5.2.6 Reason 6 - high costs of child care
Context
A parent (1.1.P.10) or non-parent carer can apply to change their child support assessment (1.1.C.70) in special circumstances if they consider that the costs of maintaining a child under 12 years of age are significantly affected by the high costs of child care.
While this mostly applies to payments made to registered child care providers, it may also apply to payments made to a person (such as a grandparent) that provides care (1.1.C.10) for the child.
Act references
CSA Act section 5, section 44, section 98C, section 98S, section 117(2)(b)(ib), section 117(3A), section 117(3B), section 117(3C), section 117(4) to (9)
On this page
- Grounds for departure under Reason 6
- High child care costs - costs incurred by a parent
- High child care costs - costs incurred by a non-parent carer
- Have the costs been incurred?
- Are the costs reasonable & necessary?
- Do the costs significantly affect the costs of the maintaining child?
- The kinds of decisions that reflect high costs of child care
Grounds for departure under Reason 6
An assessment can be changed if in the special circumstances of the case the costs of maintaining the child are significantly affected because of high child care costs in relation to the child (section 117(2)(b)(ib)).
Only net child care expenses are taken into account (that is, less any child care subsidy or additional child care subsidy that is deducted by the child care provider from the fees).
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).
Before an assessment can be changed, the Registrar must be satisfied that all of the following elements exist:
- in relation to costs incurred by a parent the child care costs are only high if they total more than 5% of the parent's ATI (1.1.A.20) for the CSP (2.3) (1.1.C.150) (section 117(3B))
- in relation to costs incurred by a non-parent carer the child care costs are only high if they total at least 25% of the COTC (1.1.C.210) for the CSP (section 117(3C))
- the costs of maintaining the child are significantly affected because of high child care costs (section 117(2)(b)(ib))
- the costs must be incurred by a parent or non-parent carer (section 117(3A)(a))
- the child must be younger than 12 years of age at the start of the CSP (section 117(3A)(b)).
If a reason to change the assessment is established the Registrar is required to consider whether it would be just and equitable (5.3) and otherwise proper (5.4) to make a particular decision.
High child care costs - costs incurred by a parent
Child care costs incurred by a parent are not high unless they are more than 5% of the parent's ATI for the CSP (section 117(3B)).
Example 1: A parent, Antonio, has child care costs of $3,000 over a 15- month CSP (457 days). Antonio's ATI for the CSP is $40,000.
Calculating if the child care costs are high, using Example 1.
| Method statement | Calculations |
|---|---|
Step 1: Calculate the parent’s ATI The Registrar will use the parent's ATI amount for the CSP in which the child care costs are, or will be incurred. This will be the income for the last relevant financial year (1.1.L.10), unless the Registrar: | Antonio’s ATI is $40,000 |
Step 2: Calculate the parent’s CSP income The parent’s ATI is divided by 365 and then multiplied by the number of days in the CSP. | The 15-month CSP has 457 days. ($40,000 ÷ 365 days) × 457 days = $50,082 |
| Step 3: Calculate 5% of the parent’s CSP income | $50,082 x 5% = $2,504 |
| Step 4: Calculate the child care costs. | Antonio’s child care costs are $3,000 |
| Step 5: Are the child care costs in Step 4 higher than the 5% income in Step 3? | As $3,000 is more than $2,504 it is established that Antonio's child care costs are high. |
Calculating if the child care costs are high if a parent’s income has changed, using Example 1
The Registrar will use the following method to calculate whether the parent's child care costs are high in a case where the parent's ATI changes within the CSP (for example, because the parent lodged an estimate of his or her income within the CSP). When ATI changes, the CSP will be separated into CSP sub-periods according to the dates that the parent’s income changes.
| Method statement | Calculations |
|---|---|
| Step 1: Identify each CSP sub-period according to the dates to which the different ATIs apply, and calculate the number of days in each sub-period. | The CSP starts on 1 January 2024 and finishes on 1 April 2025 based on income of $40,000. Antonio lodges an income estimate of $30,000 on 1 August 2024. CSP sub period 1 is 1 January to 31 July 2024 – 213 days. CSP sub-period 2 is 1 August 2024 to 1 April 2025 – 244 days. |
Step 2: Calculate the CSP sub-period income for each sub-period. The parent’s ATI for each sub-period is divided by 365 and then multiplied by the number of days in the CSP sub-period. Subperiod 1 – ($40,000 ÷ 365 days) × 213 days = $23,342. | Subperiod 2 – ($30,000 ÷ 365 days) × 244 days = $20,055. |
| Step 3: Work out the CSP income which is the sum of all CSP sub-period incomes. | $23,342 + $20,055 = $43,397 |
| Step 4: Calculate 5% of the parent’s CSP income | $43,397 x 5% = $2,170 |
| Step 5: Calculate the child care costs. | Antonio’s child care costs are $3,000 |
| Step 6: Are the child care costs in Step 5 higher than the 5% income in Step 4? | As $3,000 is more than $2,170 it is established that Antonio's child care costs are high. |
High child care costs - costs incurred by a non-parent carer
Child care costs incurred by a non-parent carer are not high unless they are more than 25% of the COTC for the CSP (section 117(3C)), in which the child care costs are, or will be incurred.
