The Legal Practitioner's Guide
4.2 Cost of the child
The new formula from 1 July 2008 approaches the cost of the child in quite a different way from
the previous formula.
Generally, if the cost of the child is higher than normal, this higher cost should be
distributed between the parents in accordance with their share of available resources, in the
same way as the cost of the child is normally distributed. (If one parent has a greater share
of the resources than is reflected in the assessment, this can be addressed by adjusting
elements of the formula relating to those resources, rather than by assigning additional costs
to that parent.) If care of the child is shared, the cost percentages may also need to be
adjusted, depending on who is meeting the child's additional costs. Alternatively, if one
parent is meeting all of the additional cost, it may be easier in situations involving shared
care to work out the other parent's dollar share of the additional cost, according to their
income percentage (see 1.3, step 3), and add to or subtract this from the annual rate. However,
such decisions may become outdated if the parents' incomes change.
Sometimes it may be appropriate to adjust the annual rate payable instead. For example, a
parent paying child support may particularly want the child to attend a certain school, and
therefore agree to bear all related costs. Adjusting the cost of the child would distribute
the extra cost between the parents, so the amount payable could be adjusted instead, depending
on who actually pays the school fees.
Examples of circumstances resulting in such adjustments and suggested draft terms follow at 4.4.
4.3 Other
If matters are very complex, or there are indications of child support avoidance, it may be
necessary to set an annual rate of child support payable. As this removes all flexibility
from the assessment, parents may need to apply for a fresh order if their circumstances change.
Parents making agreements may also decide that, in their circumstances, a particular dollar
rate of child support is appropriate, perhaps adjusted annually. However, this provides
limited options if their circumstances change, particularly for binding agreements. Parents
(and practitioners providing legal advice) will need to bear in mind that, due to the principle
that government contributions should not replace financial support from parents, Family Tax
Benefit will be paid on the basis of the child support that would have been payable if the
agreement had not been made (the notional assessment). That is, a future "shortfall" in child
support for a receiving parent as a result of an agreement will likely not be "made up" by any
increase in Family Tax Benefit. (This is not the case for departure orders made by a court,
nor for administrative Change of Assessment decisions made by CSA.)
Examples of circumstances resulting in such adjustments and suggested draft terms follow.