2.4.1: The basic formula

Context

CSA uses the basic formula to calculate the annual rate of child support payable under a child support assessment unless:

• a modified formula applies, or
• the assessment is varied by a departure order, (see chapter 2.7), or
• the assessment is varied by a change of assessment decision, (see chapter 2.6), or
• the assessment is varied by the provisions of a child support agreement that have effect as if they are a consent order. (See chapter 2.5, heading Effect of an agreement).

Legislative references

Division 1 of Part 5, Sections 5, 35 to 39 and 156 Child Support (Assessment) Act 1989

Sections 23AF and 23AG Income Tax Assessment Act 1936

Section 66M Family Law Act 1975

Section 124 Family Court Act 1997 (WA)

Income Tax Assessment Act 1997

Fringe Benefits Tax Assessment Act 1986

Explanation

The annual rate of child support payable in relation to a day in a child support period is calculated using the formula (section 36(1)):

Child support percentage x adjusted income amount

Child support percentage

The child support percentage is determined by the number of children for whom the payer is liable to pay child support under a child support assessment (section 37).

1	18%
2	27%
3	32%
4	34%
5	36%

Adjusted income amount

The adjusted income amount is calculated using the formula (section 36(2)):

Child support income amount - exempted income amount

The adjusted income amount cannot be less than nil.

Child support income amount

The child support income amount is the sum of a parent's taxable income for the last relevant year of income and their supplementary amounts for the last relevant year of income.

Exempted income amount

The exempted income amount for a payer with no relevant dependent children is 110% of the annual amount of the unpartnered rate of social security pension for the child support period (section 39 (1)(a)) (see basic values table).

If the payer has a relevant dependent child the exempt income amount is 220% of the annual amount of the partnered rate of social security pension for the child support period (section 39(1)(b)) plus an amount for each child (section 39(2)) (see basic values table).

Relevant dependent child

A payer's relevant dependent child can be their child (natural, adopted or born as the result of an artificial conception procedure) or, in certain circumstances, their step-child. The payer must be the sole or principal provider of ongoing daily care for the child (this includes where the payer and their new partner are jointly caring for the child in the home that they share) or have major contact with the child (see chapter 2.2 topic levels of care).

A relevant dependant child must be under 18 years of age, and cannot be a member of a couple. However, if an assessment for a child has been extended until they finish school the child is taken to be aged 17 until a terminating event happens (section 151D(2A)). This means that where the care of the child is divided the child is still a relevant dependant for the purposes of the assessments.

A step-child is not a payer's relevant dependent child unless the payer has a duty to maintain that child by order of a court under section 66M of the Family Law Act or section 124 of the WA Family Court Act, (see chapter 4.3 Court applications, heading Orders in relation to step-children).

A child that is in the shared care of the payer and payee is not the payer's relevant dependent child. However, a modified formula applies in these cases and the exempted income of each parent is increased by an additional amount (section 48(1)(d)).

Taxable income and last relevant year of income

CSA uses a parent's taxable income for the last relevant year of income to calculate their child support assessment. The last relevant year of income for a child support period is the financial year that ended before the start of the child support period (sections 38 and 45). The parent's taxable income is as defined in the Income Tax Assessment Act.

Supplementary amount

A parent's supplementary amount for a year of income is the sum of the parent's:

• exempt foreign income - the total of the parent's income that is exempt from tax under sections 23AF and 23AG of the Income Tax Assessment Act, less the amount of losses and outgoings incurred (sections 38A(2) and 45A(2)). A parent's exempt foreign income cannot be reduced below zero.
• rental property loss - the amount by which the parent's allowable rental property deductions under the Income Tax Assessment Act (other than prescribed allowable deductions of that kind) exceed the parent's rental property income (sections 38A(4) and 45A(4)). This does not include rental income derived as part of a partnership.
• reportable fringe benefits (sections 38A(1) and 45A(1)) - the total employee's reportable fringe benefits, as defined by the Fringe Benefits Tax Assessment Act, for the year of income (section 5). Reportable fringe benefit amounts are those with a total grossed up value of at least $1,000.

If a parent has lodged a tax return CSA will use the supplementary amounts shown on that return.

Example

M is paying child support to F for a child, A. The basic formula applies. M's taxable income for the last relevant year of income is $28,000 and there is no supplementary amount. M has no relevant dependants. M's exempted income amount is $12,315. The child support percentage for one child is 18%. The annual rate of child support (for a child support period commencing 1 January 2003) is calculated:
Annual rate of child support	= ($28,000 - $12,315) ´ 18% = $2,823
(The annual rate is rounded up or down to the nearest whole dollar (section 156)).

---

Version 1.5

Issued 1 January 2008

Feedback

<<< Previous | Next >>>