House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Families, Community Services and Indigenous Affairs, the Hon Mal Brough MP)

Schedule 1 - The formulas

Summary

This Schedule repeals Part 5 of the Child Support Assessment Act and replaces it with a new Part 5 that provides a new series of child support formulas. The new formulas are based on recent Australian research on the costs of caring for children, taking account of both parents' incomes after equal self-support amounts are deducted, recognising care of a child for more than 14 per cent of the time, and treating first and second families more equally.

Background

The new administrative assessment adopts an 'income shares' approach to calculating the costs of raising children and sharing these costs fairly between parents. It involves working out the combined incomes of the parents, determining the costs of the parents' children by reference to their combined incomes, then distributing those costs between the parents in proportions equal to their share of the combined income, taking into account the contribution to the costs of the children they may make through providing care for the children.

Part 5 recognises that sometimes only one parent's income can be used for an assessment, for example, where the other parent is deceased or is not able to be found. In these situations, if a non-parent carer is providing care for a child, the surviving, or available, parent's income only is used for the assessment.

Child support assessments will be based on the actual costs of children, which have been determined according to Australian research showing that, as parental income rises, spending on children rises in dollar terms but falls as a percentage of income, and that expenditure on children increases as they get older. The costs of children for Part 5 represent the best estimate of the amount that parents, on average, spend on their children according to their income.

Explanation of the changes

Item 1 repeals Part 5 of the Child Support Assessment Act and substitutes it with new Part 5.

INTRODUCTORY MATTERS

Part 5 has nine Divisions, which deal with:

•

the simplified outline of the new assessment scheme (Division 1);

•

the formulas used for assessing child support (Division 2);

•

the child support income used in an assessment (Division 3);

•

the amount of care that a parent or non-parent carer provides for their child (Division 4);

•

other elements of the formulas (Division 5);

•

the costs of the child (Division 6);

•

assessments and estimates of adjusted taxable income (Division 7);

•

general provisions relating to making assessments (Division 8); and

•

liability to pay child support as assessed (Division 9).

A number of defined terms is used for the purposes of assessing child support under Part 5 and following is a glossary of these terms.

THE DIVISIONS IN PART 5

Division 1 - Simplified outline

Section 35A sets out a simplified outline for Part 5. It provides that Part 5 includes all the formulas for assessing the annual rate of child support payable by a parent for a child in a child support period (other than in cases where the rate is worked out in accordance with a child support agreement, a Registrar's determination under Part 6A or a court order).

Section 35A also provides that the Costs of the Children Table in new Schedule 1 to the Child Support Assessment Act sets out the costs to the parents to raise children in various age ranges. These costs are to be met by both parents, either by paying child support or caring for their children, according to each parent's capacity to meet the costs. The Costs of the Children Table is to be published by the Secretary each year.

The costs of the children are to be met by both parents (either by paying child support or caring for their children) according to each parent's capacity to meet the costs. To determine each parent's capacity to meet those costs, the parents are assessed in respect of the costs of the child.

Section 35A notes that, generally, both parents' income is taken into account to determine each parent's capacity to pay for the costs of their children.

The formulas also allow child support to be worked out for non-parent carers.

Finally, section 35A points out that, in some cases, the annual rate of child support payable by a parent is assessed under Subdivision B of Division 8, which deals with annual rates of child support payable by parents on low incomes and minimum rates of child support.

Division 2 - The formulas

Division 2, Subdivision A - Simplified outline

Section 35B provides a simplified outline of Division 2.

The outline provides that the Costs of the Children Table in Schedule 1 to the Child Support Assessment Act, published by the Secretary each year, sets out the costs to parents of raising children in various age ranges. These costs are to be met by both parents either by paying child support or caring for their children, according to each parent's capacity to meet the costs.

The outline then refers to the six formulas in Part 5. It provides that Formula 1 applies if both parents' incomes are taken into account to determine each parent's capacity to meet the costs of their children, each parent only has one child support case and there is no non-parent carer involved in the assessment. Formula 2 applies if both parents' incomes are taken into account to determine each parent's capacity to meet the costs of their children, each parent only has one child support case and at least one non-parent carer is involved in the assessment. Formulas 3 applies if both parents' incomes are taken into account to determine each parent's capacity to meet the costs of their children, at least one of the parents has multiple child support cases and there is no non-parent carer involved in the assessment. Formula 4 applies if both parents' incomes are taken into account to determine each parent's capacity to meet the costs of their children, at least one of the parents has multiple child support cases and there is at least one non-parent carer involved in the assessment. Formula 5 applies if one parent's income only is taken into account to determine that parent's capacity to meet the costs of their children (for example, because the other parent is not a resident of Australia). Formula 6 applies if one parent is deceased and the surviving parent's income only is taken into account to determine that parent's capacity to meet the costs of their children.

Section 35C provides that the formulas contained in Part 5 are used in the administrative assessment of child support that a parent is to pay for a child, unless there is a departure determination made by the Registrar (Part 6A of the Child Support Assessment Act), a court order for departure from the administrative assessment in special circumstances (Division 4 of Part 7 of the Child Support Assessment Act) or any provisions of a child support agreement made between parents that have effect, for the purposes of Part 5, as if they were such an order made by consent. This maintains the current rule in section 35 of the Child Support Assessment Act.

The six formulas in Division 2 use a number of key concepts, largely contained in Divisions 3, 4, 5 and 6 of Part 5, which would be usefully described at this point before turning to the operation of the formulas. Consequently, these Divisions will be dealt with before dealing with the formulas in Division 2 in detail.

Division 3 - Child support income

Division 3, Subdivision A - Preliminary

Section 40E sets out a simplified outline of Division 3. It provides that the income used to determine a parent's capacity to meet the costs of their children will be reduced by:

•

a self-support amount, to take account of parents' needs to support themselves;

•

a relevant dependent child amount if the parent cares for a relevant dependent child;

•

a multi-case allowance if the parent has multiple child support cases.

The relevant dependent child amount and the multi-case allowance take account of the costs of relevant dependent children, and children in other child support cases, in a similar way to the way in which the costs of the children are worked out for children in a child support case.

The outline then notes that either parent's adjusted taxable income for a year can be reduced (under section 44) in respect of a particular child if, within three years of separating from the other parent of the child, the parent earns additional income (called post-separation costs).

Division 3, Subdivision B - Child support income and combined child support income

Subdivision B of Division 3 provides rules for determining a parent's child support income and the parents' combined child support income.

The parent's child support income

Section 41 sets out how to work out a parent's child support income.

Subsection 41(1) provides that if a parent is to be assessed in respect of only one child support case and has no relevant dependent children, the parent's child support income is their adjusted taxable income minus the self-support amount.

Subsection 41(2) provides that where a parent is to be assessed in respect of only one child support case, and they have at least one relevant dependent child, the parent's child support income is their adjusted taxable income minus the self-support amount and minus an amount to recognise the costs to the parent of the relevant dependent child living with them, called the relevant dependent child amount. The relevant dependent child amount is calculated in accordance with section 46.

Subsection 41(3) provides that if a parent is to be assessed in respect of more than one child support case and they do not have a relevant dependent child, the parent's child support income is their adjusted taxable income minus the self-support amount and minus a multi-case allowance to recognise the costs to the parent of children in another child support case. The multi-case allowance is calculated in accordance with section 47.

Subsection 41(4) provides that where a parent is to be assessed in respect of more than one child support case and they have at least one relevant dependent child, the parent's child support income is their adjusted taxable income minus the self-support amount minus their relevant dependent child amount minus their multi-case allowance

Subsection 41(5) provides that a parent's child support income is taken to be nil if the amount worked out under any of subsections 41(1) to (4) is negative.

The parent's combined child support income

Section 42 provides that the parents' combined child support income is worked out by adding together each parent's child support income.

Division 3, Subdivision C - Working out the components of child support income

Subdivision C of Division 3 provides for how to work out the components of child support income, that is, adjusted taxable income, post-separation costs, the self-support amount, the relevant dependent child amount and the multi-case allowance.

Adjusted taxable income

Section 43 deals with a parent's adjusted taxable income, which, essentially, is calculated in the same way as it is under the current scheme. Section 43 provides that it is made up of the following components for the last relevant year of income (as defined in section 5 of the Child Support Assessment Act):

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the parent's taxable income (paragraph 43(1)(a);

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the parent's reportable fringe benefits total (paragraph 43(1)(b);

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the parent's target foreign income (paragraph 43(1)(c);

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the parent's net rental property loss (paragraph 43(1)(d); and

•

the total of certain tax free pensions and benefits received by the parent (paragraph 43(1)(e).

Taxable income (defined in section 56 of the Child Support Assessment Act) and reportable fringe benefits amounts are defined in the same way as they are in the current scheme (in section 5 of the Child Support Assessment Act). The term target foreign income is replacing the term exempt foreign income to ensure that, as much as possible, consistent terminology is used both for family assistance law and child support law. The definition of target foreign income is also being aligned with the definition of target foreign income in the family assistance law. Similarly, the term rental property loss is being replaced with the family assistance term net rental property loss for consistency. However, no changes are made to how it is calculated.

To also align the calculation of income for child support purposes with family tax benefit treatment, certain non-taxable income support payments will now be included in a person's income. Under the family assistance law, certain pensions and benefits that are income tax exempt are included in the calculation of income for determining a person's entitlement to family tax benefit. Including these income payments in the calculation of adjusted taxable income recognises that, although many parents who receive these payments may not be able to work at all, some have a capacity to contribute to the costs of their children, and these resources should therefore be included in their available income. Item 57 in Schedule 2 inserts a definition, into section 5 of the Child Support Assessment Act, of tax free pension or benefit that lists the benefits and pensions to be included in adjusted taxable income and also provides that it is only included in a person's adjusted taxable income to the extent that it is exempt from tax and is not a payment by way of bereavement allowance, pharmaceutical allowance, rent assistance, language, literacy and numeracy supplement or remote area allowance. This mirrors the extent to which these payments are treated as income in the family assistance law.

A note at the end of subsection 43(1) provides that other provisions that relate to a person's adjusted taxable income are section 34A and Subdivisions B and C of Division 7. A second note points out that the components of adjusted taxable income (set out in paragraphs 43(1)(a) to (e)) are defined in section 5.

Subsection 43(2) provides that if the Registrar amends an assessment under section 44, then for the purposes of the assessment, the person's adjusted taxable income is the amount determined by the Registrar.

Further detail about assessments and estimates of adjusted taxable income is dealt with in Division 7.

Post-separation costs

Section 44 sets out how post-separation costs are to be assessed. It recognises that a parent may have extra costs to re-establish themselves following separation from the other parent of their child, whether they provide care for the child or not. As a result of these extra costs, a parent may take on overtime work or a second job. The parent's child support liability should not necessarily be increased as a result of this extra income. However, as a parent's costs to re-establish himself or herself diminish over time, section 44 is limited to the first three years after the parents last separated before the commencement of the child support case. Section 44 allows a new three-year period from a subsequent separation to be considered under an application so long as the other requirements are met. Subsequent separations from a different partner will attract a new three-year period if the parent has a child support case with that parent. That is, the parent would make an application in accordance with this section in relation to the new child support case. Parents will have to reapply for the lower level of income for each new child support period if applicable.

Subsection 44(1) provides that a parent (the applicant) may apply to the Registrar to amend an assessment of child support for a child for part of a child support period if certain criteria are met. These criteria are that:

(a)

the applicant and the other parent lived together on a genuine domestic basis for at least six months; and

(b)

the last separation of the applicant and the other parent before the application for administrative assessment was made occurred within the last three years; and

(c)

at the time of the application, the applicant and the other parent remain separated; and

(d)

in the last relevant year of income, the applicant earned, derived or received income in accordance with a pattern of earnings that was established after the applicant and the other parent last separated (see paragraph 44(1)(b)), and that would not have been reasonable to expect in the ordinary course of events. Income that would have been earned in the normal course of events, such as an annual pay rise, is not additional income for the purposes of paragraph 44(1)(c). An application for the lower level of income may not be necessary if, for example, the income pattern has reverted to what it was before the parents separated.

Subsection 44(2) provides that if the applicant makes an application, the Registrar may determine that the applicant's adjusted taxable income for the child for a day in the child support period is an amount that excludes the income referred to in paragraph 44(1)(d). That is, the Registrar may set the applicant's income at a level lower than that currently being used in the child support assessment.

Subsection 44(3) provides that the Registrar may only make a determination under subsection (2) if the determination:

(a)

reduces the applicant's adjusted taxable income for the child for a day in the child support period by 30% or less. Where reducing the applicant's income by all of the additional amount would reduce it by more than 30%, the Registrar can reduce it by 30%. This is consistent with the current policy treatment of extra income in the change of assessment process and ensures that children receive an adequate amount of child support; and

(b)

applies in respect of a day in a child support period that is less than three years after the day on which the applicant and the other parent last separated as mentioned in subsection 44(1)(b).

Paragraph 44(3)(b) applies as set out in the following example:

Ted has an income of $30,000 at the date of separation from his wife. After separation, his income increases to $60,000 as he takes on a second job. His child support liability is assessed on $60,000, as that was his income for last relevant year of income. Ted can apply to have his income set at $30,000 rather than $60,000, the extra $30,000 being additional income earned for re-establishment costs. However, even if his application is successful, his current income used in the assessment, that is, $60,000, can only be reduced by a maximum of 30%. Therefore, his income would be set at $42,000. Ted has $18,000 quarantined from his income before the self-support component is deducted and his children receive child support based on an income for him of $42,000.

Subsection 44(4) provides that the Registrar is to take such action as is necessary to give effect to the determination by amending any administrative assessment that has been made in relation to the child support period.

Subsection 44(5) provides that if the Registrar refuses to amend an assessment under subsection 44(1), the Registrar must serve written notice of the decision on the parent who made the application. Subsection 44(6) provides that the notice must include, or be accompanied by, a statement to the effect:

(a)

that the parent may, subject to the Child Support Registration and Collection Act, object to the particulars of the assessment in relation to which the parent sought to make the application; and

(b)

that if the parent is aggrieved by the decision, he or she may, subject to the Child Support Registration and Collection Act, apply to the SSAT for review of the decision.

Item 11 of the table in subsection 80(1) provides that a person may object to the particulars of an administrative assessment.

Subsection 44(7) provides that section 44 does not affect the operation of section 160 (notification requirements) or prevent the Registrar from making a new assessment for part of the child support period. A note at the end of the section provides that section 44 does not limit the power under section 75 to amend assessments.

Self-support amount

As with the current scheme, the self-support amount recognises the costs to the parents of supporting themselves. However, the self-support amount under the current scheme is considered too low, arguably creating a disincentive for paid work. Consequently, the self-support amount is being increased to an amount equal to 1/3rd of Male Total Average Weekly Earnings (MTAWE). In September 2005 MTAWE was $50,378, which would have made the self-support amount for 2006 $16,793. This self-support amount is defined in section 45, which also provides that the MTAWE figure to use in the calculation is the annualised MTAWE figure for the relevant September quarter. A note at the end of section 45 advises the reader that a parent's self-support amount can be varied by a Registrar-initiated determination (under section 98S) or a court order (under section 118), as is currently the case. If a parent's adjusted taxable income is less than the self-support amount, their child support income will be nil (subsection 41(5)), as only income above the self-support amount is taken into account for the assessment of child support.

Relevant dependent child amount

Under the new scheme, all biological and adoptive children are to be treated as equally as possible. Consequently, where a parent has a biological or adoptive child living with them, who is not the subject of a child support assessment, an amount is deducted from the parent's adjusted taxable income to recognise the parent's costs for supporting this child. This amount is called the relevant dependent child amount . In determining the costs of the relevant dependent child, the parent's income only is taken into account, not the income of a new partner, as it is only the parent's share of that child's costs that need to be deducted from their income.

The method for calculating the relevant dependent child amount is set out in the method statement in section 46 and is determined in accordance with the following steps.

Step 1: work out the parent's adjusted taxable income and the parent's self-support amount.

Step 2: determine the percentage of care that the parent is likely to have of the relevant dependent child during the next 12 months (see section 48). This step recognises that, although the relevant dependent child is not a child who is the subject of another child support assessment, they may be cared for part of the time by another person. If so, the cost of this child to the parent should be reduced to reflect that the parent does not meet the costs entirely.

Step 3: work out the parent's cost percentage for the child (see section 55C).

