The Legal Practitioner's Guide

4.4.4 A child's income

Under the Child Support (Assessment) Act 1989 a child remains an eligible child for a child support assessment until their 18th birthday (section 12(1)(c)). Where the child's secondary education continues beyond their 18th birthday, the assessment can be extended to the last day they receive secondary education in the school year of their 18th birthday, provided that an application to extend the assessment is received before they turn 18 (sections 151B, 151C and 151D).

CSA cannot end a child support assessment because of the income earned by an eligible child. However, a court can make a departure order that varies the assessment for that child if it believes that it is just and equitable to change the assessment because of the child's income, earning capacity or financial resources (section 117(2)(c)(i)).

Also, if a child's income is significant, it may indicate that a terminating event has occurred because the parent/s may cease to be an eligible carer/s (sections 12 and 7B).

The parents can also make a child support agreement to cover this situation, or the payee can make an election to end the assessment (sections 151 and 151A) for that child if he or she believes this is appropriate (and he or she does not receive more than the base rate of Family Tax Benefit Part A). A court order or agreement could also reduce or set the assessed cost of that child (see 4.4.3(f)), or assess the costs of the children in the case as though the self-supporting child were not an eligible child.

Departure order

Where child support is payable for only one child

• That pursuant to section 117 of the Child Support (Assessment) Act 1989 there be a departure from the administrative assessment(s) of child support payable by [Parent A's name] to [Parent B's name] for the child [child's name] as follows:

• The annual rate of child support will reduce to [$nil or some other specified amount per period] for any period in which [child's name] is self-supporting. For the purpose of this clause, 'self-supporting' means [definition – eg, working at least X hours per week or earning a gross income of $X per week].

Where child support is payable for more than one child

• That pursuant to section 117 of the Child Support (Assessment) Act 1989, there be a departure from the administrative assessment(s) of child support payable by [Parent A's name] to [Parent B's name] for the child(ren) [child(ren)'s names] as follows:

• For any period in which an eligible child of the assessment is self-supporting the costs of children amount for all of the children will be calculated as if the self-supporting child were not an eligible child; and an additional amount of $x will be added to the annual rate of child support that would otherwise be payable.

(The italicised words are optional – see 'Tips and problems' below.)

• For the purpose of clause 2, 'self-supporting' means [definition – eg, working at least X hours per week or earning a gross income of $X per week].

Child support agreement
If the payer and payee agree that the payer should not pay any child support for a child who is self-supporting, and the payee does not receive Family Tax Benefit (Part A) at more than the base rate, then the simplest option is for the payee to make an election to end the child support assessment for that child. The payee can then re-apply for child support for the child if he or she ceases to be self-supporting before turning 18.

If ending the assessment for the child is not a possibility because the payee receives Family Tax Benefit (Part A) at more than the base rate, parents can make a child support agreement to vary the rate of child support payable for a self-supporting child. CSA can only accept the agreement if the parents sign a binding child support agreement (section 80C), as the amount will be for less than the formula amount.

Where child support is payable for only one child

• [Parent A] and [Parent B] agree that [Parent A]'s child support payments for [child's name] will reduce to [$nil or some other specified amount per period] for any period in which [child's name] is self-supporting.

• For the purpose of this agreement, 'self-supporting' means [definition – eg, working at least X hours per week or earning a gross income of at least $X per week].

Where child support is payable for more than one child

• [Parent A] and [Parent B] agree that for any period in which an eligible child of the assessment is self-supporting the costs of children amount for all of the children will be calculated as if the self-supporting child were not an eligible child; and an additional amount of $x will be added to the annual rate of child support that would otherwise be payable.

(The italicised words are optional – see 'Tips and problems' below.)

• For the purpose of clause 1, 'self-supporting' means [definition – eg, working at least X hours per week or earning a gross income of at least $X per week].

Tips and problems

Defining 'self-supporting'
Generally, a person aged 18 or less will not be earning an income sufficient to provide for all of their needs, especially if they are still attending school or undertaking tertiary study or vocational training. It is recommended that a clause modifying child support when a child is self-supporting refers to the number of hours the child would need to work to be considered self-supporting, or perhaps the level of income that the child would need to earn.

Economies of scale
CSA makes just one child support assessment for all of the eligible children in a case. In most cases, where one child is self-supporting, but the others are not, it is likely that parents would intend that child support for the remaining children would be calculated as if they were the only eligible children in the assessment. This must be specified in the agreement or order as in the example above. Simply reducing the amount for a particular child to nil will not have this effect, due to the economies of scale factored into the Costs of Children Table where there are several children in a family. For example, for a combined child support income of $52,073, the assessed cost of one 15-year-old child if they are the only child in the family is $11,717. The cost of the 15-year old child if they also have an assessed 16-year-old sibling is half of $14,841, or $7,421.

Adding a set dollar amount for a child who is self-supporting
The optional wording suggested above for cases where there is more than one eligible child in the assessment (i.e. 'and an additional amount of $x will be added to the amount of child support that would otherwise be payable'), because the payee continues to bear some costs for that child, does not turn that clause into an income amount order. Refer to 4.4.3 under the heading 'Income amount orders and estimates' for an explanation of the effect of an income amount order (section 59). Alternatively, the cost of the child can be varied or set at the desired residual amount (see 4.4.3(f)), instead of treating the child as though they were no longer an eligible child and adding the residual amount to the assessment.

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