The basics of the formulaCSA's online guide to administration of the new child support scheme
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Your income
Each parent’s income is considered in the same way and combined to work out the costs of the children. Each parent’s share of the total income shows how much of the children’s costs they should meet.
Click on one of these topics for more information:
- What income do we use for child support?
- Are both parent’s incomes treated the same?
- If your income details change
- Is your new partner’s income taken into account?
What income do we use for child support?
A broad range of income amounts are taken into account to work out your child support payments, for both parents. We add up these amounts to get your adjusted taxable income, which is based on your last completed financial year of income.
Example: Jamie
Jamie and Lyn's child support period starts on 13 November 2008. Jamie's adjusted taxable income will be based on his 2007–2008 taxable income.
Your adjusted taxable income comprises the following amounts.
Taxable income
This is the income shown on your tax return. While the formula uses taxable income, the impact of tax on your disposable income is taken into account when we work out the costs of raising your children.
Note: Some income support payments are taxable, some are not.
Gross reportable fringe benefits total
This is the value of gross reportable fringe benefits for the income year, which is reported on your payment summary. Or ask your employer to tell you the expected amount for the year.
A fringe benefit is a benefit provided to you because of your employment. Examples include using a work car privately, low or no interest loans for employees, or a living away from home allowance.
Target foreign income
This is any foreign income you receive that is not taxable income or a fringe benefit.
Net rental property losses
A net rental property loss is where you have a rental property and the costs outweigh the income. We add any loss back on to your taxable income for child support purposes.
Some tax-free pensions or benefits
This includes disability support pensions, wife pensions and carer payments. It also includes the following payments from the Department of Veterans’ Affairs:
- invalidity service pension
- partner service pension
- income support supplement
- Defence Force income support allowance
Your child support assessment is based on your child support income. To get your child support income we deduct a self-support amount, then deduct a relevant dependent child amount and/or a multi-case allowance amount if applicable, from your adjusted taxable income.
Are both parents’ incomes treated the same?
Yes. Both parents have the same self-support amount set aside, and both parents’ child support incomes are combined to work out the costs of raising the children.
The costs of children are divided between the parents according to each parent’s share of the total combined income. This is called the income percentage.
Example: Joseph and Ellie
Ellie and Joseph have separated and have a child support assessment. Joseph's taxable income for 2006–07 was $22,000. He also received $28,000 in foreign income. Added together gives his adjusted taxable income of $50,000. The self-support amount of $18,252 is deducted from his income, leaving $31,748—which is his child support income.
Ellie's taxable income for 2006–07 was $25,000. She also had $2,000 in rental property losses and $3,000 was shown on her payment summary for gross reportable fringe benefits. Added together gives her an adjusted taxable income of $30,000. The self-support amount of $18,252 is deducted from her income, leaving $11,748—which is her child support income.
Added together, Joseph and Ellie's combined child support income is $43,496. Their income percentages show the portion of the costs of the children each parent should meet. For Joseph, this is $31,748 divided by $43,496—he needs to meet 73 per cent of costs. For Ellie, this is $11,748 divided by $43,496—she needs to meet 27 per cent of costs.
If your income details change
It’s important that you tell us about changes to your income as soon as it happens, because we may not be able to backdate the change. Learn more about income changes.
Is your new partner’s income taken into account?
No. Your or the other parent’s new partner’s income is not taken into account when working out child support payments because the biological parents have a responsibility to support their children financially.