Step 4: determine the costs of the child, in accordance with sections 55G and 55H, as if the parent's annual rate of child support were assessed under Subdivision D of Division 2, based on the income of the parent from Step 1, and as if references to children in the child support case in sections 55G and 55H were references to all of the parent's relevant dependent children. The reference to Subdivision D of Division 2 ensures that subsection 55G(2) applies in working out the costs of the child, that is, that the parent's child support income alone is used to determine the costs (not the income of their new partner or other parent).

Step 5: determine the relevant dependent child amount by using the following formula:

Parent's cost percentage for the child under step 3 * Costs of the child under step 4


The operation of the formula in this step means that the cost of the relevant dependent child to the parent is the proportion of the total costs of the child that the parent bears through care of the child. If the parent has 100% care of the child, their relevant dependent child amount is 100% of the costs of the child. If the parent has, for example, 85% care of the child, their cost percentage is 76% (worked out under section 55C) and they will be taken to be meeting 76% of the child's costs.

A note at the end of the section points out that section 73A deals with the situation where the Registrar discovers, after having made an assessment, that the parent has a relevant dependent child.

Example 1 - Working out a parent's relevant dependent child amount

Johanna has a child support case for her daughter Helga, and also has two relevant dependant children, Mitchell, aged 14, and Frida, aged 11, in a new family. Mitchell and Frida live with Johanna and her new partner 100% of the time.

When Johanna is assessed for child support, a relevant dependent child amount is deducted from her income to recognise her responsibility for Mitchell and Frida. Johanna's adjusted taxable income is $36,000.

Step 1 : Work out the difference between the parent's adjusted taxable income and their self-support amount. Johanna's adjusted taxable income is $36 000 and her self-support amount is $16,883, so the amount worked out under this step is $19,117.

Step 2 : Work out the parent's percentage of care for the relevant dependent children. Mitchell and Frida live with Johanna full-time, so her percentage of care is 100%.

Step 3 : Work out the parent's cost percentage for the relevant dependent children. Johanna has 100% care of Mitchell and Frida so her cost percentage is 100%.

Step 4 : Work out the costs of the children as if calculating the costs using sections 55G and 55H and as if subsection 55G(2) applied, that is, using Johanna's child support income only. These sections say to calculate the cost by looking up the appropriate item in the Costs of the Children Table to find the costs of all the children. According to the Costs of the Children Table, the total cost of Mitchell and Frida is $5,066, so the cost of each child is $2,533.

Step 5 : Work out the parent's relevant dependent child amount by adding up the amount for each child obtained by multiplying that child's cost by the parent's cost percentage for that child. Johanna has a cost percentage of 100% for each child, and the cost for each child is $2 533, giving an amount for each child of $2,533. This makes Johanna's relevant dependent child amount $5,066.

Multi-case allowance (section 47) and multi-case cap (section 55E)

Some parents have more than one child support case, that is, they have children with more than one ex-partner. It is intended that no parent be expected to pay in child support more than their children would cost if they all lived together in one household with the parent, even if the children were born to different ex-partners. The use of the income shares model to assess child support means that this intention needs to be achieved using two separate mechanisms.

First, the child support income that is used to calculate a parent's child support liability in each case is reduced by an amount, called a multi-case allowance , to recognise the parent's obligations to the children in their other child support cases. Second, a multi-case cap is applied to the parent's liability in respect of each child for whom they are being assessed to ensure they do not pay more in child support than if the children all lived together. To ensure that children in multiple cases receive a fair amount of child support, only one of these mechanisms operates for any one child, such that where the multi-case cap applies for a child, the multi-case allowance is not deducted from the parent's income when calculating the multi-case cap for that child.

The multi-case allowance is calculated by working out the costs of each of the parent's child support children based on their income alone, according to the same Costs of the Children Table used to assess child support. This amount is the multi-case child costs for each child. The total of the multi-case child costs for all the children who are not in the particular child support case being assessed becomes the parent's multi-case allowance for the case being assessed and is deducted from the parent's adjusted taxable income for this case. This reduction in the parent's adjusted taxable income recognises that the parent bears the costs of the other child support children either through paying child support or through providing care, and that this income is therefore not available when calculating child support for the children in this case.

The multi-case cap is the parent's multi-case child costs for a particular child less their cost percentage for that child. This is because the cap recognises that the parent may be bearing some of the child's cost through regular or shared care, and this portion of the cost must be deducted from the amount payable to find the appropriate child support amount, whereas the multi-case allowance assesses the total cost. The parent will pay in child support the lesser of the amount assessed under the formula for a particular child and the multi-case cap. This ensures that the parent does not pay more than the child would cost the parent if all the children lived in the parent's household.

The method for calculating the multi-case allowance is set out in section 47 and is determined in accordance with the following steps.

Step 1: work out the parent's adjusted taxable income and deduct from this the self-support amount.

Step 2: if the parent has a relevant dependent child amount, deduct this amount from the result in Step 1, to recognise the costs to the parent of this dependent child. The amount determined from this step is the parent's child support income for calculating the costs of the multi-case children.

Step 3: determine the costs of all the children (called the multi-case children ) for whom the parent is assessed in all child support cases. This is calculated using sections 55G and 55H. Step 3 works with the effect that only the child support income of the parent being assessed for the multi-case allowance is relevant to determining the costs of the children and, also, as if the references in sections 55G and 55H to children in a child support case were references to all of the parent's multi-case children. The multi-case allowance uses one parent's income only because it is assessing only that parent's obligations to their child support children.

Step 4: work out the parent's multi-case child cost for each child by dividing the cost of the multi-case children worked out under Step 3 by the total number of multi-case children. This result is the amount that each multi-case child would cost on this parent's income alone if they all lived in the parent's household.

Step 5: the parent's multi-case allowance for a particular child in a child support case is the product of the multi-case child costs from Step 4 and the number of multi-case children in the parent's other child support cases.

When calculating the parent's child support income for the purposes of assessing how much they should pay in child support for a particular child, the amount of the multi-case allowance is then deducted from the parent's income. This has the effect of deducting the costs of the children in the other child support cases from the parent's income when calculating child support for this particular child. When child support is calculated for the other cases, the same process applies, so that the cost of this first child is excluded from the parent's income when assessing the other cases.

Example - Working out multi-case allowances

Ari has two child support cases, with two children, Tara, aged 11, and Maya, aged 9, in one case, and one child, Aron, aged 5, in the other case. He has 24% care of Tara and Maya, but less than 14% care of Aron. Ari's adjusted taxable income is $40,000, and he has no relevant dependent children.

When calculating Ari's child support for Tara and Maya, Ari has a multi-case allowance to recognise his responsibility for Aron. When calculating Ari's child support for Aron, Ari has a multi-case allowance to recognise his responsibility for Tara and Maya.

Calculating the multi-case costs of Tara, Maya, and Aron

Step 1 : Work out Ari's adjusted taxable income minus his self-support amount. Ari's adjusted taxable income is $40,000 and his self-support amount is $16,883, so the amount worked out under this step is $23,117.

Step 2 : Ari has no relevant dependent children, so he has no relevant dependent child amount.

Step 3 : Work out the costs of all the children (the multi-case children) for whom Ari is assessed using sections 55G and 55H, as if he is being assessed for child support on his income only (that is, as if subsection 55G(2) applied) and as if references to children in a child support case were references to all Ari's multi-case children.

Then, calculate the cost of the children by looking up the appropriate item in the Costs of the Children Table to find the costs of all the children. According to the Costs of the Children Table, the total cost of Tara, Maya and Aron is $6,242.

Step 4 : Work out Ari's multi-case child costs by dividing the cost of the children from Step 3 by the total number of children. $6,242 divided by three gives a cost per child of $2,081, which is the multi-case child costs for each child.

Calculating child support for Tara and Maya

Step 5 : When calculating Ari's child support for Tara and Maya, Ari has a multi-case allowance to recognise his responsibility for Aron. This multi-case allowance is the multi-case child costs from Step 4 multiplied by the number of children in other child support cases. There is one child in another child support case, Aron, so Ari's multi-case allowance when calculating child support for Tara and Maya is $2,081 multiplied by 1, or $2,081.

Calculating child support for Aron

Step 6 : When calculating Ari's child support for Aron, Ari has a multi-case allowance to recognise his responsibility for Tara and Maya. This multi-case allowance is the multi-case child costs from Step 4 multiplied by the number of children in other child support cases. There are two children in another child support case, Tara and Maya, so Ari's multi-case allowance when calculating child support for Aron is $2,081 multiplied by 2, or $4,162.

Section 55E sets out how to work out the multi-case cap in respect of a particular child. Subsection 55E(1) provides that the multi-case cap is to be used if the parent is to be assessed in another child support case, that is, they have multiple child support cases, and either of the following applies:

•

The parent's annual rate of child support for a particular child is to be assessed under section 37 (Formula 3) or section 38 (Formula 4) and, in applying these formulas, the parent has a positive child support percentage for that particular child under Step 6 of the method statement in section 35.

•

The parent's annual rate of child support for a particular child is to be assessed under section 39 (Formula 5) or section 40 (Formula 6).

Subsection 55E(2) provides that the multi-case cap is to be worked out according to the following formula:

(100% - Parent's cost percentage for the particular child for the day) * Multi-case child costs for the particular child for the day


The multi-case cap for each child is the multi-case child costs for each child, minus the costs that the parent bears directly through care (their cost percentage). This is calculated by subtracting the parent's cost percentage from 100% (to determine the cost that they are not bearing directly) and multiplying this percentage by the multi-case child costs. The effect of this is that the cap recognises that the parent may be bearing some of the child's cost through regular or shared care, and this portion of the cost must be deducted from the cost to find the appropriate child support amount, whereas the multi-case allowance assesses the total cost. The parent will pay in child support the lesser of the amount assessed under the formula for a particular child and the multi-case cap. This ensures that the parent does not pay more than the child would cost if all the children lived in the parent's household.

Example - Working out the multi-case cap

Using the immediately preceding example, because Ari has more than one child support case, the amount of child support that he can pay for each child is capped by the multi-case cap.

This ensures that Ari does not bear a greater cost for each child than he would if all the children were living with him. The multi-case cap therefore takes account of costs that Ari bears directly through care as well as the child support he pays.

The multi-case cap for each child is the multi-case child costs for each child, minus the costs that Ari bears directly through care. This is calculated by subtracting his cost percentage from 100% (to determine the cost that he is not bearing directly) and multiplying this percentage by the multi-case child costs. The multi-case child costs for each child is worked out in section 47 and is $2,081 for each of Ari's children (see example immediately before this one).

Ari has 24% care of Tara and so has a 24% cost percentage for her. Ari's multi-case cap for Tara is therefore $2,081 multiplied by (100%-24%), or $2,081 multiplied by 76%. This makes Ari's multi-case cap for Tara $1,582.

Ari has 24% care of Maya and so has a 24% cost percentage for her. His multi-case cap for Maya is therefore $2,081 multiplied by (100%-24%), or $2,081 multiplied by 76%. This makes Ari's multi-case cap for Maya $1,582.

Ari has less than 14% care of Aron and so has a 0% cost percentage for him. His multi-case cap for Aron is therefore $2,081 multiplied by (100%-0%), or $2,081 multiplied by 100%. This makes Ari's multi-case cap for Aron $2,081.

Division 4 - Percentage of care

Division 4 deals with matters relating to the care a parent, or non-parent carer, provides for a child.

Division 4, Subdivision A - Simplified outline

Subdivision A of Division 4 deals with preliminary matters for the Division. Section 47A sets out a simplified outline of the Division. It provides that a parent's or non-parent carer's percentage of care for a child for a day in a child support period is the percentage of care of the child that the person is likely to have during a 12 month period.

A percentage of care for the child is as determined by an oral agreement or a parenting plan made by the parents of the child (or a parent and a non-parent carer), or by a court order.

The Registrar can make a determination of a parent's percentage of care for a child in certain cases (such as if there is no such agreement, plan or order, or if the care of the child changes).

A parent's percentage of care for a child is used in section 55C to work out the parent's cost percentage of the child.

A non-parent carer's cost percentage for a child is used in section 40A to work out how much child support the non-parent carer is entitled to for the child.

Section 47B provides that, for the purposes of this division, court order means one of the following:

(a)

a family violence order within the meaning of section 4 of the Family Law Act; or

(b)

a parenting order within the meaning of section 64B of the Family Law Act; or

(c)

a State child order registered in accordance with section 70D of the Family Law Act; or

(d)

an overseas child order registered in accordance with section 70G of the Family Law Act.

Division 4, Subdivision B - Determining percentages of care

Subdivision B of Division 4 deals with how to determine percentages of care for a care period.

Percentage of care

Section 48 provides that a person's percentage of care for a day in a child support period is the percentage of care of the child that the person is likely to have for a child during a period of 12 months, called the care period. Paragraph 48(1)(a) states that the care period will start from the day on which an application for an assessment of child support is made (under section 25 or 25A). Alternatively, it may start on one of the following days:

•

The day the Registrar becomes aware of a change in care arrangements that results in a change of at least 7.1%, that is, the equivalent of one night per fortnight (subparagraph 48(1)(b)(i)). This threshold level of change allows for minor fluctuations in the care arrangements (for example, due to illness), which do not constitute a significant change to the pattern of care.

•

The day the Registrar becomes aware of a change in care arrangements that results in a parent either starting to have, or ceasing to have, 14% care of the child (subparagraphs 48(1)(b)(ii) and (iii)). This rule applies because, at this level of care, the parent is recognised as meeting 24% of the costs of the child. However, if care is below 14%, the parent is taken not to be incurring any costs for the child. It would be inequitable to not recognise that these costs are incurred by the parent as soon as they start to provide 14% care. Equally it would be inequitable to assume that the parent continued to meet those costs when their care fell below 14%.

The change in care is measured in relation to the 12 months from the date the Registrar is notified or becomes aware of the change.

A note at the end of subsection 48(1) advises the reader that, by virtue of subsection 75(2), the Registrar is not entitled to amend an administrative assessment in respect of a person's percentage of care unless the Registrar become aware of an event mentioned in paragraph 48(1)(b). A further note at the end of subsection 48(2) advises the reader that the Registrar will generally rely on nights to calculate the percentage of care. However, this will not always be the case. For example, where there is daytime care or a mixture of daytime and night time care, the Registrar may take this into account in determining the percentage of care.

Subsection 48(2) provides that a person's percentage of care is to be worked out in this Subdivision B.

Subsection 48(3) provides a rounding rule for percentage of care calculations. It states that if a person's percentage of care worked out in accordance with Subdivision B is not a whole percentage, it is to be rounded up to the nearest whole percentage if it is greater than 50% and rounded down to the nearest whole percentage if it is less than 50%

Section 49 provides that, generally, the percentage of care, if any, that a parent or non-parent carer is likely to have will be determined in accordance with the care arrangements agreed between the parents or with a court order.

In the situation where a non-parent carer has made an application against one parent only (because, for example, the other parent is dead or a non-resident of Australia), the percentage of care will be determined from an oral or written agreement between the non-parent carer and the parent, or a court order (paragraph 49(a)). In all other cases, whether involving only the parents or involving non-parent carers as well, the care arrangements, and therefore the percentage of care, will be determined by an oral agreement between the parents, a parenting plan or a court order, provided that whichever is used contains sufficient information about the care arrangements to enable such a determination to be made (paragraph 49(1)(b)).

If there is no parenting plan or court order specifying the care levels, and the parents have not come to an oral agreement for child support purposes, the Registrar is required to make a factual determination of the percentage of care each parent, or non-parent carer (if there is one) is likely to have, taking into account such period of time as is necessary to be satisfied of a pattern of care (see section 50). Subsection 50(2) provides that, in making this determination, the Registrar must take into account such period of time as is necessary to be satisfied that there is, has been or will be a pattern of care for the child. For example, if a parent has had care of the children every 2nd weekend for the past three months the Registrar can take this past period into account in determining that the percentage of care that the parent is likely to have during the next 12 months is based on the parent continuing to provide this amount of care.

Subsection 50(3) enables the Registrar to revoke or vary a determination made under this section.

Division 4, Subdivision C - Changes to percentages of care

Section 51 provides that where the most recent agreement between the parents is an oral agreement, and one parent ceases to agree to the oral agreement, the Registrar will revert to the most recent parenting plan or court order to determine the percentage of care each parent is likely to have. If a parent disagrees with an oral agreement and there is no previous parenting plan or court order, the Registrar will make a factual determination as to the care arrangements.