Example 2: A non-parent carer, Artamon, has annual child care costs of $2,500 for Calista who is 8 years old. The combined child support income of Calista's parents for the CSP is $40,000.
Calculating if the child care costs are high, using Example 2
| Method statement | Calculations |
|---|---|
| Step 1: Calculate the COTC for the relevant child in the CSP. | The COTC for Calista is therefore $6,800 per annum. |
| Step 2: Calculate the CSP COTC – the COTC is divided by 365 and then multiplied by the number of days in the CSP. | ($6,800 ÷ 365 days) × 457 days = $8,514 |
| Step 3: Calculate 25% of the CSP COTC | 25% x $8,514 = $2,129 |
| Step 4: Calculate the child care costs for the CSP - The annual child care costs are divided by 365 and then multiplied by the number of days in the CSP (a 15-month CSP is 457 days). | ($2,500 ÷ 365 days) × 457 days = $3,130 |
| Step 5: Are the child care costs in Step 3 higher than the CSP COTC in Step 2? | As $3,130 is more than $2,129 it is established that Artamon’s child care costs are high. |
The Registrar will use the following method utilising Example 2 to calculate whether the non-parent carer's child care costs are high in a case where the COTC change within the CSP (for example, because one of the child's parents lodged an estimate of his or her income within the CSP). When COTC changes, the CSP will be separated into CSP sub-periods according to the dates that the COTC changes.
Calculating if the child care costs are high if COTC change, using Example 2
| Method statement | Calculations |
|---|---|
| Step 1: Identify each CSP sub-period according to the dates to which the different COTC apply, and calculate the number of days in each sub-period. | The CSP starts on 1 January 2024 and finishes on 1 April 2025. The COTC are $6,800. The COTC change on 1 August 2024 to $5,000. CSP sub period 1 is 1 January to 31 July 2024 – 213 days. CSP sub-period 2 is 1 August 2024 to 1 April 2025 – 244 days |
Step 2: Calculate the CSP sub-period COTC for each sub-period. The COTC for each sub-period is divided by 365 and then multiplied by the number of days in the CSP sub-period. | Subperiod 1 – ($6,800 ÷ 365 days) × 213 days = $3,968. Subperiod 2 – ($5,000 ÷ 365 days) × 244 days = $3,342. |
| Step 3: Work out the CSP COTC which is the sum of all CSP sub-period COTC. | $3,968 + $3,342 = $7,310. |
| Step 4: Calculate 25% of the CSP COTC. | $7,310 x 25% = $1,827. |
| Step 5: Calculate the child care costs for the CSP - The annual child care costs are divided by 365 and then multiplied by the number of days in the CSP (a 15-month CSP is 457 days). | Artamon’s annual child care costs are $2,500. ($2,500 ÷ 365 days) × 457 days = $3,130 |
| Step 6: Are the child care costs in Step 5 higher than the 5% COTC in Step 4? | As $3,130 is more than $1,827 it is established that Antonio's child care costs are high. |
Have the costs been incurred?
A parent or non-parent carer should substantiate the costs incurred when making an application for a change to the assessment. Evidence can include enrolment forms for child care, holding fees and similar documentation. Costs are incurred if there is a definite commitment to the expenditure even if an actual payment has not been made. However, there must be a reasonable expectation that the cost will be incurred.
Are the costs reasonable & necessary?
There should be an element of necessity in incurring the child care costs, for example, work-related purposes. This extends to parents or non-parent carers attempting to join the workforce, including those who are undertaking study, training or education. It may also extend to non-work related purposes such as a need for respite, particularly in relation to a non-parent carer.
The Registrar has to determine the reasonableness of the costs claimed. Examples of reasonable child care costs include:
- day care centre costs
- before and after school care costs.
Payments to a private care provider, such as a nanny or grandparent, may be reasonable. If the costs are significantly higher than other available care, the Registrar will consider whether the higher costs are necessary in the particular circumstances.
Do the costs significantly affect the costs of maintaining the child?
A parent or non-parent carer must be able to show that the total costs of maintaining the child are high because the cost of child care for that child is high. If the cost of child care is high but the total cost of maintaining the child is no greater than usual there may not be a reason to change the assessment. The costs of maintaining the child are considered in the context of the financial circumstances of the parents.
The types of decisions that reflect high costs of child care
If the Registrar decides that the child support assessment should be changed because of high costs of child care, the COTC may be increased by the total net child care costs, for distribution between the parents according to their share of the combined income. Adjusting that component of the formula assessment (1.1.F.20) allows the parents to use other administrative processes such as an estimate of income, if necessary.
Other kinds of decisions (for example, adjusting the annual rate (1.1.A.70) or other components of the formula) may be appropriate in some circumstances.