126.96.36.199 Assessable maintenance income
This topic provides information about assessable maintenance (1.1.M.10) income, and includes the following:
- how maintenance can be received
- maintenance liability (1.1.M.23), and
- different types of maintenance.
Any benefit or payment for the maintenance of the child and/or the payee (1.1.P.71) is assessable maintenance, unless it is specifically exempt. Generally, any maintenance income that should be counted under the maintenance income test (MIT) is accounted for under a child support agreement or child support assessment. This is especially true for those who receive their maintenance via a private collect arrangement. For private collect individuals, the amount reflected in the child support assessment, agreement, or notional assessment is the amount that is deemed to be received. For Child Support collect cases, where a payer pays more than their assessed liability and they are not in arrears, the Registrar will not disburse these amounts to the payee until they are due. This means these additional amounts will not be counted under the MIT until they are disbursed. Arrears amounts from previous years will be disbursed and counted under the MIT in the year they are received.
The exception to this rule is voluntary maintenance (1.1.V.20), which is maintenance paid by a person while they do not have a maintenance liability because no agreement or assessment is in place.
Act reference: FAAct section 3-'maintenance income', section 3-‘capitalised maintenance income’, section 19 Maintenance income, Schedule 1 clause 20C Working out amounts of child maintenance in relation to lump sum payments
How maintenance can be received
Maintenance can be received as:
- cash (periodic and lump sum payments)
- non-cash maintenance, or
- capitalised maintenance.
Maintenance can be paid to the payee, or the child. Assessable maintenance includes:
- child maintenance (see Explanation 1)
- partner maintenance (see Explanation 2), or
- maintenance paid directly to the child.
Explanation 1: Maintenance paid for the child to the payee, grandparent or other person to whom the court has appointed custody of the child.
Explanation 2: Maintenance paid for the payee.
Maintenance can be paid by the other parent of the child, or by the partner or former partner of a parent of the child.
Example: Marie is a payer. She has a maintenance liability for her 2 children. Marie's new partner contributes to the amount of maintenance she pays. The whole amount is assessable for the payee.
The individual must take reasonable action to seek maintenance in order to receive more than the base rate (1.1.B.10) of FTB for a child from a previous relationship. The payer's (1.1.P.72) maintenance liability may be worked out under Stage 1 or Stage 2 of the CSS. The payee can collect their maintenance privately (1.1.P.130), or through Child Support.
Voluntary maintenance is also assessable under the maintenance income test.
Policy reference: FA Guide 188.8.131.52 Taking reasonable maintenance action
Maintenance received as a cash amount or credited to the payee's bank account is cash maintenance. Cash maintenance can be collected by Child Support or privately. The actual amount received is the amount that is assessed.
Cash maintenance can be received as a periodic amount paid at a weekly, monthly, annual or other periodic interval. A periodic amount is expressed in terms that require payments of a regular amount on a recurring or cyclical basis.
Cash maintenance can also be in the form of a lump sum which is not in respect of a particular period (unlike capitalised maintenance). Such lump sums may be specified in a child support agreement or court order and may be credited by Child Support. They are assessed in the financial year they are received and are annualised as part of the overall MIT.
Non-cash maintenance is a benefit or payment for the maintenance of the child or payee. It may be given directly to the payee or the child, or may be paid to a third party on their behalf.
Examples: The following benefits may be provided as non-cash maintenance:
- food, clothing or other household items or repairs
- mortgage payments, rent or free lodging
- health insurance and medical expenses
- loan, credit card and store account repayments
- child care fees, school and tuition fees
- sporting costs including fees, equipment, related travel and accommodation
- travel or holiday expenses
- utility bills including electricity, gas, telephone and heating
- council, water and sewerage rates, and
- motor vehicle expenses.
The value to the individual of the non-cash maintenance is assessable under the MIT. The value of non-cash maintenance counted under the MIT will be reflected in the payee's child support assessment or agreement (i.e. there is no need to assess the non-cash separately). However, for private collect cases, there may be instances where it is unreasonable to expect the payee to collect the full amount under their assessment. In such cases, a partial exemption from the MAT may be warranted.
If there is a need to decide whether an amount of benefit or payment should be assessed as maintenance (e.g. if a decision maker needs to factor in a non-cash amount in assessing a partial exemption from the MAT), the following 3 points should be considered:
- is the payment from (directly or indirectly), a parent of the child/ren or a partner or former partner of a parent of the child/ren
- has the payment or benefit been received, and
- is the payment for the support of the payee or the child/ren?
If the answer to all of the above is yes, then the payment or the value of the benefit may be assessed as non-cash maintenance. If the answer to any of the above questions is no, then the payment or the value of the benefit is not considered as maintenance.
The facts of each individual case should be taken into account. What is significant is the nature and purpose of the payment.
Capitalised maintenance income
Capitalised maintenance is maintenance that is paid as a lump sum to satisfy a maintenance liability for a period of time. Capitalised maintenance is apportioned over the capitalisation period.
Policy reference: FA Guide 184.108.40.206 Capitalised maintenance