For example, the parents in a child support case enter into a parenting plan that provides the first parent with 80% care and the other parent with 20% (regular care). After six months, both parents advise the Child Support Agency that they have agreed orally to change to shared care arrangements where they have an equal care percentage. A year after the oral agreement is entered into, the first parent advises the Child Support Agency that the other parent is not exercising their care and the first parent no longer agrees to the shared care arrangements. In this case, the Registrar would vary the care percentages in the parents' assessment to reflect the care percentages in the parenting plan. The Registrar would vary the assessment immediately upon being advised that one parent no longer agrees with the oral agreement. However, if one, or both, parents disagrees with the care percentages under the parenting plan, the Registrar can only vary the assessment with reference to section 52. Oral and written agreements are treated differently because written agreements provide clearer evidence of parents' having made an agreement about future arrangements for care.

Section 52 gives the Registrar a discretion to determine the percentage of care of a child that a parent, or non-parent carer, is likely to have if the parent and/or non-parent carer argues that the level of care that is actually occurring is different from that specified in the agreement, parenting plan or court order that was used (under section 49) to determine the parent's, or non-parent carer's, percentage of care. The Registrar can determine that the parent or non-parent carer's percentage of care is different from that set out in the agreement, parenting plan or court order provided that all the following criteria are met:

•

In the circumstances of the case, the care percentage determined from the existing agreement, parenting plan or court order that is used for the calculation of child support, would be an unjust and inequitable determination of the level of financial support to be provided by a parent for the child (paragraph 52(1)(c)).

•

At least one of the parents, or the non-parent, has taken reasonable action to seek agreement about the care arrangements for the child, or to seek or enforce a court order dealing with care arrangements. What constitutes reasonable action will depend on the particular circumstances of the case and there may be some circumstances in which it is not reasonable for parents to take action to seek agreement. However, reasonable action could include, for example, attempting to resolve the matter through mediation or counselling or seeking a new court order (paragraph 52(1)(d)).

•

The parent or non-parent carer of the child applies for the Registrar to make this determination (paragraph 52(1)(e)).

Subsection 52(2) requires the Registrar to consider such period of time as is necessary to be satisfied that there is, has been, or will be, a particular pattern of care for the child.

Subsection 52(3) enables the Registrar to revoke or vary a determination made under section 52 at any time.

If the parents, or non-parent carer, have not resolved the conflict over the care arrangements before the end of six months from when the Registrar makes a determination under section 52, the Registrar must review the determination and has the discretion to make another determination, provided all the criteria in subsection 52(1) can still be satisfied (subsection 52(4)). The reason for limiting these determinations to six months is to reflect the principle of shared parental responsibility underlying family law and child support, which is that parents should be encouraged to agree about matters concerning their children, to take responsibility for their parenting arrangements and seek to resolve conflict about parenting arrangements. Ideally, the Registrar will not be required to determine care arrangements beyond six months, rather the parents will resolve the issues and reach agreement.

A note at the end of subsection 52(1) advises the reader that if the Registrar refuses to make a determination under this section, the Registrar must give the applicant a notice under section 54.

Section 53 enables the Registrar to determine the percentage of care that a parent or non-parent carer is likely to have during a care period if one parent was to have at least regular care of a child during the period and they did not provide that level of care, despite the child being available to them. This rule recognises that, given a parent gets a significant reduction in their child support liability because they are credited with meeting the costs of a child through regular care, they should not be entitled to the reduction if they fail to provide care at that level. In this situation, the other parent, or non-parent carer, is actually bearing the costs of the child and this should be reflected in the assessment.

For example, a parent's parenting plan may say they have care of a child every second weekend. This means they have regular care (expressed as a percentage of care of 14%) and are taken to be meeting 24% of the costs of the child through this care, thereby reducing the amount they would otherwise pay in child support. If, despite the parenting plan, the parent stops caring for the child every fortnight, and their pattern of care becomes a weekend every month, it would be inequitable for the parent to continue to get a 24% reduction in their child support because they no longer bear significant costs for the child through care.

Paragraph 53(1)(c) requires that a parent must apply to the Registrar for a determination under section 53 to be made.

A note at the end of subsection 53(1) advises the reader that if the Registrar refuses to make a determination under this section, the Registrar must give the applicant a notice under section 54.

Subsections 53(2) and (3) provide that subsections 53(4) and (5) determine the date of commencement of a determination under section 53 and that this date may be retrospective, where appropriate.

Subsection 53(4) states that the new determination of the percentage of care must be prospective, that is, the day the determination is made or a future date. Subsection 53(5) says the rule in subsection 53(4) will not apply if the other parent, or non-parent carer, could not reasonably have known that regular care was not occurring or would not occur. It would be reasonable for a parent not to have known that regular care would not occur in the following example.

Jack's parenting plan with Emily, made in March 2006, states that he will have Tommy for nine weeks over the Christmas school holiday period. This agreed pattern of care gives Jack regular care for the purposes of an assessment and so, in March 2006, when the administrative assessment was made, Jack was given a 24% reduction in his child support for this care. Jack tells Emily in November 2006 that he cannot care for Tommy for the Christmas school holiday period due to his work commitments. If Jack does not provide this care, he does not fulfil his obligation to provide the percentage of care needed for regular care. Until November 2006, Emily could not reasonably have known that Jack would not provide this care over the Christmas break. In this situation, the Registrar can determine that Jack never established a pattern of regular care that justified the credit he received for regular care and can backdate, to March 2006, a determination that sets Jack's percentage of care to less than regular care.

Subsection 53(6) makes it clear that a parent never establishes a pattern of care if the pattern could not have been established until later in the child support period, as occurred in the example of Jack and Emily.

Subsection 54(1) provides that if the Registrar refuses to make a determination under section 52 or 53, the Registrar must serve written notice of the decision on the person who made the application. Subsection 54(2) provides that the notice must include, or be accompanied by, a statement to the effect that the person may (subject to the Child Support Registration and Collection Act) object to the particulars of the assessment and if the person is aggrieved by the decision on objection, they can apply to the SSAT for review of the decision.

Division 4, Subdivision D - Where there is more than one agreement, plan, order or determination

Subsection 55(1) provides that if there is more than one oral agreement, parenting plan or court order under section 49, or Registrar determination under section 50, 52 or 53, the percentage of care that a parent is likely to have during the care period is to be determined by the most recent of the agreement, plan, court order or determination. The purpose of this provision is to ensure that parents reach agreement about care arrangements and adhere to the agreement unless they agree otherwise. For example, if there is an oral agreement that is later replaced by a parenting plan, and one of the parents then argues that the level of care actually being provided is not what is provided for in the plan and the (older) oral agreement more accurately reflects the care provided by the other parent, the Registrar will not revert to basing the percentage of care on the previous oral agreement (unless the parents both agree, in which case there is a new oral agreement that takes precedence over the parenting plan). If parents dispute the percentage of care actually occurring, they must seek to resolve the matter and reach a new oral agreement or parenting plan, or seek a court order. If the parents cannot agree and one parent applies to the Registrar under section 52, the Registrar may make a factual determination of the care arrangements if the criteria in section 52 are met.

Subsection 55(2) provides that the most recent agreement, plan or determination is subject to any court order made in respect of the parents of the child that specifies that the order cannot be altered by agreement between the parents.

Division 5 - Working out other elements for the formulas

Division 5, Subdivision A - Simplified outline

Section 55A sets out a simplified outline of other elements used in the formulas. It provides that a parent's income percentage represents:

•

the parent's capacity to meet the costs of their child; and

•

the extent that the parent is taken to have met the costs of the child through providing care for the child.

Section 55A also provides that the parent's child support percentage is the difference between the parent's income percentage and his or her cost percentage. If the parent has a positive child support percentage, the annual rate of child support payable by the parent is that percentage of the costs of the child. If the parent has multiple child support cases, the annual rate of child support payable by the parent is capped by the parent's multi-case cap for the child.

Division 5, Subdivision B - Working out other elements for the formulas

Subdivision B of Division 5 deals with how to work out other elements for the formulas, including income percentages, cost percentages, child support percentages and the multi-case cap.

Income percentages

Section 55B sets out how to work out a parent's income percentage for a day in the child support period. Each parent's percentage contribution to the combined child support income is called their income percentage. Section 55B provides that the formula for working out the parent's income percentage is the parent's child support income divided by the combined child support income, as follows:

Parent's child support income for the child for the day / Parent's combined child support income for the child for the day


This formula works in the following way. If Jack's child support income is $40,000 and Carla's is $25,000, the combined child support income is $65,000. Jack's income percentage is $40,000 divided by $65,000, which is 61.54%. Carla's income percentage is $25,000 divided by $65,000, which is 38.46%.

In determining the percentages, section 55B states that each percentage is worked out to two decimal places, rounding up if the third decimal place is five or more.

Cost percentages

Section 55C sets out how to work out cost percentages. A parent's or non-parent carer's cost percentage for a child is the amount of credit, expressed as a percentage, that the parent is given for providing care for a child. It is worked out according to the table in section 55C, set out below.

Once a parent's or non-parent carer's percentage of care is determined, this percentage is translated into a cost percentage by identifying the relevant percentage of care in column 1 of the table and then identifying the corresponding row in column 2 to locate the appropriate cost percentage.

For example, if a parent has zero to less than 14% care of a child (row 1, column 1) they have a cost percentage in row 1, column 2 of nil. Consequently, this parent is taken not to be incurring any costs for the child. Once a parent provides 14% care (row 2, column 1), they have a cost percentage of 24% (row 2, column 2) and are taken to be incurring 24% of the costs of the child. Similarly, a parent who provides more than 86% care of a child (row 7, column 1) is taken to be incurring 100% of the costs (row 7, column 2). In this latter situation, the parent is taken to be incurring 100% of the costs because any other care provided for the child must be less than 14%, and if a person provides this amount of care they are taken not to be meeting any costs of the child.

Child support percentages

Section 55D sets out how to work out a parent's child support percentage. A parent's child support percentage is used in the formulas to determine the proportion of the costs of a child that a parent should transfer to the other parent or carer, according to that parent's share of the combined child support income and costs borne through care. Each parent will have a child support percentage, and section 55D provides it is calculated by deducting the parent's cost percentage (the credit they receive for their percentage of care) from their income percentage (their proportion of the combined child support income), as per the following formula.

The calculation under this formula has the effect that the proportion of the costs of the child that the parent is otherwise required to pay (their income percentage) is reduced by the amount of care they provide for the child (their cost percentage), recognising that they meet these costs through the care they provide.

Multi-case cap

Section 55E sets out how to work out a parent's multi-case cap if the following criteria apply (subsection 55E(1)):

•

a parent is to be assessed for child support under Formula 3, 4, 5 or 6 (in sections 37, 38, 39 and 40); and

•

if Formula 3 or 4 (section 37 or 38), applies, the parent has a positive child support percentage for the particular child under Step 6 of the method statement in Formula 1 (section 35); and

•

the parent is assessed in respect of children in other child support cases.

Subsection 55E(2) provides that the parent's multi-case cap for a child is worked out using the formula:

(100% - Parent's cost percentage for the particular child for the day) * Multi-case child costs for the particular child for the day


This works with the effect that the multi-case cap is the parent's multi-case child costs for a particular child less their cost percentage for that child. This is explained more fully, with an example, in this explanatory memorandum above under Division 3 under the heading Multi-case allowance (section 47) and multi-case cap (section 55E).

Division 6 - The costs of the child

Division 6, Subdivision A - Preliminary

Subdivision A of Division 6 sets out a simplified outline of the Division at section 55F, which provides that the costs of children are worked out using the rules in Division 6 as well as the Costs of the Children Table in Schedule 1. The costs of the children are based on the number of children in a child support case and the ages of those children. These costs are divided by the number of children in the child support case to determine the costs of the particular child. The Costs of the Children Table is updated each year to reflect changes to the annualised MTAWE figure.

Division 6, Subdivision B - The costs of the child

Subdivision B of Division 6 sets out how to use the Costs of the Children Table, which is inserted as Schedule 1 to the Child Support Assessment Act by item 2 of this Schedule.

First, it is necessary to identify the column in the Costs of the Children Table that covers the parents', or parent's, relevant income range.

If both parents are assessed for child support (that is, they are assessed under section 35 (Formula 1), section 36 (Formula 2), section 37 (Formula 3) or section 38 (Formula 4), the relevant column is the one that covers the parents' combined child support income (subsection 55G(1)).

A note at the end of subsection 55G(1) advises the reader that the Secretary publishes the updated Costs of the Children Table in the Gazette each year for child support periods that being in the next year (see section 155).

If only one parent is assessed for child support (that is, they are assessed under section 39 (Formula 5) or section 40 (Formula 6), the relevant column is the one that covers the parent's child support income (subsection 55G(2)). A note at the end of subsection 55G(2) alerts the reader to the fact that this subsection also applies in working out the relevant dependent child amount and the multi-case allowance (see Step 4 of the method statement in section 46 and Step 3 of the method statement in section 47).

It is then necessary to identify the number of children (the child support children) in the child support case that relates to the child of the particular assessment (subsection 55G(3)).

Next, identify the ages of the child support children at the time the administrative assessment is made. If there are more than three child support children in the case, the ages of the oldest three children are to be used (subsection 55G(4)).

Next, identify the item in the Costs of the Children Table that covers that number of child support children of those ages (subsection 55G(5)). The amount worked out for the item is the costs of the children ((subsection 55G(6)).

Having worked out the costs of the children, section 55H provides for how to work out the costs of a child for a day. It provides that if there is only one child support child, the costs of the child are the costs of the children calculated under section 55G (paragraph 55H(a)). If there is more than one child, the costs of the child is the costs of the children calculated under section 55G, divided by the number of children in the child support case (paragraph 55H(b)).

Division 2 - The formulas

Division 2, Subdivision B - Working out annual rates of child support using incomes of both parents in single child support case

Section 35D provides that Subdivision B of Part 5 is to be used to determine the annual rate of child support payable where both parents are to be assessed in respect of the costs of a child for whom they are both the parents and neither of them has children in a different child support case. There are two formulas in Subdivision B, as set out in section 35 (Formula 1) and section 36 (Formula 2).

Formula 1 - two parents, single child support case, no non-parent carer

Section 35 sets out the method statement to use to calculate the annual rate of child support payable for a child for a day in a child support period if no non-parent carer has a percentage of care for the child during the relevant care period. It comprises the following steps.

Step 1 requires each parent's child support income for the child for the day to be worked out (see section 41).

Step 2 requires the parents' combined child support income for the child for the day to be worked out (see section 42).

Step 3 requires each parent's income percentage for the child for the day to be worked out (see section 55B).

Step 4 requires each parent's percentage of care for the child to be worked out (see sections 48).

Step 5 requires each parent's cost percentage for the child for the day to be worked out (see section 55C).

Step 6 requires each parent's child support percentage to be worked out (see section 55D).

Step 7 requires the costs of the child for a day to be worked out (see sections 55G and 55H).

Step 8 provides that if the parent has a positive child support percentage, under step 6, the annual rate of child support payable by the parent for the child for the day is worked out using the following formula:

Parent's child support percentage for the child for the day * Costs of the child for the day


The formula works, therefore, by first establishing the income each parent has available to contribute to the costs of their child. Combining both parents' child support incomes pools the total resources available for meeting the child's costs and is also used to calculate the actual costs of the child, because the costs of the child are based on how much parents have available to spend on them. A parent's child support percentage is the percentage that is used to determine how much of the costs of a child the parent will be responsible for. It is calculated by deducting the parent's cost percentage for the child from their income percentage. This has the effect that the income the parent has available to support the child is reduced by the amount of care they provide for the child, recognising that they meet these costs by providing the care. If the parent is the main carer for the child, generally, they will not have a positive child support percentage because their cost percentage will be equal to or more than their income percentage. However, a note at the end of section 35 makes it clear that, if a parent has a percentage of care that is more than 65%, the parent's rate of child support is nil (see section 40C).

Where a parent does have a positive child support percentage, they are required to the pay the amount worked out by multiplying the child support percentage by the costs of the child.

The effect of this is that each parent will meet the costs of the child according to their capacity to pay, after taking into account the costs they have met by providing care.

