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2.4.11 Fixed annual rate of child support for certain low income parents

Context

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

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

On this page

What is the fixed annual rate of child support?

A fixed annual rate is payable by parents with a low ATI 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 addresses situations where a parent minimises 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 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 (e.g. due to their current partner's income). These parents can apply for the fixed annual rate not to be used as it may be unfair to apply the fixed annual rate in these circumstances. 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 CSA Act section 65A(2) at $1,060 per child. This amount is increased each year by an indexation factor (see 2.4.2 for current rate). The liability of a parent under this provision is capped at a maximum of 3 times the fixed annual rate (CSA Act section 65A(3)).

The fixed annual rate is indexed each calendar year in line with the CPI 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 ATI for the last relevant year of income is less than the parenting payment (single) maximum basic amount as at 1 January of that year, 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 as at 1 January of that year, and
  • that parent has less than shared care of the child.

Note: If a parent's ATI has been set at a particular amount through an income amount order 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)).

Income support payment

The term 'income support payment' is defined in CSA Act section 66(9). Under section 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, or
(f) a veteran payment made under an instrument made under section 45SB of the Veterans' Entitlements Act.

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

  • youth allowance, or
  • austudy payment, or
  • JSP, or
  • special benefit, or
  • parenting payment (partnered).

A social security pension is:

  • age pension, or
  • disability support pension, or
  • carer payment, or
  • parenting payment (single).

The references in SSAct section 23(1) to 'income support payment', 'social security benefit', 'JSP' 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)).

Note: Widow allowance and partner allowance were included in the definition of social security benefit up to and including 31 December 2021. These allowances ceased to exist from 1 January 2022 and are no longer included in the SSAct from that date.

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

The fixed annual rate will apply if the parent's ATI for the last relevant year of income is less than the parenting payment (single) maximum basic amount as at 1 January of that year (see 2.4.2 for current rates).

If the parent has lodged an estimate of their current ATI under CSA Act section 60, the estimate amount is compared with the parenting payment (single) maximum basic amount at the second condition in the 'When does the fixed annual rate apply?' section 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)).

Shared care of the child

A fixed annual rate assessment is only made if the parent has less than shared care of the child. The fixed annual rate is not applied if the parent has shared care of the child (i.e. care of the child for 35% (128 nights) or more in a year (2.2.1)) (CSA Act section 65A(1)(c)). This is because 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 annual rate assessment will be made.

Example: Ibrahim is assessed in respect of the costs of their children, Pia and Halvar, for a child support period commencing 8 August 2019. Ibrahim did not receive an income support payment in the last relevant year of income (2018-19) and had an ATI for that year of less than the relevant pension parenting payment (single) maximum basic amount. Ibrahim has regular care of Pia and Halvar.

The assessment is made applying the fixed annual rate. The amount payable is $1,443 for each child, a total of $2,886.

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 a parent. It is simply 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 the first parent is determined (CSA Act section 67A).

Example: Nathan and Susanne have 2 children, Johanna and Ane. Johanna lives with Nathan and Ane lives with Susanne.

The cost of each child for a child support period commencing in 2019, calculated using the basic formula, is $920.

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

Nathan is liable to pay $920 to Susanne for Ane, the child in Susanne's care.

Susanne is liable to pay $1,443 to Nathan for Johanna, the child in Nathan's care.

The amounts payable are offset with Susanne required to pay $523 to Nathan.

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)).

Example: In 2019, Clementine is assessed to pay child support to Alex for their children, Selina and Able. Clementine is also assessed to pay child support to Verity for their children Laura, Dan and Lukas. Clementine has regular care, or less, of all the children.

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

The amount payable for each child is:

(3 × 1,443) ÷ 5 = $866.

The annual rate payable to Alex is $866 × 2 = $1,732.

The annual rate payable to Verity is $866 × 3 = $2,598.

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).

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

As Ariston meets the conditions of CSA Act section 65A the liability for a child support period commencing in 2019 has been assessed at the fixed annual rate.

The amount payable to each carer for Melanie is:

$1,443 × (50 ÷ 100).

The annual rate payable to Simona is $1,443 × 0.5 = $722.

The annual rate payable to Donata is $1,443 × 0.5 = $722.

A parent can make an application for the fixed annual rate not to be 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 how the Registrar will make a decision on that application.

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