2.4.11 Fixed Annual Rate of Child Support for Certain Low Income Parents

Context

Where a liable parent has a low adjusted taxable income or estimated income but did not receive income support payments during the last relevant year of income, a fixed annual rate assessment will be made.

Act references

CSA Act section 5, section 40A, section 40B, section 60, section 65A, section 65B, section 66, section 66A, section 66B, section 66C, section 67A, section 153A, section 155

SSAct section 23

Farm Household Support Act 2014 section 91, section 93

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What is the fixed annual rate of child support?

A fixed annual rate is payable by parents with a low adjusted taxable income or estimated income who did not receive income support payments during the last relevant year of income (CSA Act section 65A). The last relevant year of income is the financial year that ended before the start of the relevant child support period.

The fixed annual rate is intended to address the situation where parents minimise their taxable income in a way that does not fairly represent their true income or real capacity to pay child support, and thereby reduce or avoid the contribution they should make towards meeting the costs of their children.

If parents are genuinely on a low income they will usually access social security or other income support payments. Some parents may genuinely be on a low income and either choose not to access income support payments, or may not be eligible to receive such payments. For these parents it may be unfair to impose the fixed annual rate and they can apply for the fixed rate not to be used. See 2.5.3 for information about making an application for the fixed annual rate of child support not to be used.

The fixed annual rate of child support is prescribed in the CSA Act at $1,060 per child (section 65A(2)) however is to be indexed each calendar year. The liability of a parent under this provision is capped at a maximum of 3 times the fixed annual rate (section 65A(3)).

The fixed annual rate is indexed each calendar year to the Consumer Price Index using the following formula (CSA Act section 153A):

$1,060 × (Highest September quarter index number ÷ 2005 September quarter index number)

The highest index number for a September quarter since the September 2005 quarter will usually be the figure for the most recent September quarter.

The indexed fixed annual rate for a particular calendar year applies to child support periods starting within that calendar year (CSA Act section 153A). The current fixed annual rate is included in the table of basic values in 2.4.2 together with previous year's figures.

The Registrar is required to publish the fixed annual rate of child support for the next year in the Australian Government Gazette before the end of each calendar year (CSA Act section 155).

When does the fixed annual rate apply?

The fixed annual rate is the rate payable by a parent for a child if:

  • the parent did not receive an income support payment in the last relevant year of income, and
  • that parent's adjusted taxable income for the last relevant year of income is less than the parenting payment (single) maximum basic amount OR the Registrar has accepted an estimate of the parent's current income and the estimated income is less than parenting payment (single) maximum basic amount, and
  • that parent has less than shared care of the child.

Note: If a parent's adjusted taxable income has been set through the change of assessment process (see CSA Act section 98S(1)(g)), the fixed annual rate will not apply to a parent because their adjusted taxable income has not been calculated under CSA Act section 43 (see CSA Act section 65A(1)(b)(i)).

Income support payment

The term income support payment is defined in CSA Act section 66(9). Under 66(9)(a) the term has the meaning given by SSAct section 23(1). In that Act the term is defined as:

(a) a social security benefit, or
(aa) a job search allowance, or
(b) a social security pension, or
(c) a youth training allowance, or
(d) a service pension, or
(e) income support supplement under Part IIIA of the Veterans' Entitlements Act.

SSAct section 23(1) also contains definitions for these terms. A social security benefit is a:

(aa) widow allowance, or
(aab) youth allowance, or
(aac) austudy payment, or
(a) newstart allowance, or
(c) sickness allowance, or
(d) special benefit, or
(e) partner allowance, or
(ea) mature age allowance under Part 2.12B, or
(f) benefit parenting payment (partnered), or
(g) parenting allowance (other than non-benefit allowance).

A social security pension is:
(a) an age pension, or
(b) a disability support pension, or
(c) a wife pension, or
(d) a carer payment, or
(e) a pension parenting payment (single), or
(ea) a sole parent pension, or
(f) a bereavement allowance, or
(g) a widow B pension, or
(i) a mature age partner allowance, or
(k) a special needs pension.

The references in SSAct section 23(1) to 'income support payment', 'social security benefit', 'newstart allowance' and 'youth allowance' are modified, by sections 91 and 93 of the Farm Household Support Act 2014, to be taken to include 'farm household allowance' under that Act. This means that the term 'income support payment' under CSA Act section 66(9) is taken to include 'farm household allowance'.

An income support payment also includes a payment under the ABSTUDY scheme that includes an amount identified as living allowance that is paid at the maximum basic rate (section 66(9)(b)).

Income less than the pension parenting payment (single) maximum basic amount

The fixed annual rate will apply if the parent's adjusted taxable income for the last relevant year of income is less than the parenting payment (single) maximum basic amount (see 2.4.2 for current rates).