Example 1 - Formula 1 - one parent with regular care

Joseph and Elly have three children, Paul, who is 9, Jack, who is 7, and Kylie, who is 5. They separate, and the children live with Elly most of the time, but spend every second weekend and some school holidays with Joseph, as well as some evenings during the week.

Their care arrangements are flexible, but for all the children Joseph's care level amounts to regular care of between 14% and 34%. Joseph has an adjusted taxable income of $50,000 and Elly has an adjusted taxable income of $30,000. Neither Joseph nor Elly has a relevant dependent child.

Step 1 : Work out each parent's child support income by deducting the self-support amount of $16,883 from each of their incomes. This gives Joseph a combined child support income of $33,117 and Elly a Child Support Income of $13,117.

Step 2 : Work out the parents' combined child support income by adding together their child support incomes. Joseph and Elly's combined child support income is $33,117 + $13,117, or $46,234.

Step 3 : Work out each parent's income percentage by dividing their child support income by their combined child support income from Step 2. For Joseph this is $33,117 divided by $46,234, or 71.63%, and for Elly this is $13,117 divided by $46,234, or 28.37%.

Step 4 : Work out the percentage of care that each parent will have of each child. Joseph has between 14% and 34% care of Paul, Jack, and Kylie. Elly has between 66% and 86% care of Paul, Jack, and Kylie.

Step 5 : Work out each parent's cost percentage for each child by looking up the table in section 55C. Joseph has a cost percentage of 24% for Paul, Jack, and Kylie, and Elly has a cost percentage of 76% for Paul, Jack, and Kylie.

Step 6 : Work out each parent's child support percentage for each child by subtracting their cost percentage for that child from their income percentage.

Joseph has a child support percentage of 71.63% - 24% = 47.63% for Paul, Jack, and Kylie.

( This means that Joseph is responsible for 71.63 % of the children's cost because he has 71.63 % of the combined child support income, but he bears 24 % of the cost through care, so he needs to transfer 47.63 % of the cost to Elly through child support .)

Elly has a child support percentage of 28.37% - 76% = -47.63% for Paul, Jack, and Kylie. This is taken to be nil, as it is negative.

( This means that Elly is responsible for 28.37 % of the children's cost because she has 28.37 % of the combined child support income, and bears 76 % of the cost through care, so she is entitled to child support from Joseph .)

Step 7 : Work out the costs of each child.

Joseph and Elly's combined child support income is $46,234 and, according to the Costs of the Children Table, this makes the total cost of the children $12,274. This is divided by three (the total number of children), giving a cost for each child of $4,091.

Step 8 : If a parent has a positive child support percentage, this is the share of the cost of the child that they need to transfer to the other parent.

As noted in Step 6, Joseph has a child support percentage of 47.63% for Paul, Jack, and Kylie, and so needs to transfer 47.63% of their costs to Elly through child support. The cost of each child is $4,091 and 47.63% of this is $1,949, so this is what Joseph owes in child support for each child. The total that Joseph needs to transfer for Paul, Jack, and Kylie is $5,847.

Elly has a nil child support percentage for Paul, Jack, and Kylie, and so does not need to transfer any child support.

Joseph transfers $5,847 to Elly. He bears $2,946 (24% of the children's cost) through care. Elly meets her share of the cost, $3,481 (28.37% of the cost, since she has 28.37% of the combined child support income) directly through care. She uses the child support from Joseph to meet the remainder of the costs that she bears through care.

Example 2 - Formula 1 - shared care, one child with each parent

Peter and Amy have two children, Jamie, who is 13, and Elissa, who is 9. They separate, and Jamie lives with Peter 100% of the time and Elissa lives with Amy 100% of the time. Peter has an adjusted taxable income of $40,000 and Amy has an adjusted taxable income of $30,000. Neither Peter nor Amy has a relevant dependent child.

Step 1 : Work out each parent's child support income by deducting the self-support amount of $16,883 from each of their incomes. This gives Peter a child support income of $23,117 and Amy a child support income of $13,117.

Step 2 : Work out the parents' combined child support income by adding together their child support incomes. Peter and Amy's combined child support income is $23,117 + $13,117, or $36,234.

Step 3: Work out each parent's income percentage by dividing their child support income by their combined child support income from Step 2. For Peter this is $23,117 divided by $36,234, or 63.80%, and for Amy this is $13,117 divided by $36,234, or 36.20%.

Step 4 : Work out the percentage of care that each parent will have of each child. Peter has 100% care of Jamie, and Amy has 100% care of Elissa.

Step 5 : Work out each parent's cost percentage for each child by looking up the table in section 55C. Peter has a cost percentage of 100% for Jamie and 0% for Elissa, and Amy has a cost percentage of 0% for Jamie and 100% for Elissa.

Step 6 : Work out each parent's child support percentage for each child by subtracting their cost percentage for that child from their income percentage.

Peter has a child support percentage of 63.80% - 100% = -36.20% for Jamie. This is taken to be nil, as it is negative.

( This means that Peter is responsible for 63.80 % of Jamie's cost because he has 63.80 % of the combined child support income, but he bears 100 % of Jamie's cost through care, so he is entitled to child support from Amy .)

Peter has a child support percentage of 63.80% - 0 = 63.80% for Elissa.

( This means that Peter is responsible for 63.80 % of Elissa's cost, and does not bear any of the cost through care, so he needs to transfer 63.80 % of the cost to Amy through child support .)

Amy has a child support percentage of 36.20% - 0 = 36.20% for Jamie.

( This means that Amy is responsible for 36.20 % of Jamie's cost because she has 36.20 % of the combined child support income, and does not bear any of the cost through care, so she needs to transfer 36.20 % of the cost to Peter through child support .)

Amy has a child support percentage of 36.20% - 100% = -63.80% for Elissa. This is taken to be nil, as it is negative.

( This means that Amy is responsible for 36.20 % of Elissa's cost, but she bears 100 % of the cost through care, so she is entitled to child support from Peter .)

Step 7 : Work out the costs of each child. Peter and Amy's combined child support income is $36,234 and, according to the Costs of the Children Table, this makes the total cost of the children $9,493. This is divided by two (the total number of children), giving a cost for each child of $4,747.

Step 8 : If a parent has a positive child support percentage, this is the share of the cost of the child that they need to transfer to the other parent.

As noted in Step 6, Peter has a nil child support percentage for Jamie, and so does not need to transfer any child support for him (he is entitled to child support from Amy for Jamie). Peter has a child support percentage of 63.80% for Elissa, and so needs to transfer 63.80% of her costs to Amy through child support. Elissa's cost is $4,747 and 63.80% of this is $3,029, so this is what Peter owes in child support for Elissa.

Amy has a child support percentage of 36.20% for Jamie, so needs to transfer 36.20% of his costs to Peter through child support. Jamie's cost is $4,747 and 36.20% of this is $1,718, so this is what Amy owes in child support for him. Amy has a nil child support percentage for Elissa, and so does not need to transfer any child support for her (she is getting child support from Jamie for Elissa).

The amount that Peter needs to transfer to Amy ($3,029) and the amount that Amy needs to transfer to Peter ($1,718) are offset, giving an amount of $1,311, which Peter transfers to Amy.

Even though Peter and Amy each have full care of a child, Peter has a higher income than Amy, and so there is some child support payable to Amy.

Example 3 - Formula 1 - shared care and a relevant dependant child

Tim and Wei Ling have two children, Jeremy, who is 15, and Alice, who is 13. Tim and Wei Ling have separated. Jeremy lives with Tim most of the time, but spends every second weekend and some school holidays with Wei Ling, so that Wei Ling has a care level of 24% for Jeremy and Tim has 76% care. Alice lives with Tim one week and Wei Ling the next, so that they each have 50% care of Alice. Tim has an adjusted taxable income of $40,000 and Wei Ling also has an adjusted taxable income of $40,000. Wei Ling has a new relevant dependent child, who is 9.

Step 1 : Work out each parent's child support income by deducting the self-support amount of $16,883 from each of their incomes. Wei Ling has a relevant dependent child amount that is also deducted from her income. This amount is worked out according to section 47 and is $3,930. This gives Tim a child support income of $23,117 and Wei Ling a child support income of $19,187.

Step 2 : Work out the parents' combined child support income by adding together their child support incomes. Tim and Wei Ling's combined child support income is $23,117 + $19,187, or $42,304.

Step 3 : Work out each parent's income percentage by dividing their child support income by their combined child support income from step 2. For Tim this is $23,117 divided by $42,304, or 54.64%, and for Wei Ling this is $19,187 divided by $42,304, or 45.36%.

Step 4 : Work out the percentage of care that each parent will have of each child. Tim has 76% care of Jeremy and 50% care of Alice. Wei Ling has 24% care of Jeremy and 50% care of Alice.

Step 5 : Work out each parent's cost percentage for each child by looking up the table in section 55C. Tim has a cost percentage of 76% for Jeremy and 50% for Alice, and Wei Ling has a cost percentage of 24% for Jeremy and 50% for Alice.

Step 6 : Work out each parent's child support percentage for each child by subtracting their cost percentage for that child from their income percentage.

Tim has a child support percentage of 54.64% - 76% = -21.36% for Jeremy. This is taken to be nil, as it is negative.

( This means that Tim is responsible for 54.64 % of Jeremy's cost because he has 54.64 % of the combined child support income, and he bears 76 % of the cost through care, so he is entitled to child support from Wei Ling .)

Tim has a child support percentage of 54.64% - 50% = 4.64% for Alice.

( This means that Tim is responsible for 54.64 % of Alice's cost because he has 54.64 % of the combined child support income, and he bears 50 % of the cost through care, so he needs to transfer 4.64 % of the cost to Wei Ling through child support .)

Wei Ling has a child support percentage of 45.36% - 24%, or 21.36% for Jeremy.

( This means that Wei Ling is responsible for 45.36 % of Jeremy's cost because she has 45.36 % of the combined child support income, and bears 24 % of the cost through care, so she needs to transfer 21.36 % of the cost to Tim through child support .)

Wei Ling has a child support percentage of 45.36% - 50%, or -4.64% for Alice. This is taken to be nil, as it is negative.

( This means that Wei Ling is responsible for 45.36 % of Alice's cost because she has 45.36 % of the combined child support income, and bears 50 % of the cost through care, so she is entitled to child support from Tim .)

Step 7 : Work out the costs of each child.

Tim and Wei Ling's combined child support income is $42,304 and, according to the Costs of the Children Table, this makes the total cost of the children $12,098. This is divided by two (the total number of children), giving a cost for each child of $6,049.

Step 8 : If a parent has a positive child support percentage, this is the share of the cost of the child that they need to transfer to the other parent.

As noted in Step 6, Tim has a nil child support percentage for Jeremy and so does not need to transfer any child support for him - he is getting child support from Wei Ling for Jeremy.

Tim has a child support percentage of 4.64% for Alice, so he needs to transfer 4.64% of Alice's cost to Wei Ling through child support. Alice's cost is $6,049 and 4.64% of this is $280, so this is what Tim owes in child support for Alice.

Wei Ling has a child support percentage of 21.36% for Jeremy, so she needs to transfer 21.36% of Jeremy's cost to Tim through child support. Jeremy's cost is $6,049 and 21.36% of this is $1,292, so this is what Wei Ling owes in child support for Jeremy.

Wei Ling has a nil child support percentage for Alice, and so does not need to transfer any child support for her - she is getting child support from Tim for Alice.

The amount that Tim needs to transfer to Wei Ling ($280) and the amount that Wei Ling needs to transfer to Tim ($1,292) are offset (under section 67A), giving an amount of $1,012, which Wei Ling transfers to Tim.

Formula 2 - two parents, single child support case, one or more non-parent carers

Subsection 36(1) states that section 36 sets out how to calculate the annual rate of child support payable for a child for a day in a child support period if a non-parent carer has a percentage of care for a child for a day in the child support period (Formula 2)

Initially, Formula 2 applies in exactly the same way as Formula 1. This is because, if a non-parent carer is providing care, the assessment is still worked out using both parents' incomes, cost percentages and child support percentages. The only information about the non-parent carer that is relevant to the assessment is their cost percentage (based on their percentage of care). It is only the manner in which each parent's annual rate of child support payable is distributed that differs from Formula 1, as part of the child support needs to be paid to the non-parent carer to contribute to their costs for caring for the child.

Consequently, subsection 36(2) requires Steps 1 to 8 of Formula 1 to be followed except that the rule in subsection 55D(2), which states that a parent's child support percentage is to be disregarded if it is negative, is ignored.

Subsection 36(3) then provides that if the first parent's child support percentage under Step 6 of the method statement in Formula 1 is positive, the annual rate of child support payable by the first parent for the child is the annual rate worked out under Step 8 of the method statement in Formula 1.

Subsection 36(4) states the rule for when an annual rate of child support for a child is payable only to a non-parent carer or carers. It provides that if the second parent's child support percentage is also positive, the first parent must pay the annual rate of child support worked out under Step 8 of Formula 1 to the non-parent carer. Similarly, if the second parent's child support percentage is negative, but they do not have at least shared care of the child, the first parent must pay the annual rate of child support payable under Step 8 of Formula 1 to the non-parent carer. This is because the second parent is not entitled to any child support unless they have at least shared care of the child.

Section 40A sets out how to distribute a parent's annual rate of child support if there is more than one non-parent carer (see Division 2, Subdivision E below).

Note 1 at the end of subsection 36(4) points out that if both parents have a positive child support percentage, the non-parent carer or carers are entitled to be paid the total of the two annual rates of child support.

A further note, Note 2, points out that a non-parent carer is not entitled to be paid child support unless they make an application under section 25A in relation to the child. This is because subsection 40B(2) requires a non-parent carer to apply for an assessment if they want to be paid child support in respect of a child.

Subsection 36(5) deals with how an annual rate of child support is to be distributed if it is payable to both the other parent and a non-parent carer. Paragraph 36(5)(a) provides that if the second's parent's child support percentage is negative and the second parent has at least shared care of the child, the first parent must pay the annual rate of child support payable under Step 8 of Formula 1 to the second parent using the second parent's negative child support percentage as a positive. For example, if Betty, the second parent, has a child support percentage of -35%, it is taken to be 35%, and she is entitled to be paid 35% of the first parent's annual rate of child support.

Providing the non-parent carer has applied to be paid child support, paragraph 36(5)(b) then requires the non-parent carer to be paid the difference between the annual rate payable by the first parent and the amount paid to the second parent. In the example above, Betty is entitled to 35% of the first parent's annual rate of child support for the child, so the non-parent carer would be entitled to the remaining 65%. (Note that this method of distribution does not apply if the first parent's annual rate of child support for the child is determined by the multi-case cap (see section 55E)).

Example 1 - Formula 2 - one non-parent carer, one parent with care

Ben and Jacki have two children, Tom, who is 4, and Shona, who is 2. They separate, and Tom and Shona live with Ben's mother, Lisa, most of the time, but Ben has regular care of 24% of Tom. Jacki has less than 14% care of both children. Ben has an adjusted taxable income of $45,000 and Jacki has an adjusted taxable income of $25,000. Neither Ben nor Jacki has a relevant dependent child.

Step 1 : Work out each parent's child support income by deducting the self-support amount of $16,883 from each of their incomes. This gives Ben a child support income of $28,117 and Jacki a child support income of $8,117.

Step 2 : Work out the parents' combined child support income by adding together their child support incomes. Ben and Jacki's combined child support income is $28,117 + $8,117, or $36,234.

Step 3 : Work out each parent's income percentage by dividing their child support income by their combined child support income from Step 2. For Ben this is $28,117 divided by $36,234, or 77.60%, and for Jacki this is $8,117 divided by $36,234, or 22.40%.

Step 4 : Work out the percentage of care that each parent or non-parent carer will have of each child. Ben has 24% care of Tom, and Lisa has 76% care of Tom and 100% care of Shona. Jacki does not have any care of the children.

Step 5 : Work out each parent and non-parent carer's cost percentage for each child by looking up the table in section 55C. Ben has a cost percentage of 24% for Tom and 0% for Shona, Jacki has a cost percentage of 0% for Tom and Shona, and Lisa has a cost percentage of 76% for Tom and 100% for Shona.

Step 6 : Work out each parent's child support percentage for each child by subtracting their cost percentage for that child from their income percentage.

Ben has a child support percentage of 77.60% - 24% = 53.60% for Tom.

( This means that Ben is responsible for 77.60 % of Tom's cost because he has 77.60 % of the child support income, but he bears 24 % of Tom's cost through care, so he needs to transfer 53.60 % of Tom's cost through child support .)

