2.4.11 Fixed annual rate

Context

The Registrar will make a fixed annual rate assessment where a liable parent has a low ATI but did not receive income support payments during the last relevant year of income. The fixed annual rate amount may not be the final amount payable by a parent - it is the amount calculated at (for example) Step 8 of the basic formula (2.4.7), as payable by that parent in relation to the child.

The fixed annual rate addresses situations where a parent minimises their taxable income in a way that does not fairly represent their real capacity to pay child support, and thereby reduce or avoid the contribution they should make towards meeting the costs of their children. If a parent is 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 example, due to their current partner's income). A parent is able to apply to the Registrar to have the fixed annual rate not be used.

If an application to have the fixed annual rate not be used is refused and the parent believes that their assessment is unfair for other reasons, they may wish to consider applying for a change of assessment (2.6.1).

See 2.4.2 for the current fixed annual rate and current parenting payment (single) maximum basic amount. See 2.4.13 for historical rates and amounts.

On this page

• What is the fixed annual rate?
• How the fixed annual rate is calculated where a parent is liable for more than 3 children
• Paying the fixed annual rate for a child to more than one person
• Calculating the amount of child support to be transferred when the parent assessed to pay a fixed annual rate is also entitled to receive child support in a case
• Applying for the fixed annual rate to not be used
• Meaning of income
• Decision on application
• Amending an assessment if the reasons to not apply the fixed annual rate are no longer satisfied

What is the fixed annual rate?

The fixed annual rate is a prescribed amount paid per child, for up to 3 children in an assessment if (CSA Act section 65A):

• the parent did not receive an income support payment (SS Guide 1.1.I.80) in the last relevant year of income
• that parent's ATI (actual or estimated) for the last relevant year of income is less than the parenting payment (single) maximum basic amount as at 1 January of that year, and
• that parent has less than shared care of the child (less than 35% care) - see 2.2.1 for basics of care.

Note: If a parent's ATI has been set at a particular amount by an income amount order (for example, as part of a change of assessment process (CSA Act section 98S(1)(g))), the fixed annual rate will not apply. This is because their ATI has not been calculated under CSA Act section 43 (CSA Act section 65A(1)(b)(i)).

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 fixed 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).

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 the formula in 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).

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

The fixed annual rate amount payable by a parent in relation to the child is subject to any offsetting of amounts calculated as payable by the other parent before the final amount payable by the first parent is determined (CSA Act section 67A).

Applying for the fixed annual rate to not be used

If a parent is assessed to pay the fixed annual rate, they can make an application for the fixed annual rate to not be used. (CSA Act section 65B(1)(a)).

If a determination had been made immediately before the end of the previous child support period that the fixed annual rate should not apply (under CSA Act section 65B(4)), then the parent is deemed to have made an application that the fixed annual rate not be used in the new child support period (CSA Act section 65B(1)(b)).

The parent making the application must provide evidence that:

• their current income (not ATI) is no more than the relevant parenting payment (single) maximum basic amount (CSA Act section 65B(2)(a)), and
• it would be unjust and inequitable to expect them to pay the fixed annual rate (CSA Act section 65B(2)(b)).

Meaning of income

A parent's current income is generally their income for the 12-month period from the date of the application.

An income tax assessment for the last relevant year of income will not be sufficient evidence of the parent's income as the Registrar must use the definition of income in CSA Act section 66A(4) to determine if the parent's current income is no more than the relevant parenting payment (single) maximum basic amount.

In CSA Act section 66A(4), income is defined as:

• any money received, earned or derived for personal use or benefit, or
• any periodic payment by way of gift or allowance.

The exclusions to this definition are prescribed in the regulations (CSA Regs section 13):

• amenity allowances or gratuities (incidental payments for personal items or other minor expenses, but not payments for work, study or participation in approved programs) paid to prisoners
• disability support pensions, pensions paid to veterans who are totally and permanently incapacitated and Special Rate Disability Pension for veterans, where at least 85% of the pension is paid to another person for the provision of ongoing care to the pension recipient
• a National Disability Insurance Scheme (NDIS) amount (as defined in the National Disability Insurance Scheme Act 2013), and
• payments of 'redress' within the meaning of the National Redress Scheme for Institutional Child Sexual Abuse Act 2018.

