2.4.4: The payer has a high income

Context

The amount of child support payable is capped by limiting the income used for a payer.

Legislative references

Sections 5, 42 and 156 Child Support (Assessment) Act 1989

Explanation

For the days in any child support period after 1 July 2006 a payer's income is 'capped' at 2.5 times the annual equivalent of all employees average weekly total earnings for the child support period (EAWE). If a payer's child support income amount exceeds the cap their adjusted income amount is reduced to:

2.5 times the annual equivalent of the relevant EAWE less the exempted income amount.

Example

M is paying child support to F for one child, A. M has a taxable income for the relevant year of $280,000 and no supplementary amount. 2.5 times EAWE for a child support period that starts on 1 September 2006 is $104,702. M has no relevant dependants so the exempted income amount is $13,983. The child support percentage for one child is 18%. The annual rate of child support for the child support period is calculated:
Reduced adjusted income amount	= $104,702 - $13,983 = $90,719
Annual rate of child support	= $90,719 ´ 18% = $16,329
(The annual rate is rounded up or down to the nearest whole dollar (section 156)).

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Version 1.5

Issued 1 July 2006

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