Ben has a child support percentage of 77.60% - 0 = 77.60% for Shona.

( This means that Ben is responsible for 77.60 % of Tom's cost, and does not bear any of the cost through care, so he needs to transfer 77.60 % of Shona's cost through child support .)

Jacki has a child support percentage of 22.40% - 0 = 22.40% for Tom.

( This means that Jacki is responsible for 22.40 % of Tom's cost because she has 22.40 % of the child support income, and does not bear any of the cost through care, so she needs to transfer 22.40 % of the cost through child support .)

Jacki has a child support percentage of 22.40% - 0 = 22.40% for Shona.

( This means that Jacki is responsible for 22.40 % of Shona's cost because she has 22.40 % of the child support income, and does not bear any of the cost through care, so she needs to transfer 22.40 % of the cost through child support .)

Note that Lisa does not have a child support percentage because, although she is bearing some of the costs of the children, she has no legal obligation to financially support them, and therefore her income is not used in the child support calculation.

Step 7 : Work out the costs of each child.

Ben and Jacki's combined child support income is $36,234 and, according to the Costs of the Children Table, this makes the total cost of the children $8,587. This is divided by two (the total number of children), giving a cost for each child of $4,294.

Step 8 : If a parent has a positive child support percentage, this is the share of the cost of the child that they need to transfer in child support.

As noted in Step 6, Ben has a child support percentage of 53.60% for Tom, and so needs to transfer 53.60% of his costs through child support. Tom's cost is $4,294 and 53.60% of this is $2,302, so this is what Ben owes in child support for Tom.

Ben has a child support percentage of 77.60% for Shona, and so needs to transfer 77.60% of her costs through child support. Shona's cost is $4,294 and 77.60% of this is $3,332, so this is what Ben owes in child support for Shona.

Jacki has a child support percentage of 22.40% for Tom, and so needs to transfer 22.40% of his costs through child support. Tom's cost is $4,294 and 22.40% of this is $962, so this is what Jacki owes in child support for Tom.

Jacki has a child support percentage of 22.40% for Shona, and so needs to transfer 22.40% of her costs through child support. Shona's cost is $4,294 and 22.40% of this is $962, so this is what Jacki owes in child support for Shona.

Step 9 : If both parents' child support percentages are positive, then the non-parent carer is entitled to be paid the total of the child support from both parents.

Both Ben and Jacki have positive child support percentages for both children. Ben pays $2,303 for Tom and $2,332, or a total of $5,634 to Lisa. Jacki pays $962 for Tom and $962 for Shona, or a total of $1,924 to Lisa.

Step 10 : There is only one non-parent carer, Lisa, so she receives all of the child support, that is, $7,558.

Example 2 - Formula 2 - two non-parent carers, one parent with care

Jeff and Kathy have one child, Trent, who is 12. They separate, and neither Jeff nor Kathy can look after Trent full-time. Trent lives 46% of the time with Jeff's mother, Irene, and 40% of the time with Kathy's mother, Jan. Jeff has 14% care of Trent and Kathy has less than 14% care of Trent. Jeff has an adjusted taxable income of $45,000 and Kathy has an adjusted taxable income of $25,000. Neither Jeff nor Kathy has a relevant dependent child.

Step 1 : Work out each parent's child support income by deducting the self-support amount of $16,883 from each of their incomes. This gives Jeff a child support income of $28,117 and Kathy a child support income of $8,117.

Step 2 : Work out the parents' combined child support income by adding together their child support incomes. Jeff and Kathy's combined child support income is $28,117 + $8,117, or $36,234.

Step 3 : Work out each parent's income percentage by dividing their child support income by their combined child support income from step 2. For Jeff this is $28,117 divided by $36,234, or 77.60%, and for Kathy this is $8,117 divided by $36,234, or 22.40%.

Step 4 : Work out the percentage of care that each parent or non-parent carer will have of each child. Jeff has 14% care of Trent, Irene has 46% care of Trent, and Jan has 40% care of Trent. Kathy does not have any care of Trent.

Step 5 : Work out each parent's cost percentage for each child by looking up the table in section 55C. Jeff has a cost percentage of 24%, because he has regular care of 14-34%. Kathy has a cost percentage of 0%.

Step 6 : Work out each parent's child support percentage for each child by subtracting their cost percentage for that child from their income percentage.

Jeff has a child support percentage of 77.60% - 24% = 53.60%.

( This means that Jeff is responsible for 77.60 % of Trent's cost because he has 77.60 % of the child support income, but he bears 24 % of Trent's cost through care, so he needs to transfer 53.60 % of Trent's cost through child support .)

Kathy has a child support percentage of 22.40% - 0 = 22.40% for Trent.

( This means that Kathy is responsible for 22.40 % of Trent's cost because she has 22.40 % of the child support income, and does not bear any of the cost through care, so she needs to transfer 22.40 % of the cost through child support .)

Note that Irene and Jan do not have child support percentages because, although they are bearing some of Trent's costs, they have no legal obligation to financially support him, and therefore their incomes are not used in the child support calculation.

Step 7 : Work out the costs of the child.

Jeff and Kathy's combined child support income is $36,234 and, according to the Costs of the Children Table, this makes Trent's cost $5,942.

Step 8 : If a parent has a positive child support percentage, this is the share of the cost of the child that they need to transfer in child support.

As noted in Step 6, Jeff has a child support percentage of 53.60%, and so needs to transfer 53.60% of Trent's costs through child support. Trent's cost is $5,942 and 53.60% of this is $3,185, so this is what Jeff owes in child support for Trent.

Kathy has a child support percentage of 22.40% for Trent, and so needs to transfer 22.40% of his costs through child support. Trent's cost is $5,942 and 22.40% of this is $1,331, so this is what Kathy owes in child support for Trent.

Step 9 : If both parents' child support percentages are positive, then the non-parent carers are entitled to be paid the total of the child support from both parents.

Both Jeff and Kathy have positive child support percentages. Jeff pays $3,185 and Kathy pays $1,331. This is a total of $4,516.

Step 10 : Divide the child support between the eligible parents and non-parent carers according to their share of the cost percentages of all people eligible to receive child support (section 40A).

Jeff has a cost percentage of 24% (for care of 14-34%), but because he has less than 35% care, he is not eligible to receive child support.

Kathy has a cost percentage of 0%. Irene has a cost percentage of 35% (25% for 35% care + 2% for each percentage of care over 35%) and Jan has a cost percentage of 47% (25% for 35% care + 2% for each percentage of care over 35%), so the child support is divided between Irene and Jan.

The total of the cost percentages of the people entitled to receive child support is 35% + 47% = 82%. Irene's cost percentage divided by the cost percentages of the people entitled to receive child support is therefore 35% divided by 82%, or 42.68%. Jan's cost percentage divided by the cost percentages of the people entitled to receive child support is therefore 47% divided by 82%, or 57.31%

The total available child support is $4,516 and Irene is entitled to 42.68% of this. Irene receives $1,927. Jan is entitled to 57.31% of the child support, and receives $2,588.

Example 3 - Formula 2 - one non-parent carer, one parent with shared care

Sean and Tricia have one child, Sarah, who is 7. They separate, and Sarah lives 50% of the time with Tricia and 50% of the time with Tricia's mother, Dorothy. Sean has an adjusted taxable income of $65,000 and Tricia has an adjusted taxable income of $45,000. Neither Sean nor Tricia has a relevant dependent child.

Step 1 : Work out each parent's child support income by deducting the self-support amount of $16,883 from each of their incomes. This gives Sean a child support income of $48,117 and Tricia a child support income of $28,117.

Step 2 : Work out the parents' combined child support income by adding together their child support incomes. Sean and Tricia's combined child support income is $48,117 + $28,117, or $76,234.

Step 3 : Work out each parent's income percentage by dividing their child support income by their combined child support income from Step 2. For Sean this is $48,117 divided by $76,234, or 63.12%, and for Tricia this is $28,117 divided by $76,234, or 36.88%.

Step 4 : Work out the percentage of care that each parent or non-parent carer will have of each child. Tricia has 50% care of Sarah and Dorothy has 50% care of Sarah. Sean does not have any care of Sarah.

Step 5 : Work out each parent's cost percentage for each child by looking up the table in section 55C. Tricia has a cost percentage of 50%, because she has shared care of 50%. Sean has a cost percentage of 0%.

Step 6 : Work out each parent's child support percentage for each child by subtracting their cost percentage for that child from their income percentage.

Sean has a child support percentage of 63.12% - 0% = 63.12%.

( This means that Sean is responsible for 63.12 % of Sarah's cost because he has 63.12 % of the child support income, and does not bear any of the cost through care, so he needs to transfer 63.12 % of Sarah's cost through child support .)

Tricia has a child support percentage of 36.88% - 50% = -13.12% for Trent.

( This means that Tricia is responsible for 36.88 % of Sarah's cost because she has 36.88 % of child support income, but she bears 50 % of the cost through care, so she is entitled to 13.12 % of the cost through child support .)

Note that Dorothy does not have a child support percentage because, although she is bearing some of Sarah's costs, she has no legal obligation to financially support her, and therefore her income is not used in the child support calculation.

Step 7 : Work out the costs of the child.

Sean and Tricia's combined child support income is $76,234 and, according to the Costs of the Children Table, this makes Sarah's cost $11,169.

Step 8 : If a parent has a positive child support percentage, this is the share of the cost of the child that they need to transfer in child support.

As noted in Step 6, Sean has a child support percentage of 63.12%, and so needs to transfer 63.12% of Sarah's costs through child support. Sarah's cost is $11,169 and 63.12% of this is $7,050, so this is what Sean owes in child support for Sarah.

If the second parent has a negative child support percentage, and that parent has at least shared care, that parent is entitled to that percentage, expressed as a positive, of the costs of the child.

Tricia has a child support percentage of -13.12% for Sarah, and has shared care of her. Tricia is therefore entitled to 13.12% of Sarah's cost. 13.12% of $11,169 is $1,465, and this is what Sean pays to Tricia in child support. Tricia also meets 36.88% of Sarah's costs directly through care, as she has 36.88% of the combined child support income.

The non-parent carer is entitled to the remainder of the child support payable. $7,050 - $1,465 = $5,585, and this is what Sean pays to Dorothy in child support. This is 50% of the cost of Sarah.

Division 2, Subdivision C - Working out annual rates of child support using the incomes of both parents in multiple child support cases

Section 36A provides that Subdivision C of Division 2 of Part 5 is to be used to determine the annual rate of child support payable for a child a day in the child support period if both parents are to be assessed in respect of the costs of that child and at least one of the parents is to be assessed in respect of the costs of another child in another child support case. There are two formulas in Subdivision C, as set out in section 37 (Formula 3) and section 38 (Formula 4).

Formula 3 - two parents, multiple child support case, no non-parent carer

Section 37 sets out the method statement for working out the annual rate of child support payable where at least one parent has more than one child support case and no non-parent carer has a percentage of care for the child for a day in the child support period.

The method statement has three steps.

Step 1 requires Steps 1 to 8 of section 35 (Formula 1) to be followed.

Step 2 then requires that each parent's multi-case cap (if any) be calculated in accordance with section 55E.

Step 3 then provides that if a parent has a positive child support percentage under Step 6 of the method statement in section 35 (Formula 1), the annual rate of child support payable by the parent for the child is the lesser of the annual rate of child support worked out under Step 8 of section 35 (Formula 1) and the parent's multi-case cap for the child.

Essentially, this Formula 3 works in exactly the same way as Formula 1, except that it ensures that no parent will pay in child support more than their children would cost if they all lived together in one household, even if the children were born to different ex-partners. It does this by ensuring that a parent with multiple child support cases will pay no more in child support than their multi-case cap (the amount the children would cost if they all lived in one household).

Example - Formula 3 - parent with multiple cases

Belinda and George have one child Hugo, who is 3. George also has a child, Lucy, who is 9, with Stella. Hugo lives with Belinda most of the time, and George has less than 14% care. Lucy lives one week with George and the next week with Stella, so that each has 50% care. Belinda has an adjusted taxable income of $30,000, George has an adjusted taxable income of $40,000, and Stella has an adjusted taxable income of $35,000. There are no relevant dependent children.

Child Support for Hugo

Step 1 : Work out each parent's child support income by deducting the self-support amount of $16,883 from each of their incomes, and the multi-case allowance, if necessary. George's multi-case allowance (which recognises George's obligation to Lucy) is $2,774 (see section 47). This gives George a child support income of $20,343 and Belinda a child support income of $13,117.

Step 2 : Work out the parents' combined child support income by adding together their child support incomes. George and Belinda's combined child support income is $20,343 + $13,117, or $33,460.

Step 3 : Work out each parent's income percentage by dividing their child support income by their combined child support income from Step 2. For George this is $20,343 divided by $33,460, or 60.80%, and for Belinda this is $13,117 divided by $33,460, or 39.20%.

Step 4 : Work out the percentage of care that each parent will have of each child. George has care of less than 14% of Hugo, so Belinda has 100% care of Hugo.

Step 5 : Work out each parent's cost percentage for each child by looking up the table in section 55C. George has a cost percentage of 0% and Belinda has a cost percentage of 100%.

Step 6 : Work out each parent's child support percentage for each child by subtracting their cost percentage for that child from their income percentage.

George has a child support percentage of 60.80% - 0% = 60.80% for Hugo.

( This means that George is responsible for 60.80 % of Hugo's cost, and does not bear any of the cost through care, so he needs to transfer 60.80 % of the cost to Belinda through child support .)

Belinda has a child support percentage of 39.20% - 100% = -39.20%. This is taken to be nil, as it is negative.

( This means that Belinda is responsible for 39.20 % of Hugo's cost because she has 39.20 % of the child support income, but she bears 100 % of the cost through care, so she is entitled to child support from George .)

Step 7 : Work out the costs of each child. Belinda and George's combined child support income is $33,460 and, according to the Costs of the Children Table, this makes Hugo's cost $5,525.

Step 8 : If a parent has a positive child support percentage, this is the share of the cost of the child that they need to transfer to the other parent.

George has a child support percentage of 60.80% for Hugo, so needs to transfer 60.80% of his costs to Belinda through child support. Hugo's cost is $5,525 and 60.80% of this is $3,359, so this is what George owes in child support for him (subject to the operation of the multi-case cap in Step 9).

Belinda has a nil child support percentage for Hugo, and so does not need to transfer any child support for him (she is entitled to child support from George for Hugo).

Work out each parent's multi-case cap, if any. George's multi-case cap for Hugo is $2,774 (see section 55E). Amanda only has one child support case, so does not have a multi-case cap.

Step 9 : The amount that George must pay in child support to Belinda is the lesser of the amounts in Step 7 and Step 8. $2,774 is the lesser of the two amounts, so this is what George pays to Belinda in child support. This is the amount that it would cost George to look after Hugo if he was living with George and any other child support children that George has (that is, Lucy).

Child Support for Lucy

Step 1 : Work out each parent's child support income by deducting the self-support amount of $16,883 from each of their incomes, and the multi-case allowance, if necessary. George's multi-case allowance (which recognises George's obligation to Hugo) is $2,774 (see section 47). This gives George a child support income of $20,343 and Stella a child support income of $18,117.

Step 2 : Work out the parents' combined child support income by adding together their child support incomes. George and Stella's combined child support income is $20,343 + $18,117, or $38,460.

Step 3 : Work out each parent's income percentage by dividing their child support income by their combined child support income from Step 2. For George this is $20,343 divided by $38,460, or 52.89%, and for Stella this is $18,117 divided by $38,460, or 47.11%.

Step 4 : Work out the percentage of care that each parent will have of each child. George and Stella both have 50% care of Lucy.

Step 5 : Work out each parent's cost percentage for each child by looking up the table in section 55C. George has a cost percentage of 50% and Stella has a cost percentage of 50%.

Step 6 : Work out each parent's child support percentage for each child by subtracting their cost percentage for that child from their income percentage.

George has a child support percentage of 52.89% - 50% = 2.98% for Lucy.

( This means that George is responsible for 52.89 % of Lucy's cost because he has 52.89 % of the combined child support income, and bears 50 % of the cost through care, so he needs to transfer 2.89 % of the cost to Stella through child support .)

Stella has a child support percentage of 47.11% - 50% = -2.89%. This is taken to be nil, as it is negative.

