The Legal Practitioner's Guide
1.3 (a) Basic Formula (Formula 1) components
After 1 July 2008, child support will be calculated using six formulae. Around 90% of
assessments will use Formula 1, the basic formula, which calculates child support for
single child support cases (see below) with no non-parent carer. The other formulae are
variations of this basic formula, and are briefly described in chapter 1.4.
It should be noted that the new formula considers all the children of the same two parents
as forming a single child support case. This means that if neither parent has another
child support case and there is no non-parent carer, Formula 1 applies, regardless of
their care arrangements. This is a change from the situation prior to 1 July 2008, where
parents who each have care of one child of their relationship, or who share care of a
child, are considered to have two "reverse cases", where each parent is in turn
assessed as a liable (payer) and a receiving parent (payee).
Formula 1 assesses the cost of the children based on the combined available resources of
the parents, and then distributes this cost between the parents based on their respective
shares of these resources. Either parent may meet through care some or all of the costs
for which they are responsible. Usually, one parent will not meet all of their share of
the costs through care, and will need to transfer child support to the other parent, who
is meeting more than their share. The amount they need to transfer will be based on how
much of their share they need to transfer, and on the costs of the children according the
Costs of Children Table.
The formula takes into account the following information:
-
each parent's adjusted taxable income (section 43) – representing their total
resources, including taxable income, taxable and non-taxable income support payments,
reportable fringe benefits, net rental losses, foreign income, etc;
-
each parent's self-support amount (section 45) – an allowance for each parent to
meet their own basic expenses before their income is considered as available resources
for child support calculations. The amount is the same for each parent and is indexed
each year. For child support periods that start in 2008, it will be $18,272 –
updated information is available from www.csa.gov.au;
-
each parent's relevant dependent child amount (section 46) – an allowance
deducted from the parent's adjusted income to recognise their financial responsibility
for children in a new family, calculated using the Costs of Children Table and that
parent's income;
-
each parent's child support income (section 41) – representing the parent's
resources that are available to support the child support children, after the
self-support and relevant dependent child amounts have been deducted;
-
the parents' combined child support income (section 42) – representing the total
available resources of the two parents;
-
each parent's income percentage (section 55B) – the share that each parent has
of these combined resources, and therefore the share of the costs that they must meet;
-
each parent's care percentage (section 48) – the care that each parent has of
each child support child;
-
each parent's cost percentage (see table in section 55C) – the share of the
child's costs that each parent incurs through their care;
-
each parent's child support percentage (section 55D) – the share of the child's
cost that a parent must transfer – this is their share of the resources (income
percentage) minus the share that they meet directly (cost percentage). A parent who
meets more of the costs than their share of the resources will have a negative child
support percentage and will generally receive child support;
-
the cost of the child (section 55G & 55H) – according to the Costs of
Children Table, based on the parents' combined available financial resources; and
-
annual rate of child support (section 35) – the amount transferable, calculated
by multiplying the child support percentage of the parent with the positive percentage
by the cost of the child.