2.6.10: Reason 4 - income of the child

Context

A payer or payee can apply for a change of assessment in special circumstances if the child support assessment is unfair because of the child's income, earning capacity, property or financial resources.

Legislative references

Sections 98C, 117(2)(c)(i) and 117(4) to 117(9) Child Support (Assessment) Act 1989.

Explanation

The usual formula assessment provisions do not take into account the child's personal income when calculating the rate of child support payable by a parent for that child.

CSA cannot end a child support assessment because of the income earned by an eligible child. However, there may be a reason for changing an assessment if in the special circumstances of the case, the administrative assessment of child support results in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child because of the income, earning capacity, property and financial resources of the child (section 117(2)(c)(i)).

The phrase 'special circumstances of the case' is not defined in the Assessment Act. The Family Court has held that 'it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary' ( Gyselman and Gyselman (1992) FLC 92-279).

Each case has to be considered in the light of the individual circumstances of the child and the parents. Substantial income and/or assets, whether or not directly under the control of the child, will be relevant when deciding whether the assessment is unfair.

A parent can make an application to change the child support assessment if they consider that the financial resources of the child results in an unjust and inequitable level of child support under the child support assessment.

CSA will consider the financial resources of the child in the context of the income and asset position of both parents. In most cases there will be some overlap between these considerations and that of consideration of what is 'just and equitable'.

Minimal earnings

Significant income

'Just and equitable', or fair, and the kinds of decision that can be made

Minimal earnings

Minimal earnings are generally not regarded as a reason to change an assessment of child support (Mee and Ferguson (1986) FLC 91-716).

CSA will not usually consider that the following types of income affect the financial responsibility of the parents:  

• income derived from casual work in holidays or after school hours,
• gifts of small amounts of money,
• pocket money.

CSA must disregard an income-tested pension, allowance or benefit received by the child (or by another person on behalf of the child) when considering that child's income, earning capacity, property and financial resources (section 117(7)).

Significant income

If a child receives more than a minimal income (i.e. a 'significant income', CSA will consider whether that income is sufficient to warrant a change to an assessment. This will depend upon the income of the child, the financial circumstances of the parents, the amount of child support payable under the assessment and the circumstances of the case. However, as a guide, CSA will not be satisfied that a child's income is sufficient to warrant a change to the assessment unless that income is regular and exceeds the equivalent of the Youth Allowance payable to a child under 18 years of age living at home plus the income free threshold applicable to students/New Apprentices. This means that as at August 2007, a child would need to earn or receive a weekly amount of $213.25 or more for the earnings to be considered so significant as to be capable of affecting the assessment.

CSA will also consider the needs of the child including the costs incurred by the child, or the payee, in earning the income, e.g. transport and clothing costs.

Example

'Just and equitable', or fair, and the kinds of decision that can be made

If there is a reason to change the assessment CSA must consider whether it would be fair to the child, the payer, and the payee to make a decision to change the assessment (sections 117(4) to 117(9)).

Where the assessment covers a number of eligible children, the self-supporting income of one child may be sufficient to establish the reason in respect of that child. It may be fair to reflect the income of the child by reducing the child support percentage that will reduce the total child support payable. Alternatively the disregarded income amount of the payee could be adjusted.

Where there is a change to the assessment due to the income, earning capacity, property and financial resources of the child, the change will usually have effect until the child turns 18, or the end of that school year.

The decision will depend on the circumstances of the case and any other reasons under consideration.

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Version 1.4

Issued 3 August 2007

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