( This means that Stella is responsible for 47.11 % of Lucy's cost because she has 47.11 % of the combined child support income, but she bears 50 % of the cost through care, so she is entitled to child support from George .)

Step 7 : Work out the costs of each child.

Stella and George's combined child support income is $38,460 and, according to the Costs of the Children Table, this makes Lucy's cost $6,275.

Step 8 : If a parent has a positive child support percentage, this is the share of the cost of the child that they need to transfer to the other parent.

George has a child support percentage of 2.89% for Lucy, so needs to transfer 2.89% of his costs to Stella through child support. Lucy's cost is $6,275 and 2.89% of this is $181, so this is what George owes in child support for her (subject to the operation of the multi-case cap in Step 9).

Stella has a nil child support percentage for Lucy, and so does not need to transfer any child support for her (she is entitled to child support from George for Lucy).

Step 9 : Work out each parent's multi-case cap, if any. George's multi-case cap for Hugo is $1,387 (see section 55E). Stella only has one child support case, so does not have a multi-case cap.

Step 10 : The amount that George must pay in child support to Belinda is the lesser of the amounts in Step 7 and Step 8. $181 is the lesser of the two amounts, so this is what George pays to Stella in child support. Even though George and Stella both have 50% care of Lucy, George has a slightly higher child support income than Stella, so transfers a small amount of child support for Lucy.

Formula 4 - two parents, multiple child support cases, non-parent carer

Subsection 38(1) states that section 38 sets out how to calculate the annual rate of child support payable for a child for a day in a child support period if a non-parent carer has a percentage of care for a child for a day in the child support period (Formula 4).

Subsection 38(2) requires Steps 1 to 8 in section 35 (Formula 1) to be followed except that the rule in subsection 55D(2), which states that a parent's child support percentage is to be disregarded if it is negative, is to be ignored.

Subsection 38(3) then requires that each parent's multi-case cap (if any) be calculated in accordance with section 55E.

Subsection 38(4) provides that if a parent's (the first parent's) child support percentage under Step 6 of the method statement in section 35 (Formula 1) is positive, then the annual rate of child support payable by the parent for the child is the lower of:

•

the annual rate of child support worked out under Step 8 of the method statement; and

•

the parent's multi-case cap (if any) for the child.

Subsection 38(5) provides for how to pay the annual rate if it is only payable to non-parent carers. It provides that if the second parent's child support percentage is also positive, or the second parent's child support percentage is nil or negative, but the parent does not have shared care of the child, then the first parent must pay the annual rate of child support that is payable by them under subsection 38(4) to the non-parent carers in accordance with section 40A.

Subsection 38(6) sets out how to distribute a parent's annual rate of child support if it is payable to both the other parent and a non-parent carer. Subsection 38(6) provides that if the second parent's child support income is negative, and the second parent has at least shared care of the child, then, subject to section 40B, the first parent must pay the annual rate of child support that is payable by the first parent for the child under subsection 38(4) to the second parent and the non-parent carer in accordance with section 40A.

Example - Formula 4 - multiple cases, with a non-parent carer

Marina and Pablo have one child, Elena, who is 14. Pablo also has two children with Tessa - Bella, who is 9, and Charlie, who is 6. Elena lives with Maria most of the time, and Pablo has 24% care. Bella and Charlie live one week with Tessa and the next week with Tessa's mother, Eleanor, so that each has 50% care. Pablo has less than 14% care with Bella and Charlie. Maria has an adjusted taxable income of $45,000, Pablo has an adjusted taxable income of $40,000, and Tessa has an adjusted taxable income of $35,000. There are no relevant dependent children.

Child Support for Elena

Step 1 : Work out each parent's child support income by deducting the self-support amount of $16,883 from each of their incomes, and the multi-case allowance, if necessary. Pablo's multi-case allowance (which recognises Pablo's obligation to Bella and Charlie) is $4,546 (see section 47). This gives Pablo a child support income of $18,571 and Marina a child support income of $28,117.

Step 2 : Work out the parents' combined child support income by adding together their child support incomes. Pablo and Marina's combined child support income is $18,571 + $28,117, or $46,688.

Step 3 : Work out each parent's income percentage by dividing their child support income by their combined child support income from Step 2. For Pablo this is $18,571 divided by $46 688, or 39.78%, and for Marina this is $28,117 divided by $46,688, or 60.22%.

Step 4 : Work out the percentage of care that each parent will have of each child. Pablo has 24% care of Elena and Marina has 76% care of Elena.

Step 5 : Work out each parent's cost percentage for each child by looking up the table in section 55C. Pablo has a cost percentage of 24% and Marina has a cost percentage of 76%.

Step 6 : Work out each parent's child support percentage for each child by subtracting their cost percentage for that child from their income percentage.

Pablo has a child support percentage of 39.78% - 24% = 15.78% for Elena.

( This means that Pablo is responsible for 39.78 % of Elena's cost, and bears 24 % of the cost through care, so he needs to transfer 15.78 % of the cost to Marina through child support .)

Marina has a child support percentage of 60.22% - 76% = -15.78%.

( This means that Marina is responsible for 60.22 % of Elena's cost because she has 60.22 % of the child support income, but she bears 76 % of the cost through care, so she is entitled to child support from Pablo .)

Step 7 : Work out the costs of each child.

Marina and Pablo's combined child support income is $46,688 and, according to the Costs of the Children Table, this makes Elena's cost $10,525.

Step 8 : If a parent has a positive child support percentage, this is the share of the cost of the child that they need to transfer to the other parent.

Pablo has a child support percentage of 15.78% for Elena, so needs to transfer 15.78% of her costs to Marina through child support.

Elena's cost is $10,525 and 15.78% of this is $1,661, so this is what Pablo owes in child support for her (subject to the operation of the multi-case cap in Step 9).

Marina has a nil child support percentage for Elena, and so does not need to transfer any child support for her (she is entitled to child support from Pablo for Elena).

Step 9 : Work out each parent's multi-case cap, if any. Pablo's multi-case cap for Elena is $1,727 (see section 55E). Marina only has one child support case, so does not have a multi-case cap.

Step 10 : The amount that Pablo must pay in child support to Marina is the lesser of the amounts in Step 8 and Step 9. $1,661 is the lesser of the two amounts, so this is what Pablo pays to Marina in child support. Pablo also meets 24% of Elena's costs, or $2,526, directly through care. Marina meets her 60.22% share of Elena's costs, or $6,338, directly through care.

Child Support for Bella and Charlie

Step 1 : Work out each parent's child support income by deducting the self-support amount of $16,883 from each of their incomes, and the multi-case allowance, if necessary. Pablo's multi-case allowance (which recognises his obligation to Elena) is $2,273 (see section 47). This gives Pablo a child support income of $20,844 and Tessa a child support income of $18,117.

Step 2 : Work out the parents' combined child support income by adding together their child support incomes. Pablo and Tessa's combined child support income is $20,844 + $18,117, or $38,961.

Step 3 : Work out each parent's income percentage by dividing their child support income by their combined child support income from Step 2. For Pablo this is $20,844 divided by $38,961, or 53.50%, and for Tessa this is $18,117 divided by $38,961, or 46.50%.

Step 4 : Work out the percentage of care that each parent or non-parent carer will have of the children. Tessa has 50% care of Bella and Charlie and Eleanor has 50% care of Bella and Charlie. Pablo has less than 14% care, so has a care percentage of 0%.

Step 5 : Work out each parent's cost percentage for each child by looking up the table in section 55C. Pablo has a cost percentage of 0% and Tessa has a cost percentage of 50%.

Step 6 : Work out each parent's child support percentage for each child by subtracting their cost percentage for that child from their income percentage.

Pablo has a child support percentage of 53.50% - 0% = 0% for Bella and Charlie.

( This means that Pablo is responsible for 53.50 % of Bella and Charlie's cost because he has 53.50 % of the combined child support income, and bears none of the cost through care, so he needs to transfer 53.50 % of the cost through child support .)

Tessa has a child support percentage of 46.50% - 50% = -3.50%.

( This means that Tessa is responsible for 46.50 % of Bella and Charlie's cost because she has 46.50 % of the combined child support income, but she bears 50 % of the cost through care, so she is entitled to child support from Pablo .)

Note that Eleanor does not have a child support percentage because, although she is bearing some of Bella and Charlie's costs, she has no legal obligation to financially support them, and therefore her income is not used in the child support calculation.

Step 7 : Work out the costs of the children.

Pablo and Tessa's combined child support income is $38,961 and, according to the Costs of the Children Table, this makes Bella and Charlie's cost $9,215.

Step 8 : If a parent has a positive child support percentage, this is the share of the cost of the child that they need to transfer in child support.

As noted in Step 6, Pablo has a child support percentage of 53.50%, and so needs to transfer 53.50% of Bella and Charlie's costs through child support. Bella and Charlie's cost is $9,215 and 53.50% of this is $4,930, so this is what Pablo owes in child support for Bella and Charlie (subject to the multi-case cap in Step 9).

Tessa has a negative child support percentage, and therefore does not have to transfer any child support. She is entitled to child support from Pablo.

Step 9 : Work out each parent's multi-case cap, if any.

Pablo's multi-case cap for Bella and Charlie is $3,455 (see section 55E). Tessa only has one child support case, so does not have a multi-case cap.

Step 10 : The amount that Pablo must pay in child support is the lesser of the amounts in Step 8 and Step 9. $3,455 is the lesser of the two amounts, so this is what Pablo pays in child support.

Step 11 : Divide the total child support between the other parent and non-parent carer according to the method in section 40A.

According to the table in section 55C, Tessa has a cost percentage of 50% and Eleanor has a cost percentage of 50%.

The total of the cost percentages of the people entitled to receive child support is 50% + 50% = 100%. Tessa's cost percentage divided by the cost percentages of the people entitled to receive child support is therefore 50% divided by 100%, or 50%. Eleanor's cost percentage divided by the cost percentages of the people entitled to receive child support is also 50% divided by 100%, or 50%.

The total available child support is $3,455 and Tessa and Eleanor each receive 50%, or $1,728.

Division 2, Subdivision D - Working out annual rates of child support using the incomes of both parents in multiple child support cases

Section 38A provides that Subdivision D of Division 2 is to be used to determine the annual rate of child support payable for a child a day in the child support period if only one parent is to be assessed in respect of the costs of that child. There are two formulas in Subdivision E, as set out in section 39 (Formula 5) and section 40 (Formula 6).

Formula 5 - one parent, other parent not a resident of Australia or special circumstances

Section 39 sets out the method statement to be used to work out the annual rate of child support payable for a day in a child support period if a non-parent carer of a child has applied for a parent to be assessed in respect of the costs of the child because of subparagraphs 25A(b)(ii) or (iii). Generally, a non-parent carer must apply for both parents to be assessed for child support because both parents' incomes are needed for the assessment. However, subparagraphs 25A(b)(ii) and (iii) enable a non-parent carer to apply against one parent only if the other parent is a non-resident of Australia or there are other special circumstances for not requiring the non-parent carer to apply in respect of both parents. The method under section 39 recognises that where these special circumstances apply, there are still potentially two parental incomes in relation to the child even though only one parental income is available for the child support assessment.

The method statement has nine steps.

Step 1 requires the parent's child support income for the child for the day to be worked out (see section 41) and doubled.

Step 2 requires the parent's percentage of care for the child to be worked out (see sections 48 to 51B).

Step 3 requires the parent's cost percentage for the child for the day to be worked out (see section 55C).

Step 4 requires the costs of the child for a day to be worked out, under sections 55G and 55H, using the parent's doubled income from Step 1 of this method statement. The parent's income is doubled because it would be unfair to expect one parent to pay more child support just because the other parent's income was not available due to the special circumstances of the case, for example, where other parent cannot be found. Consequently, the available parent is assessed as though the other parent's income is also being assessed and that income is identical to the parent's who is being assessed.

Step 5 requires the following rate to be determined:

1/2 * [Costs of the child for the day - (Parent's cost percentage for the child for the day * Costs of the child for the day)]


This formula in Step 5 works out the rate of child support payable by calculating the child's costs minus the costs the parent bears through care and then calculating half of this amount. The cost is halved because the cost has been calculated as though the parent will have half the responsibility for the cost.

Step 6 provides that if the parent is not assessed in respect of the costs of another child in another child support case (that is, the parent does not have a multi-case cap) the annual rate of child support payable by the parent for the child for the day is the rate worked out under Step 5.

Step 7 requires the parent's multi-case cap to be calculated under section 55E if the parent is assessed in respect of the costs of another child in another child support case.

Step 8 provides that the annual rate of child support payable by the parent for the child for a day in the child support period is the lesser of the rate worked out under Step 5 and the parent's multi-case cap from Step 7.

Step 9 provides that if two non-parent carers have a percentage of care for the child during the relevant care period, the parent must pay the annual rate of child support that is payable under Step 5 or Step 8 to the carers in accordance with section 40A. If there is only one non-parent carer, the annual rate of child support payable by the parent is payable to that carer. Step 9 also states that payment to the non-parent carer is subject to the rule that the non-parent carer must have made an application for child support in order to be entitled to receive the annual amount payable by the parent.

Example - one non-parent carer applying against one parent only due to special circumstances or other parent not a resident of Australia

Nick and Carolyn have one child, Billy, who is 14. They separate and before a child assessment is made, Nick goes overseas to a country where Australia does not have a reciprocal child support agreement.

This means that Nick cannot be assessed for child support. Billy is living full-time with an uncle, Garry, who applies for Carolyn to pay child support. Because it would be unfair to expect Carolyn to pay more child support just because Nick has left the country, Carolyn is assessed as though Nick is also being assessed, on an income identical to her own. Carolyn has an adjusted taxable income of $35,000 and no relevant dependent child.

Step 1 : Work out the parent's child support income by deducting the self-support amount of $16,883 from their income, and double this income. This gives Carolyn a child support income of $36,234. This will mean that the costs of Billy are calculated as though Nick's income was also used and assessed at $35,000.

Step 2 : Work out the percentage of care that the parent has. Carolyn has less than 14% care of Billy.

Step 3 : Work out the parent's cost percentage. Carolyn's cost percentage is 0%.

Step 4 : Work out the costs of the child. The child support income used to calculate Billy's cost is $36,234, making Billy's cost $8,225.

Step 5 : Work out the rate payable, by calculating the costs of Billy minus the costs that Carolyn bears through care, and then calculating half of this amount. Carolyn does not bear any cost through care, so half of the cost is $4,113. The cost is halved because the cost has been calculated as though Nick will have half the responsibility for the cost.

Step 6 : Carolyn does not have any other child support case, so $4,113 is the amount of child support that she must pay to Garry.

Formula 6 - one parent, non-parent carer, other parent deceased

Section 40 sets out the method statement to be used to work out the annual rate of child support payable for a day in a child support period if a non-parent carer of a child has applied for a parent to be assessed in respect of the costs of the child because of subparagraph 25A(b)(iv) (other parent deceased). The method under section 40 recognises that where one parent is deceased, the other parent's income is the only parental income available in relation to the child.

The method statement has nine steps and works in much the same way as Formula 5, except that the parent's income is not doubled and the costs of the children are not halved. This treatment reflects that where one parent is deceased, the only income available to meet the costs of the child is the surviving parent's income.

Step 1 requires the parent's child support income for the child for the day to be worked out (see section 41).

Step 2 requires the parent's percentage of care for the child to be worked out (see section 48).

Step 3 requires the parent's cost percentage for the child for the day to be worked out (see section 55C).

Step 4 requires the costs of the child for a day to be worked out (see sections 55G and 55H).

Step 5 requires the following rate to be determined:

Costs of the child for the day - (Parent's cost percentage for the child for the day * Costs of the child for the day)


Step 6 provides that if the parent is not assessed in respect of the costs of another child in another child support case (that is, the parent does not have a multi-case cap) the annual rate of child support payable by the parent for the child for the day is the rate worked out under Step 5.

Step 7 requires the parent's multi-case cap to be calculated under section 55E if the parent is assessed in respect of the costs of another child in another child support case.

Step 8 provides that the annual rate of child support payable by the parent for the child for a day in the child support period is the lesser of the rate worked out under Step 5 and the parent's multi-case cap from Step 7.

