2.4.5: The payee's income is higher than the disregarded amount

Context

If a payee's income is higher than a certain amount it can reduce the child support assessment.

Legislative references

Subdivision D of Division 2 of Part 5, sections 43, 44,45, 45A and 46 Child Support (Assessment) Act 1989

Explanation

The payee's income can affect the amount of child support payable if:

• the payee is a parent of the child; and
• the payer is not an eligible carer of any children of the assessment (section 43) (i.e., the payee has sole care). (See chapter 2.2).

A payee's child support income amount is based on their taxable income and supplementary amounts for the last relevant year of income.

If a payee's child support income exceeds the disregarded income amount the payer's adjusted income is reduced by 50% of the excess (section 44(1)). However, the annual rate of child support cannot be less than 25% of the annual rate that would be payable if the payee's income was less than the disregarded income amount (section 44(2)).

Example

M is paying child support to F who has sole care of their child, A. M has a taxable income for the relevant year of $20,000 and no supplementary amount. M has no relevant dependants so the exempted income amount is $13,983. F has a child support income amount of $48,000. The disregarded amount is $41,881. The child support percentage for one child is 18%. The annual rate of child support (for a child support period commencing 1 January 2006) is calculated:
F's income in excess of disregarded	= $48,000 - $41,881 = $6,119
50 % of excess	= $3,060
Reduced adjusted income amount	= $20,000 - $13,983 - $3,060 = $2,957
Annual rate of child support	= $2,957 ´ 18% = $532
(The annual rate is rounded up or down to the nearest whole dollar (section 156)).
Minimum child support	= ($20,000 - $13,983) x 18% x 0.25 = $271
(The annual rate is rounded up or down to the nearest whole dollar (section 156)). The reduced amount is more than the minimum amount. M has to pay F the reduced amount of $532.

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Version 1.5

Issued 28 July 2006

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