2.6.10 Reason 4 - income of the child
A parent 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.
CSA Act section 98C, section 117(2)(c)(i), section 117(4) to section 117(9)
On this page
- Grounds for departure under Reason 4
- Minimal earnings
- Significant income
- 'Just and equitable', & 'otherwise proper', & the kinds of decisions that can be made
Grounds for departure under Reason 4
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.
The Registrar 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 CSA Act. The Family Court 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 result in an unjust and inequitable level of child support under the child support assessment.
The Registrar 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 consideration of what is 'just and equitable'.
Minimal earnings are generally not regarded as a reason to change an assessment of child support (Mee and Ferguson (1986) FLC 91-716).
The Registrar 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.
The Registrar must disregard an income-tested pension, allowance or benefit (2.6.17) 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)).
If a parent applies for a change of assessment because their child receives more than a minimal income, the Registrar will consider whether that income is significant 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, generally the Registrar 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 maximum basic rate of youth allowance (SS Guide 126.96.36.199) payable to a child under 18 years of age living at home plus the income free threshold applicable to students/Australian Apprentices (SS Guide 188.8.131.52, 184.108.40.206). This means, for example, that as at 1 January 2023, a child would generally need to earn or receive a gross income of at least $406.45 per week for the earnings to be considered so significant as to be capable of affecting the assessment.
However, this is only a guide, and in certain circumstances, the Registrar may determine that the child's income is significant even if it is below this amount, or is insignificant even though it is above this amount. The figure will change periodically in line with changes to payment rates for youth allowance. The Registrar will also consider the needs of the child including the costs incurred by the child, or the parents, in earning the income, e.g. transport and clothing costs.
For example, where a child earns $406.45 per week but incurs high transport costs, and the payer has an adequate disposable income, it might not be considered fair to change the assessment.
However, if the payer has a low income and the payee is in a comfortable financial position, then it might be considered fair to change the assessment.
'Just and equitable' & 'otherwise proper', & the kinds of decisions that can be made
If there is a reason to change the assessment, the Registrar must consider whether it would be just, equitable and otherwise proper 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 significant income of one child may be sufficient to establish the reason in respect of that child. It may be appropriate to reflect the income of the child by reducing the costs of that child used in the assessment, which will reduce the total child support payable.
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 the school year in which the child turns 18, subject to an application under CSA Act section 151B (2.5.5).
The decision will depend on the circumstances of the case and any other reasons under consideration.