties agree to do so; by either party after 3 years; by either party if the notional assessment changes by more than 15 per cent; or by a court order.
Agreements or orders for lump sum payments
- A binding child support agreement or a court order can provide for some or all of the child support to be paid by a lump sum instead of periodic payments. A lump sum payment includes a transfer of property.
- A Child Support Agency administrative assessment must be in force before the agreement or order is registered, and the lump sum payment must equal or exceed the formula assessment amount.
- If child support is paid by a lump sum, the Child Support Agency will credit the lump sum against the amount of child support payable under the administrative assessment. This will continue until the lump sum is reduced to nil, and then ongoing payments of child support will start again.
For further information regarding child support agreements, go to the Child Support Agency website.
How a child support agreement will affect family assistance
Child Support agreements before 1 July 2008 that continue
If you have a child support agreement before 1 July 2008 that the Child Support Agency has reviewed and accepted to continue after 1 July 2008, your FTB Part A will continue to be worked out using the amount of child support received under your agreement.
Child support agreements that begin on or after 1 July 2008
If you enter into a child support agreement on or after 1 July 2008, the maintenance income test for FTB Part A will use a notional amount of child support rather than the actual amount that you receive.
For certain kinds of child support agreements (particularly those for less than the amount calculated under the child support formula), the Child Support Agency will work out the annual rate of child support that would otherwise be payable under the child support legislation if there was no agreement, and this will be called the 'CSA notional assessment'
The amount of child support that would be received under a CSA notional assessment is the amount that will be used in the maintenance income test for FTB Part A.
This gives parents more flexibility to make child support agreements while at the same time ensuring that the amount of FTB paid will be the same as if the agreement had not been made. Parents will not get more FTB if they agree to receive less child support, and will not get less FTB if the other parent agrees to pay more child support.
Agreements for a lump sum payment only
For agreements for a lump sum payment only, the maintenance income test for FTB Part A will use the amount credited against the child support liability due to the lump sum payment, plus any remaining cash component of child support received.
Example:
Sylvia and Peter have a binding child support agreement in place, which provides that Peter is to transfer $12,000 to Sylvia. They agree that this amount is to be credited at 75 per cent of Peter's child support liability for their daughter Vicki. Peter's child support liability for 2009-10 is $4,000, and Sylvia receives $500 cash child support in 2009-10. In working out Sylvia's FTB Part A rate, the maintenance income test will use the lump sum credit of $3,000 plus the cash payment of $500 that Sylvia also received.
For further information regarding child support agreements, go to the Child Support Agency website.
What is a Child Support Agency (CSA) notional assessment and how does it affect FTB?
For certain kinds of child support agreements, the Child Support Agency will work out the annual rate of child support that would otherwise be payable under the child support legislation if there was no agreement. This is called the 'CSA notional assessment' because it is a 'notional' rather than an actual rate of child support. The amount of child support that would be received under a CSA notional assessment is the amount that will be used in the maintenance income test for FTB Part A.
Example:
Michael and Jane have registered a child support agreement for their son Thomas. They have agreed that Michael will pay an annual rate of $4,000 in child support. The CSA notional assessment for the whole of 2009-10 is $5,000. When applying the maintenance income test in calculating Jane's FTB Part A rate, the notional amount of $5,000 will be used instead of the actual agreement amount of $4,000
If you have an agreement and collect child support privately...
If you make a child support agreement and collect your child support privately, the maintenance income test for FTB Part A will use the notional amount of child support.
Example:
In Michael and Jane's case, the notional amount of child support ($5,000) would be used in the maintenance income test for FTB Part A to work out Jane's rate of FTB Part A.
If you have an agreement and child support is collected through the Child Support Agency...
If you make a child support agreement and the Child Support Agency collects the child support payments, special rules apply if you receive less than 100 per cent of the child support amount payable under your agreement.
If you receive less than 100 per cent of your agreement amount of child support, then the maintenance income test for FTB Part A will not use 100 per cent of the notional amount of child support. It will use a percentage of this amount that is equal to the percentage of the agreement amount that you received.
Example:
Alex and Maria have a child support agreement and payments are collected by the CSA. They have agreed that Maria is to receive an annual rate of $6,000 in child support from Alex. The notional amount of child support is $5,000.
The CSA collects $3,000 in child support payments from Alex. This is equal to 50 per cent of Alex and Maria's agreement amount. This means that, when working out Maria's rate of FTB Part A, the maintenance income test will use 50 per cent of the notional amount of $5,000. That is, the amount of $2,500 will be used.
Extending the time for taking reasonable maintenance action from 28 days to 13 weeks
Before January 2007, separating parents only had 28 days to negotiate parenting arrangements and apply for child support to avoid a reduction in their FTB Part A payments. This had the potential to increase conflict rather than encourage reconciliation or cooperation.