If the parent has lodged an estimate of their current adjusted taxable income under CSA Act section 60 then it is the estimate amount that is compared with the Parenting Payment (single) maximum basic amount at the second condition above. The other criteria are unchanged, i.e. the relevant test is still whether the parent received an income support payment during the last relevant year of income (CSA Act section 65A(1)).

The parent has less than shared care of the child

If a parent has shared care of the child (care of the child for 35% (128 nights) (see 2.2.1) or more in a year) then the fixed annual rate is not used (CSA Act section 65A(1)(c)). The parent is taken to be meeting some of the costs of the child through care.

If the 3 conditions are satisfied, then a fixed assessment will be made.

Example: M is assessed in respect of the costs of their children, A and B, for a child support period commencing 8 August 2008. M did not receive an income support payment in the last relevant year of income (2007-08) and had an adjusted taxable income for that year of less than the relevant pension parenting payment (single) maximum basic amount. M has regular care of A and B.

The assessment is made applying the fixed annual rate. The amount payable is $1,122 for each child, a total of $2,244.

How the amount of child support to be transferred is calculated when the parent assessed to pay a fixed annual rate is also entitled to receive child support in a case

The amount calculated under CSA Act section 65A may not be the final amount payable by the parent to the other parent. It is the amount calculated at (for example) Step 8 of the basic formula, as payable by that parent in relation to the child. That figure is subject to any offsetting of amounts calculated as payable by the other parent before the final amount payable by a parent to the other parent is determined (CSA Act section 67A).

Example: M and F have 2 children, A and B. A lives with M and B lives with F.

The cost of each child for a child support period commencing in 2008, calculated using the basic formula, is $920.

F did not receive an income support payment in the last relevant year of income and had an adjusted taxable income for that year of less than the relevant parenting payment (single) amount. Therefore F is assessed to pay the fixed annual rate for A.

M is liable to pay $920 to F for B, the child in F's care.

F is liable to pay $1,122 to M for A, the child in M's care.

The amounts payable are offset with F required to pay $202 to M.

How the fixed annual rate is calculated where a parent is liable for more than 3 children

If the fixed annual rate assessment is payable for more than 3 children then the amount payable is capped at 3 times the annual rate (CSA Act section 65A(3)). The amount payable for each child is calculated according to the following formula (CSA Act section 65A(4)):

Amount for each child = (3 × fixed annual rate ÷ total number of children for whom child support is payable by the parent under CSA Act subsection 65A(1))

Example: In 2008 F is assessed to pay child support to M1 for their children, A and B. F is also assessed to pay child support to M2 for their children C, D and E. F has regular care, or less, of all the children.

As F did not receive an income support payment in the last relevant year of income and their adjusted taxable income is less than the relevant parenting payment (single) amount F has been assessed at the fixed annual rate.

The amount payable for each child is:

(3 × 1,122) ÷ 5 = $673

The annual rate payable to M1 is $673 × 2 = $1,346.

The annual rate payable to M2 is $673 × 3 = $2,019.

Paying the fixed annual rate for a child to more than one person

If the care of a child is shared between a parent and a non-parent carer, or between 2 non-parent carers, then the fixed annual rate payment is shared between the carers in accordance with CSA Act section 40A (CSA Act section 65A(5)):

Total rate that the parent and non-parent carers are entitled to be paid for the day × (Parent's or non-parent carer's cost percentage for the child ÷ Total of parent's and non-parent carer's cost percentage for the child)

A non-parent carer is not entitled to be paid child support unless they have at least 35% care of the child and they have applied under CSA Act section 25A in relation to the child (CSA Act section 40B).

Example: M and F have one child A, who lives one week with F and one week with M's mother G. F and G each have a cost percentage of 50%. M has less than regular care of A. G has applied for an assessment of child support for A.

As M meets the conditions of CSA Act section 65A the liability for a child support period commencing in 2008 has been assessed at the fixed annual rate.

The amount payable to each carer for A is:

$1,122 × (50 ÷ 100)

The annual rate payable to F is $1,122 × 0.5 = $561.

The annual rate payable to G is $1,122 × 0.5 = $561.

A parent can make an application that the fixed annual rate is not used

If the Registrar makes an assessment applying CSA Act section 65A to a parent, the parent can make an application for the fixed annual rate not to be used. The parent must show that their income is genuinely low and that it would be unjust and inequitable for them to pay the fixed annual rate (CSA Act section 65B(2)). See 2.5.3 for information on making an application and also information on how the Registrar will make a decision on that application.

Last reviewed: 3 July 2017