In considering a parent's financial circumstances, 'money':

• includes coins and bank notes, cheques and deposits into bank accounts (but not goods, services, or some other benefit, even if the payment is capable of being valued in money terms)
• is 'earned' when it is received in return for labour or service, in compensation or as profit
• is taken to be 'derived' in accordance with ordinary business and commercial principles including capital payments, trust distributions and royalties
• is taken to be 'received' when it comes into a person's possession (This covers most money which comes into a person's hands including capital payments, for example, a tax refund, Lotto wins, lump sum compensation, profit from the sale of an asset, deposits into a joint bank account)
• must be received for the person's own use or benefit (Income received by a person in another capacity is not included).

Only net income is considered. The Registrar will deduct the person's expenses (that would be recognised for taxation purposes) that directly relate to them earning the particular type of income from their gross income. However, 'paper expenses' (such as depreciation of property or assets, or carried forward losses) should not be deducted as they are not considered to relate directly to earning the income and do not reduce cash flow.

If expenses claimed are discretionary (for example, repairs to a rental property), the Registrar must be satisfied that they were necessary before they will be deducted from the parent’s income.

Although taxable income is calculated by taking the total amount of deductions away from the total amount of assessable income, the Registrar will consider each individual source to determine if the amounts in total are no more than the relevant pension parenting payment (single) maximum basic amount. Losses from one source will not be deducted from income from another source.

Note: The superannuation pension and the lotto win (both non-taxable income) have been included in calculating the income for CSA Act section 66A(4) purposes. The parent's application for the fixed annual rate to not be used will not be granted as the total income exceeds the relevant parenting payment (single) maximum basic amount ($23,800 in 2023).

The Registrar is satisfied that Noor's current income is no more than the relevant parenting payment (single) maximum basic amount. The Registrar is also satisfied that it would be unjust and inequitable to expect Noor to pay the fixed annual rate. A determination is made under CSA Act section 65B(4) that the fixed annual rate not apply.

As Noor has regular care of the children, and is therefore contributing to the cost of the children, the minimum rate of child support (CSA Act section 66) does not apply. Noor is not required to pay child support for Florinda and Petra.

Decision on application

The Registrar must first be satisfied that the parent's current income is no more than the relevant parenting payment (single) maximum basic amount (2.4.2), before granting the application. If the parent's current income is more than the relevant parenting payment (single) maximum basic amount, the application must be refused (CSA Act section 65B(4)).

If the parent's current income is no more than the relevant amount, the Registrar must also be satisfied that it would be unjust and inequitable to expect the parent to pay the fixed annual rate (CSA Act section 65B(4)). The Registrar may decide that it would not be unjust and inequitable to require the parent to pay the fixed annual rate despite their income being low.

In making this decision, the Registrar will consider whether the parent's income accurately reflects their real capacity to pay child support, including whether the parent receives goods, services or benefits which mean that their current income is not an accurate representation of their financial position.

If an application is granted, the Registrar will specify the day on which the fixed annual rate ceases to apply to the parent (CSA Act section 65B(5)). In most cases, the Registrar will specify that the determination will apply from the first day in the child support period on which the fixed annual rate was payable. However, if making a determination that the fixed annual rate will not apply from the beginning of the child support period would create an overpayment for the payee, generally the Registrar will specify that the determination will apply from a date after the start of the child support period, for example, the date the application was made. In making this decision, the Registrar will consider the reasons for any delay in making the application.

If the fixed annual rate applies to only part of the child support period (for example, where the parent lodged an estimate of income after the beginning of the child support period), the determination not to apply a fixed annual rate will not apply to the earlier part of the child support period.

When the Registrar refuses to grant the application, the unsuccessful applicant must be notified in writing (CSA Act section 66C). That person can then object (4.1.2) to the particulars of the assessment.

Amending an assessment if the reasons to not apply the fixed annual rate are no longer satisfied

If after a determination for the fixed annual rate to not be used has been made, the Registrar may amend the assessment to apply the fixed annual rate, if the parent no longer meets the conditions for the determination that the fixed rate not apply (CSA Act section 66B(b)).

The Registrar will amend the assessment from the date:

• of the change in circumstances that meant CSA Act section 65B is no longer satisfied, if that date can be ascertained
• the fixed annual rate was first not applied, if CSA Act section 65B was in fact never satisfied, or
• the Registrar became aware of the change in circumstances that meant CSA Act section 65B is no longer satisfied.

The Registrar must notify the liable parent in writing that the fixed annual rate will again apply and that the assessment has been amended (CSA Act section 66C). That person can then object (4.1.2) to the particulars of the assessment.