Step 9 provides that if two non-parent carers have a percentage of care for the child during the relevant care period, the parent must pay the annual rate of child support that is payable under Step 5 or Step 8 to the carers in accordance with section 40A. If there is only one non-parent carer, the annual rate of child support payable by the parent is payable to that carer. Step 9 also states that payment to the non-parent carer is subject to the rule that the non-parent carer must have made an application for child support in order to be entitled to receive the annual amount payable by the parent.

Example - two non-parent carers applying against one parent only because other parent deceased

Mustafa and Aida have one child, Imran, who is 3. They separate and later Aida dies. Imran lives 50% of the time with each of two aunts, Nadira and Sam. Mustafa has an adjusted taxable income of $40,000 and no relevant dependent child.

Step 1 : Work out the parent's child support income by deducting the self-support amount of $16,883 from their income. This gives Mustafa a child support income of $23,117.

Step 2 : Work out the percentage of care that the parent has. Mustafa has less than 14% care of Imran.

Step 3 : Work out the parent's cost percentage. Mustafa's cost percentage is 0%.

Step 4 : Work out the costs of the child. The child support income used to calculate Imran's cost is $23,117, making his cost $3,930.

Step 5 : Work out the rate payable, by subtracting the costs that Mustafa bears through care from Imran's cost. Mustafa does not bear any cost through care, so the rate payable is $3,930.

Steps 6 to 8 : Mustafa does not have any other child support case, so $3,930 is the amount of child support that he must pay.

Step 9 : Divide the total child support between the other parent and non-parent carer according to the method in section 40A. Sam and Nadira both have 50% of the total cost percentage of the carers, so they each receive $1,965 from Mustafa.

Division 2, Subdivision E - General provisions

Subdivision E of Division 2 provides for some general rules in respect of the formulas.

Subsection 40A sets out the rules for how to distribute child support where there is more than one person entitled to child support, as may happen in the following situations:

•

after working out a parent's annual rate of child support payable under Formula 2 (incomes of both parents, single child support case) or Formula 4 (incomes of both parents, multiple child support case), child support is payable to both a parent and a non-parent carer of a child (paragraph 40A(1)(a)); or

•

after working out a parent's annual rate of child support payable under Formula 5 or 6 (income of one parent only), child support is payable to two or more non-parent carers of a child (paragraph 40A(1)(b)); or

•

in assessing a parent for an annual rate of child support for low income parents not on income support (section 65A), an annual rate of child support is payable to either a parent and a non-parent carer or to two non-parent carers of the child (paragraph 40A(1)(c)).

Subsection 40A(1) states that, in the above situations, the annual rate of child support that a parent or non-parent carer (as the case requires) is entitled to be paid for a child for a day in a child support period is to be determined according to the following formula.

Total rate to which parent and non-parent carers are entitled to be paid for the day * Parent or non-parent carer's cost percentage for the child for the day / Total of parent and non-parent carer's cost percentages for the child for the day


This formula takes the total amount of child support to which all the carers (parent and non-parent carer/s) are entitled, then distributes it to each carer according to their cost percentage. This means that the available child support is distributed according to the amount of care each carer has for the child.

For example, Harold's annual rate of child support is $3,000. His ex-partner, Jenny, has a cost percentage of 35% (because she cares for their child 40% of the time). Jenny's mother, Betty, has a cost percentage of 65% (because she provides 60% of the care). Jenny and Betty therefore have 100% care of the child between them. Jenny's cost percentage of 35% divided by the total of hers and Betty's cost percentages (100%) is .35. Betty's cost percentage of 65% divided by the total of hers and Jenny's cost percentages (100%) is .65. Therefore, the annual rate of child support to which Jenny is entitled is $3,000 multiplied by .35, that is, $1,050. The annual rate of child support to which Betty is entitled is $3,000 multiplied by .65, that is, $1,950.

Subsection 40A(1) provides that these rules are subject to section 40B, which provides that a non-parent carer of a child is not entitled to be paid child support if they have not made an application under section 25A.

Subsection 40A(2) provides that even if the non-parent carer is not entitled to be paid child support because they have not applied for it, their cost percentage is still taken into account. That is, the non-parent carer's level of care (translated into a cost percentage) is still relevant to calculating the overall care provided to the child by a parent or a non-parent carer or carers, and therefore determining who bears, or should bear, the costs for the child, even if the non-parent carer does not apply for child support.

Subsection 40B provides that a non-parent carer is not entitled to be paid child support unless they have applied for an assessment of the costs of the children in respect of both parents, or, where only one parent's income only is relevant (as in Formulas 5 and 6), they have applied for an assessment in respect of that parent.

A non-parent carer may be involved in an assessment under Formulas 2, 4, 5 or 6, or an assessment under section 65A (annual rate of child support for low income earners not on income support) or section 66 (minimum annual rate of child support).

Subsection 40B(2) provides that if a non-parent carer is not entitled to be paid child support for a child under subsection 40B(1), the annual rate of child support that would otherwise be payable to the non-parent carer by the parent, or parents, for the child is not payable.

Subsection 40B(3) provides that if a non-parent carer of a child has not applied for child support at the time the administrative assessment of child support is made, but applies later in the child support period, the non-parent carer is entitled to be paid the annual rate of child support worked out under Part 5 from the day they make the application. That is, their entitlement to child support will not be backdated to the date of the assessment.

Paragraph 40B(3)(d) makes it clear that a new child support period will not be started when a non-parent carer makes the (later) application.

Subsection 40C provides that the annual rate of child support payable by a parent for a child is nil if the parent's annual rate of child support is worked out under section 35 (Formula 1) or section 37 (Formula 3) (incomes of both parents, no non-parent carers) and the parent's percentage of care for the child is more than 65%.

Section 40D provides that the annual rate of child support payable by a parent for a child is nil if the parent's child support percentage for the child for the day is nil

Division 7 - Assessments and estimates of adjusted taxable income

Division 7, Subdivision A - Preliminary

Section 55J provides a simplified outline of the Subdivision. It states that a parent's taxable income is, generally, the amount of taxable income that is assessed under an Income Tax Assessment Act. However, it notes that the Registrar may make a determination of a parent's adjusted taxable income if the parent has not lodged a tax return. Where a parent lodges a tax return after an administrative assessment of child support has been made, there are limits on the Registrar's ability to amend the assessment for past periods. Finally, section 55J notes that, as is currently the case, a parent can estimate the amount of his or her adjusted taxable income for days in a child support period.

Division 7, Subdivision B - Adjusted taxable income determined by reference to taxable income for the last relevant year of income

Subdivision B of Division 7 provides the rules for dealing with a parent's adjusted taxable income, which is determined by reference to their taxable income for the last relevant year of income

Section 56 is a clarifying rewrite of current section 56 of the Child Support Assessment Act and makes no substantive changes to section 56. Minor technical amendments are made, however, to reflect the new terminology in Part 5 and delete references to redundant terminology.

Section 57 is a clarifying rewrite of current section 57 of the Child Support Assessment Act and makes no substantive changes to section 57. Minor technical amendments are made, however, to reflect the new terminology in Part 5 and delete references to redundant terminology.

Section 58 is a clarifying rewrite of current section 58 of the Child Support Assessment Act. It also amends section 58 to provide that, if the Registrar must determine an income where a parent has not lodged a tax return for two years, the Registrar must determine that the parent's adjusted taxable income for that year of income is 2/3rd MTAWE (subsection 58(3)).

Section 58A is a new provision that requires the Registrar to amend immediately an administrative assessment of child support if the assessment was made on the basis of a determination under section 58 (Registrar determination of components of adjusted taxable income) and the Registrar subsequently finds out either the amount of the parent's taxable income, or the total of the other components of their adjusted taxable income or information allowing further determinations under section 58, and the amount that is subsequently ascertained is different from the amount that was previously determined under section 58 (subsection 58A(1)).

Subsection 58A(2) provides that if the parent lodged, or still has time to lodge, their tax return on time in accordance with taxation rules when the Registrar ascertains their taxable income, or other component of their adjusted taxable income, or information allowing a further determination under section 58, the Registrar is to amend immediately the administrative assessment for the child support period on the basis that the parent's taxable income, or other component of their adjusted taxable income, for that year of income is, and always has been, the amount that was subsequently ascertained. That is, the new administrative assessment will apply retrospectively. This rule will also apply if the person failed to lodge their return on time, but the subsequently ascertained taxable income, or other component of adjusted taxable income, was higher than the amount the Registrar had determined under section 58.

Subsection 58A(3) provides that if subsection 58A(2) does not apply, the Registrar must immediately amend an administrative assessment for the child support period on the basis that for each later day in the period the parent's taxable income, or other component of adjusted taxable income, for that year of income is the amount that was subsequently ascertained. That is, the new administrative assessment will apply prospectively.

Subsection 58A(4) makes it clear that new section 58A applies irrespective of whether or not the Commissioner of Taxation has made an assessment under an Income Tax Assessment Act of the parent's taxable income for that year of income.

Division 7, Subdivision C - Child support income determined by reference to estimate of adjusted taxable income for rest of current child support period

Section 60 is a clarifying rewrite of current section 60 of the Child Support Assessment Act and makes no substantive changes to section 60. Minor technical amendments are made, however, to reflect the new terminology in Part 5 and delete references to redundant terminology. In particular, current references to a person's child support income amount, taxable income and supplementary amount are replaced with the more comprehensive new concept of the parent's adjusted taxable income. Similarly, a reference to assessing the annual rate of child support payable by or to a person is replaced with reference to assessing the parent in respect of the costs of a child.

Section 60A replaces current section 60A of the Child Support Assessment Act and makes changes to reflect the new terminology in Part 5 and delete references to redundant terminology. Changes are also made to reflect the new arrangements for Social Security Appeals Tribunal review of child support decisions. Section 60A provides for a notice of administrative assessment to be generally treated as conclusive evidence of the proper making of the assessment and of the correctness of the particulars in the notice. The revised section 60A disapplies this rule for proceedings under specified provisions in the Child Support Registration and Collection Act. This is because section 116 of that Act already provides more generally for documents produced to be prima facie evidence, so the rule in section 70 is superfluous in those cases.

Section 60B replaces current section 60B of the Child Support Assessment Act and makes changes to reflect the new terminology in Part 5 and delete references to redundant terminology. Changes are also made to reflect the new arrangements for Social Security Appeals Tribunal review of child support decisions. Section 60B provides for a notice of administrative assessment to be generally treated as conclusive evidence of the proper making of the assessment and of the correctness of the particulars in the notice. The revised section 60B disapplies this rule for proceedings under specified provisions in the Child Support Registration and Collection Act. This is because section 116 of that Act already provides more generally for documents produced to be prima facie evidence, so the rule in section 70 is superfluous in those cases. Subsection 60B(3) provides that a contravention of subsection 60B(2) in relation to a decision does not affect the validity of the decision.

Section 61 is a clarifying rewrite of current section 61 of the Child Support Assessment Act and makes no substantive changes to section 61. Minor technical amendments are made, however, to reflect the new terminology in Part 5 and delete references to redundant terminology.

Section 62 is a clarifying rewrite of current section 62 of the Child Support Assessment Act and makes no substantive changes to section 62. Minor technical amendments are made, however, to reflect the new terminology in Part 5 and delete references to redundant terminology.

Section 63 is a clarifying rewrite of current section 63 of the Child Support Assessment Act and makes no substantive changes to section 63. Minor technical amendments are made, however, to reflect the new terminology in Part 5 and delete references to redundant terminology.

Section 63A is replaces current section 63A of the Child Support Assessment Act and makes minor technical amendments to change references to 'person' to 'parent', because the provision only applies to parents.

Section 63B replaces current section 63B of the Child Support Assessment Act and makes minor technical amendments to change references to 'person' to 'parent', because the provision only applies to parents.

Section 63C is a new provision. It provides that where a parent elected to have their child support income amount (and therefore their assessment) determined by reference to an estimate of their taxable income (under section 60) and the estimate resulted in a minimum rate assessment, the Registrar can review the estimate, once the period for which the estimate is in place has passed, to determine how it compared with the parent's actual income and, if warranted, amend the assessment from a date determined by the Registrar.

Section 64 is a clarifying rewrite of current section 64 of the Child Support Assessment Act with minor technical amendments to reflect the new terminology in Part 5 and delete references to redundant terminology. It also adds new paragraph 64(1)(c), to provide that where an estimate results in a minimum annual rate being payable it is not subject to reconciliation. (However, the estimate can be reviewed - see section 63C above).

Section 64A replaces current section 64A of the Child Support Assessment Act and makes minor technical amendments to reflect the new terminology in Part 5 and delete references to redundant terminology. The new section also reflects, in the notification requirement in subsection (6), the new arrangements for review of child support decisions by the Social Security Appeals Tribunal, instead of by the Administrative Appeals Tribunal as at present.

Division 8 - Provisions relating to the making of assessments

Division 8, Subdivision A - Simplified outline

Division 8 of Part 5 contains provisions relating to the making of assessments.

Section 64B provides a simplified outline of the Subdivision, which provides that, in making an administrative assessment of child support, the Registrar may act on the basis of documents and information in his or her possession. In some cases the Registrar may assess the annual rate of child support for a child that is payable by a parent who is on a low income but is not receiving an income support payment. The Registrar may also assess the annual rate of child support payable by a parent for all the children in a child support case as the minimum annual rate. Section 64B states that Subdivision C of Division 8 contains rules relating to the making of administrative assessment.

Division 8, Subdivision B - Annual rates of child support for low income parents and minimum annual rates of child support

Section 65A is a new provision dealing with the annual rate of child support for low income parents not on income support.

Parents who are not in receipt of an income support payment but whose adjusted taxable income is lower than the annual parenting payment (single) maximum basic rate plus pension supplement (pension PP (single) maximum basic rate), that is, approximately $13,000, will be required to pay an annual rate of child support per child of $1,060. A definition of pension PP (single) maximum basic rate is inserted into section 5 of the Child Support Assessment Act by item 40 of Schedule 2 . This new annual rate for low income parents not on income support addresses the situation where people minimise their income in a way that does not fairly represent their true income, or real capacity to pay child support, and thereby reduce or avoid the contribution they should make towards the costs of their children. The view is that if people genuinely are on a low income they would access social security, or other, income support payments. This new rule is contained in subsection 65A(1).

Subsection 65A(1) provides that this rule will also apply where a parent who is not on an income support payment has elected to have their assessment based on their estimated income (under section 60 of the Child Support Assessment Act) and their estimate of this income is less than the pension PP (single) maximum basic rate.

The annual rate of child support payable for a child by low income parents who are not on income support is $1,060 (subsection 65A(2)). This amount is to be indexed in line with CPI increases and a note to this effect is at the end of subsection 65A(2) advising the reader that the indexation rule is in section 153A.

These rules will not apply, however, if the parent has at least shared care of the child (paragraph 65A(1)(c)), recognising that the parent bears their share of the costs of the child by providing this care. If a parent has shared care in one child support case and no care in another case, they will only be required to pay the annual rate in section 65A in respect of the children in the child support case for which they do not have shared care.

The annual rate in section 65A is to be applied to a parent in respect of each of the children for whom they are assessed for child support. However, there is a cap of three on the number of section 65A annual rate liabilities that a parent can have (subsection 65A(3). This means that although a low income parent may have four or five children, and potentially four or five section 65A annual rate liabilities, their total liability will be capped at three times this annual rate. This is consistent with the costs of children being capped at 3.

Where there are more than three children, subsection 65A(4) provides that the capped liability of three times the section 65A annual rate should be distributed equally between all the children. This is achieved by dividing the total of the three annual rates by the total number of children for whom child support is payable by the parent and paying the resulting amount to the parent or non-parent carer of each child. For example, if Fred would be liable for the annual rate for four children, the most he will pay is three times the annual rate. The other parent, or non-parent carer, of each of the four children will then be entitled to 25% of the total of the three annual rates.

Subsection 65A(5) provides for the situation where a child's care is shared between the other parent and a non-parent carer. In this situation, if the other parent and the non-parent carer share equally the care of the child, the annual rate payable in respect of the child is distributed according to section 40A.

Some people may genuinely be on a low income and choose not to access income support payments and it would be unfair to apply this annual rate rule to them. Consequently, a parent will not be required to pay the section 65A annual rate for any of the children if they apply to the Registrar for this rule not to apply to them (paragraph 65B(1)(a)) and the Registrar is satisfied that the total financial resources available to support the person are lower than the pension PP (single) maximum basic amount (subsection 65B(2)). A parent may be deemed to have applied for a reduction if, immediately before the end of the child support period, their rate was not determined under section 65A because of an existing determination under section 65B (paragraph 65(1)(b)). In determining whether the annual rate should not apply to the parent, the Registrar will consider the current income of the parent for the 12 months commencing from the date the person applied to not have the annual rate apply. Income has the same meaning as the definition of income for subsection 66A(4) of the Child Support Assessment Act, including the ability to prescribe certain matters in the regulations.