Now parents have 13 weeks - a much more reasonable period - to enable contact with a Family Relationship Centre or other support service in order to agree post-separation arrangements (including the negotiation of cooperative parenting arrangements through a parenting plan).
How does child support affect my rate of Family Tax Benefit Part A?
If you are entitled to more than the base rate of Family Tax Benefit Part A, any child support (maintenance) payments you or your partner get may affect how much you can be paid.
Your Family Tax Benefit Part A will reduce by 50 cents in every dollar of child support you get, over the maintenance income free areas (below), until the base rate is reached.
Maintenance income is NOT assessed if the customer or their partner is permanently blind, AND they receive one of the following payments:
- a social security Age or Disability Support Pension, or
- a DVA service pension or income support supplement.
| Status | Maintenance received (per year) |
|---|---|
| Single parent, or one of a couple receiving maintenance | $1,368.75 |
| Couple, each receiving maintenance | $2,737.50 |
| For each additional child | $456.25 |
Child support over these amounts will reduce your Family Tax Benefit Part A by 50 cents in the dollar, until the base rate of Family Tax Benefit Part A is reached.
If you have a blended family and receive child support for some but not all of the children in your family, the Maintenance Income Free Area will apply only to those children in your family for whom you receive child support.
If you receive child support for a child from a previous relationship and you also have care of a child from a different relationship or your current relationship, the child support you receive will only affect the maximum amount of FTB Part A for the child from your previous relationship. A Maintenance Income Test Ceiling (MITC) will also be calculated, which limits the effect that child support can have on your rate of FTB Part A, to the maximum amount of additional FTB Part A for the children for whom child support is paid. Any child support received above the MITC will be disregarded for FTB purposes.
Example
Jane has care of Thomas - her son from her previous relationship with Michael - and for whom she receives child support. Jane is currently in a relationship with David and they have a child, Lucy. In working out Jane's FTB Part A rate, the child support amount received for Thomas will only affect the maximum amount of additional FTB Part A that could be received for Thomas.
| For each child | Per fortnight | Per year |
|---|---|---|
| Under 18 years | $51.24 | $2,062.25 |
| 18-24 years | $68.74 | $2,518.50 |
Please Note: As the Family Tax Benefit Part A Supplement is paid after the end of the financial year, annual figures include the $726.35 per child supplement for 2010/11. The amount is not included in the fortnightly figures.
Example
Sally is entitled to the maximum rate of Family Tax Benefit Part A for one child under 13 years because her income is $32 000. Sally's ex-partner pays her $5 000 per year in child support.
- The maximum rate for Family Tax Benefit is $4,803.40
- $5,000 - $1,335.90 = $3,664.10
- $3,664.10 x 0.5 = $1,832.05
- $4,803.40 - $1,832.05 = $2,971.35
Sally is entitled to $2,971.35
Alignment of Care
The Family Assistance Office (FAO) and the Child Support Agency (CSA) now use the same rules to work out the percentage of care you provide your child or children.
By aligning the rules for determining care percentages, parents will only have to tell one agency about a change in care – not both.
What do I need to do?
If you receive Family Tax Benefit and pay or receive child support, you will only need to have your percentage of care assessed once by either the FAO or CSA. The other agency will then be notified of any changes in your percentage of care and will update your details automatically.
It's important you tell the CSA or the Family Assistance Office about changes to your care as soon as they happen. If you do not tell them within 28 days of the change, your child support assessment may only be able to be changed from the day you tell them. This 28 day time limit does not apply for family assistance purposes.
You can also apply to have your percentage of care worked out under the new rules, even if the care arrangements have not changed.
You can talk to the FAO or CSA about your care arrangements. If you have other questions about your child support payments or family assistance you will need to talk to the relevant agency.
Changes to your percentage of care could affect your eligibility or rate of payment for other entitlements. If you’re receiving a payment such as Parenting Payment or Newstart you must also tell Centrelink about changes in your circumstances.
Sam and Sandy*
Sam calls the FAO to say that there is a change to the care of his son Eric – Eric now stays with Sandy for 56 nights in a year. The FAO confirms the new care arrangements with both Sam and Sandy and reassesses Sam’s Family Tax Benefit. The new care percentage is sent to the Child Support Agency and applied to the child support assessment.
*This is an example only.
Where can I get more information?
For more information about these changes, you can call 13 6150 or speak to your local Centrelink Customer Service Centre or Medicare office. To speak to Centrelink in a language other than English call 13 1202.
You can also visit www.csa.gov.au or call 13 1272. If you don’t speak English, call the Translating Interpreting Service on 13 1450 between 8.30am and 4.45pm (local time), Monday to Friday.
[ top ]