A note at the end of subsection 65B(2) advises the reader that if the Registrar refuses to grant an application under this section, the Registrar must serve a notice on the applicant under section 66C.

The Registrar has a discretion to determine the date, including a retrospective date, in the current child support period from which the section 65A annual rate is not to apply to a person (subsection 65B(3)). It is intended that the determination will generally apply from the beginning of the current child support period, or, where there is an identifiable event that has caused the reduction in income, from the happening of the event, unless this date would cause an overpayment. The determination will then apply for the remainder of the current child support period (unless a change of assessment otherwise occurs).

If the Registrar determines, under section 65B, that the annual rate rule in section 65A should not apply to a parent, the parent's child support is to be assessed in accordance with the minimum annual rate of child support rules in section 66 of the Child Support Assessment Act.

Section 66 substitutes current section 66.

Currently, where an annual rate of child support payable for a child or children by a liable parent is assessed as less than the minimum annual rate of child support, the minimum annual rate of child support is generally payable (see section 66 of the Child Support Assessment Act). The rules in section 66 have been broadened so that the provision will now also:

•

apply to income support recipients;

•

not apply to a parent who would otherwise be liable for the payment if they provide at least regular care for a child in a child support case, thereby acknowledging the costs a parent bears for their children through care; and

•

apply on a per child support case basis. This is different to the current position where, if a payer has a liability in more than one child support case, the minimum liability is apportioned between the payees according to how many children each has in their care (see subsection 63(3) of the Child Support Assessment Act).

Consequently, new subsection 66(1) provides that the parent will be required to pay the minimum annual rate of child support if either of subparagraphs 66(1)(b)(i) or (b)(ii) applies (see below) and they do not have at least regular care of at least one of the children in the child support case for which they are assessed (see subparagraph 66(1)(a)). So, for example, if a parent has three child support children in their child support case and provides at least regular care for any one of them, they will not be subject to the minimum rate rule for that case.

Subparagraph 66(1)(b)(i) provides that the minimum annual rate of child support will apply if a parent is on an income support payment at the maximum basic rate. Subsection 66(9) provides that the term income support payment means a payment of living allowance at the maximum rate under the ABSTUDY scheme, as well as an income support payment as defined in subsection 23(1) of the Social Security Act. The Social Security Act definition essentially covers: a social security benefit; a social security pension; an age service pension, invalidity service pension, partner service pension or carer service pension under Part III of the Veterans' Entitlements Act 1986 ; and, an income support supplement under Part IIIA of the Veterans' Entitlement Act 1986 .

Subparagraph 66(1)(b)(ii) provides that the minimum annual rate rule will apply to a particular child support case if the total amount that a parent would be required to pay in that case is less than the minimum annual rate of child support.

Subsection 66(2) makes it clear that if an assessment could be made under either of section 65A (annual rate for low income parents) or section 66, the assessment must be made under section 65A.

Subsections 66(3) and 66(4) provide for when a minimum rate assessment will commence and finish.

If a parent is assessed in respect of a minimum annual rate because they receive an income support payment at the maximum basic rate, the minimum rate assessment applies from the first day in the child support period that the parent receives the income support payment at the maximum basic rate and ends either at the end of the child support period or 28 days after the parent stops receiving the payment at that rate, even if that date would be in a new child support period (subsection 66(3)). This allows parents a short period during which their child support obligations remain low, while they manage the costs of resuming employment or increasing their employment, for example, while waiting for their first payday.

If a parent is assessed in respect of a minimum annual rate and is not on an income support payment, the assessment applies from the first day in the child support period that the parent would be assessed for a minimum annual rate of child support and ends 28 days after the parent would be so assessed, even if that date would be in a new child support period (subsection 66(4)). As with subsection 66(3), this allows parents a short period during which their child support obligations remain low while they manage the costs of resuming employment or increasing their employment.

Subsection 66(5) states that the minimum annual rate of child support is $320 and a note at the end of the subsection advises the reader that this amount is indexed annually under s153A.

Subsection 66(6) caps at three the total number of minimum annual rates for which a parent can be liable and this includes cases where child support is not payable to a non-parent carer because they have not applied for it (subsection 40B(1) refers). This means that a person who has children in more than three child support cases will not pay an amount more than three times the minimum annual rate.

If a parent has more than three child support cases for which they are otherwise liable for the minimum annual rate, the distribution of the amount of money that is payable is worked out using the formula in subsection 66(6). This formula operates by dividing the total of the three annual rates by the total number of the parent's child support cases.

For example, if Fred would be liable for the minimum annual rate in four child support cases, the most he will pay is three times the minimum annual rate of $320, which is $960. This rate is then divided by the number of cases (four) to produce an amount of $240 per child support case and this amount is distributed to the carer or carers entitled to child support in each child support case.

If the minimum annual rate, or rates, for which a person is liable is to be paid to both the other parent and a non-parent carer, or to two non-parent carers, of the children (because they share the care of the children in the child support case), the money is to be distributed to the parent or carer in accordance with subsection 66(7). This subsection provides that if the care is shared equally between the carers, the rate payable is to be shared equally, otherwise only the carer who has the greatest percentage of care of the children is entitled to be paid the rate.

As is currently the case, section 66 does not apply in relation to child support payable in respect of a child in accordance with a departure order (under Division 4 of Part 7 of the Child Support Assessment Act) or a child support agreement made by consent that has effect as if it were such an order (subsection 66(8)).

Note that, where an application for assessment is made by a non-parent carer, it is possible that two parents in the child support case may each be liable to pay the minimum rate to the non-parent carer, or that one may be liable to pay the minimum rate and the other may be required to pay an amount of child support to the non-parent carer.

In some situations, a person can elect to have their child support income amount (and therefore their assessment) determined by reference to an estimate of their taxable income (see Subdivision B of Part 5). Where an estimate has resulted in a minimum rate assessment, there is to be no reconciliation of the estimated amount with the parent's actual adjusted taxable income after the end of the child support period. Consequently, section 64, which enables the Registrar to do reconciliations of estimates, is being amended to provide that where an estimate results in a minimum annual rate being payable it is not subject to reconciliation (see paragraph 64(1A)(c)).

Section 66A replaces existing section 66A of the Child Support Assessment Act, which currently enables the Registrar to reduce a minimum annual rate assessment under section 66 to nil if the liable parent makes an application for such a reduction and the parent's income, for the 12 months starting from the beginning of the relevant child support period, will be less than the minimum annual rate (noting that income for this provision is defined in subsection 66A(4) and regulation 7CA of the Child Support Assessment Act regulations). These rules continue in section 66A. An assessment made under section 66A will apply to each day in the period to which the assessment under section 66 (minimum assessment) would have applied (subsection 66A(3)). A further change from current section 66A is that the 12 month period used to assess a person's income for the purposes of section 66A starts from the date the parent's lodges an application under this section, rather than start of child support period as is currently the case.

Section 66C replaces current section 66C with minor technical changes to reflect changed terminology and the new arrangements for Social Security Appeals Tribunal review of child support decisions. New subsection 60C(3) provides that a contravention of subsection 60C(2) in relation to a decision does not affect the validity of the decision.

Division 8, Subdivision C - Making administrative assessments

Section 66D replaces, without change, current section 65.

Section 67 replaces current section 67 without substantive change.

Section 67A replaces current section 49A, without substantive change.

Section 68 replaces current section 68.

Section 69 replaces current section 69, with minor technical changes to reflect changed terminology.

Section 70 replaces current section 70 to reflect the new arrangements for Social Security Appeals Tribunal review of child support decisions. Section 70 provides for a notice of administrative assessment to be generally treated as prima facie evidence of the proper making of the assessment and of the correctness of the particulars in the notice. The revised section 70 disapplies this rule for proceedings under specified provisions in the Child Support Registration and Collection Act. This is because section 116 of that Act already provides more generally for documents produced to be prima facie evidence, so the rule in section 70 is superfluous in those cases.

Section 71 replaces current section 71.

Section 72 replaces current section 72 to reflect the new arrangements for Social Security Appeals Tribunal review of child support decisions.

Section 73 replaces current section 73.

Section 73A replaces current subsection 39(3).

Section 74 replaces current section 74.

Section 74A replaces current section 74A and applies in the situation where child support is payable for a child and the Registrar is notified, or otherwise becomes aware, that the person's percentage of care for the child changes by more than 7.1%, or the person's percentage of care falls below, or increases to, 14% or more. In this situation, if, under section 75, the Registrar amends the administrative assessment to alter the rate at which child support is payable for the child, the altered rate is to apply on and from the day the Registrar was notified, or otherwise became aware of, the change to the parent's percentage of care. This applies subject to the parents fulfilling the other requirements of having their level of care changed where they have a previous agreement, or court ordered arrangement, about care (see Subdivision B of Division 4). Where a specific provision of Subdivision C of Division 4 provides specifically for an earlier date of effect, this restriction does not apply.

Section 75 replaces current section 75 and makes a number of amendments mainly to provide for the changed terminology in Part 5. However, it also inserts a new rule that provides that, subject to section 53 the Registrar must not make amend an administrative assessment due to a change in the person's percentage of care unless the change to the person's percentage of care is more than 7.1%, or the person's percentage of care falls below, or increases to, 14% or more (subsection 75(2)).

Section 76 replaces current section 76 and makes a few amendments, mainly to provide for the changed terminology and concepts in Part 5. Subsection 76(2) differs from current subsection 76(2) in that it requires a notice given under the new section to state the age ranges of children who are multi-case children, the costs of the child, and an assessed parent's, and non-parent carer's, percentage of care. The new section also reflects, in its requirements to specify certain review rights and further options, the new review arrangements for child support decisions, under which the Social Security Appeals Tribunal provides the first tier of external review, with Administrative Appeals Tribunal review being available in relation to percentage of care decisions if the person is aggrieved by the Social Security Appeals Tribunal decision.

Division 9 - Liability to pay child support as assessed

Division 9 of Part 5 deals with provisions relating to liability to pay child support.

Section 76A provides a simplified outline of the Division, which states that the amount of child support payable for a child or children for a day in a child support period is the daily rate specified in the notice of assessment.

Section 77 is a clarifying rewrite of existing section 77 and does not make any substantive amendment.

Section 78 is a clarifying rewrite of existing section 77 and does not make any substantive amendment. However, a note is added to the end of the section to advise the reader that Section 66 of the Child Support Registration and Collection Act also deals with when child support debts become due and payable.

Section 79 replaces existing section 79 and adds a note to the end of the section to advise that amounts covered by section 30 of the Child Support Registration and Collection Act are debts due to the Commonwealth.

Item 2 adds 'Schedule 1 - The Costs of the Children Table' to the end of the Child Support Assessment Act.

Clause 1 sets out 'The Costs of the Children Table'. A note after the heading refers the reader to section 55G, which deals with how to work out the costs of children using the Costs of the Children Table.

The Costs of the Children Table sets out the cost of children according to the combined child support income of their parents, or the child support income of one parent if only one parent can be assessed.

Clauses 2 to 3 of Schedule 1 explain how the table works.

The table is composed of a number of rows and columns. Each column has two amounts, setting out the upper and lower limits of each income range used when calculating the costs of children. Different percentages apply to different bands, to reflect that spending on children is not a constant percentage of parental income as that income rises. Each row has a number of children, from one to three, in different age ranges, young, old, and mixed. Research shows that the net costs of children increase only very slightly for the fourth and subsequent children in a family, because of the economies of scale in larger households, the constraints on spending of household budgets, and the structure of family tax benefit. Therefore, where there are four or more children in a family, the same costs as for three children are used. Thus the figures to be used in calculating the costs of children for any given parents can be found by locating the appropriate row for the number and age of their children, and the appropriate column for their combined child support income amount.

To find the cost of the children, the percentage in the parents' income band is multiplied by the amount of combined child support income that they have above the lower limit of that band. To deal with the income below the lower limit of that band, the full amount of income in each band (1/2 MTAWE in each, as each band is defined as 1/2 MTAWE) is multiplied by the percentage applicable to that band. The cost of the children is the total of all the resulting amounts.

Subclause 1(1) deals with the child support income ranges - fraction of MTAWE row , the first row in the table. Subclause (1) explains that in each column of the Fraction of MTAWE row are specified two amounts, namely, the parents' combined child support income or the parent's child support income amount (for when only one parent's income is used).

Subclause 1(2) provides that to work out the first dollar amount in each column (other than the first column) of the first row, it is necessary to take the second amount in the previous column (worked out under subclause (3)) and add one dollar. A note points out that the first dollar amount in each column is the lowest combined child support income, or child support income, covered by that column.

Subclause 1(3) explains that to work out the second dollar amount in each column (other than the last column), it is necessary to multiply the second fraction specified in that column by the annualised MTAWE figure for the relevant September quarter. A note points out that the second dollar amount in each column is the highest combined child support income, or child support income, covered by that column.

Subclause 2(1) provides that each item in the Costs of the Children Table sets out a method of working out the costs of the children. Subclause 2(2) then provides that if, under section 55G, an item is identified in the first column of the table, the costs of the children is the amount that is the percentage specified in that item of the parents' combined child support income, or the parent's child support income, (as the case requires).

Subclause 2(3) then provides that if, under section 55G, an item (the relevant item ) is identified in a row in the second, third, fourth or fifth column (the relevant column ), the costs of the children is the total of the following amounts:

(a)

the total of the amounts worked out for each item in that row in each of the previous columns by multiplying the percentage specified in that item by the highest combined child support income minus the lowest combined child support income, or child support income, covered by that column;

(b)

the amount worked out by multiplying the percentage specified in the relevant item by the difference between:

(i)

the parents' combined child support income, or the parent's child support income, (as the case requires); and

(ii)

the highest combined child support income or child support income in the previous column.

Finally, subclause 2(4) provides that if under section 55G, an item is identified in a row in the last column, the costs of the children is the total of the amounts worked out for the items in that row in each of the previous columns in accordance with paragraph (3)(a).

Essentially, then, the table sets out the percentage of each dollar of the parents' combined child support income that the parents would spend on their children. The percentages vary according to the level of the parents' income. Because expenditure on children decreases as a percentage of income as income increases (even though expenditure in dollar terms increases), the percentages in the table decrease for each increasing band of income, from left to right in the table. Because older children cost more than younger children, there are also different categories for young children (under 13), older children (13 or over), and situations where at least one child is under 13 and one child is 13 or over.

The bands of income are defined in terms of Male Total Average Weekly Earnings. This is a measure of average income in Australia. Because this measure is published regularly by the Australian Bureau of Statistics, the amount of child support that parents pay will keep up with movements in income.

The following table shows how the Costs of the Children Table will look when populated with dollar amounts. (Note that the MTAWE figures used in this table are provided as a sample only, as they were estimates for 2006 during research on the costs of children. These figures approximate actual 2006 figures but are not identical).

Each year, the Table will be Gazetted in this way with updated MTAWE figures (see item 98 in Schedule 2 to this bill) and populated with dollar amounts, in the same way as the Tax Commissioner publishes a tax table each year. The tax table sets out an amount payable at the lower limit of each income tax band and a marginal rate for each dollar an income band, above the lower limit. Gazetting the Costs of the Children Table will make it simpler for parents to determine the costs of their children.

This means that to work out the costs of the children in a child support case, it is first necessary to locate the correct category of costs in terms of ages and number of children. Then locate the correct income band for the parents' combined child support income. Subtract the lower limit of that income band from the parents' combined child support income, and multiply the remaining income by the specified percentage. Then add the dollar amount specified in the same place. This set dollar amount is the total that is payable for all the bands below the parents' particular band.

Using the figures in the table above, for example, this means that if two parents have a combined child support income of $78,000 and one child, they do not have to calculate 17c for every dollar up to $25,324, plus 15c for every dollar between $25,325 and $50,648, plus 12c for each dollar between $50,648 and $75,972, plus 10c for every dollar between $75,973 and their combined child support income. Rather, they can simply add $11,143 to the amount found by calculating 10c for every dollar between $75,973 and their combined child support income.