Child Support Made Easy - The Child Support Agency (CSA) Site
Peter Szabo
Moores Legal
 

You need to have a general working knowledge on how child support works. A good starting point is the Guide, published by the Agency and updated regularly.The next best reference point are the Fact Sheets. Master these and you are well on your way to understanding Child Support.The formula is being changed over the next two years. See Reforms below. For your part, you should advise your client as payee to obtain an assessment promptly to ensure payments commence without delay. If your client is the payer, they likewise should be informed of their responsibilities so that they can budged for the liability when it arrives.

Of course many couples opt out of the CSA assessment scheme, and enter into Child Support Agreements. These are discussed below. To sensibly negotiate a child support agreement, you still need to know how it all works. So read on!

The Guide

The guide sets out CSA’s policy and view of the child support scheme and its administration. It is organised into parts, chapters and topics. Compulsory reading for lawyers. The topics are:

Part one - About the Scheme
Part two - Child Support Assessments
Part Three - Orders under the Family Law Act
Part Four - Objecting Appealing and Applying to Court
Part Five - Collecting Child Support
Part Six - Administration

The guide is produced by CSA’s Legal & Quality Assurance section. CSA staff are expected to follow The guide except where it would result in an anomaly. Staff are expected to report any anomalies to CSA’s Legal & Quality Assurance section so that corrective action can be taken.

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Calculators

The Child Support calculator can be used to obtain an estimate of child support payable for a particular child support period. You can perform a simple calculation based solely on income details or you can add complexity by including additional information like variables of levels of care, child/rens age and other case related information.

Please note: The results from using this calculator are only indicative and may not be the same as a Child Support Assessment done by CSA. If you require an accurate assessment, contact CSA on 131272 and speak with a Customer Service Officer.

Employer calculator
To assist employers work out the net pay to the employee, taking into account child support payments, the protected earnings amount and the basic tax liability.

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The Basic Formula

The way in which child support is calculated is explained here.  An adjusted income is arrived at, and the payer is required to pay the following percentage of that income for the children:
 

One Child	18%
Two Children	27%
Three Children	32%
Four Children	34%
Five or More Children	36%

More details on the basic formula is available in  The Guide

Then you have to understand if the following issues are applicable:
Shared Care, Non Agency Payments,  etc... - read  The Guide
Refer also to my comments on the main page regarding how contact impacts on payments - Buying the Kids.

Child support alters each year when a new tax return is lodged by the Payer.

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Where the Payer has a high income - The Cap

A payer's income is 'capped' at 2.5 times the annual equivalent of average weekly earnings for the child support period (AWE). If a payer's child support income amount exceeds the cap their adjusted income amount is reduced to a maximum. As at April 2006 it is in the range of $139,300. It will reduce to $104, 702.  Check the Reform Fact Sheet 3  link for more information on reforms over the next two years two years.
The Cap does NOT mean this is the limit of the payer's liability. High income earners can expect to have private school fees, and other expenses, in addition to direct child support payments. However, to get a higher amount, the payee is probably going to have to go through the Review process or seek a Departure Order unless the payee agrees otherwise

Reviews, Court Applications and Departure Orders

If your client is unhappy with an assessment, the internal review procedure is to be followed. No lawyers are involved at this point. There are limited grounds for seeking a departure order. The most common is that the taxable income of the payer does not reflect their true level of income or income earning capacity. In those cases the review process is followed, and if the review result is unnacceptable, a Departure Order has to be sought. See page 219 to 223 of the Practice Manual

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Dealing with Arrears - the Reality for most Payees

Whilst the CSA system works well in many instances, there are many issues. A major one is in the issue of arrears of support. Unless the Payer has assets or a significant tax refund due, the payee can be left in the lurch literally for years. Typically, a payer can negotiate a repayment scheme direct with the CSA. The Payee has no input in this process, which may see thousands of dollars being repaid at $20.00 a month. Often Payers manipulate their finances to ensure that there are no assets in their name, nor are there any tax refunds to grab. If your client is not satisfied with what the CSA has done, they can take private enforcement proceedings. However, that may not be commercially viable. The arrears will be paid - eventually. The Payee will usuall get an increase in the pension, but not dollar for dollar.
 

Dealing with Arrears - Some Hints when acting for the Payer

If you are acting for the payer, and are negotiating a final resolution of all arrears, be careful. You must make certain your client is up to date with all assessments for all years. If for example, your client estimated his income for a given year at $40,000.00 and a year or so later filed an actual return for $60,000.00 a reassessment will be issued - eventually! This reassessment may take several years to "catch up" with your client. If you miss this in your negotiations, it will come back to bite.
There are many instances of Payers who have ignored their obligations for years. They may appear at your door wanting advice on how to get rid of the albatross. There is no point in trying to negotiate reductions with the CSA. All they will do is collect the arrears, even if slowly, and by instalments. They have no authority or power to compromise the arrears, only to negotiate the rate at which they are paid off. However, provided satisfactory arrangemetns are made, penalties and fines are often waived. The only way to reduce the arrears (apart from obtaining a departure order) is to negotiate with the Payee. If they agree, both parties can then ask the CSA to formalise the new arrangement.

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Child Support Agreements

The CSA has published a fact sheet on Agreements which is worth reading for a quick summary.
See also the commentary in Chapter 14 of the Practice Manual.

The CSA has published a standard Form 102 Child Support Agreement. In theory, agreements can be used by parties to opt out of the CSA system and define their own arrangements. There are some traps however. The main ones are as follows:

• a payee in receipt of Centrelink benefits is restricted in their right to negotiate an agreement. The Payer cannot pay less than 100% of  what the assessment otherwise would be. Non periodic payments (eg school fees) cannot make up more than 25% of that amount.
• The agreement cannot be enforced unless it is registered with the CSA in the case of periodic payments, and in the Family Court or the Federal Magistrates Court (Rule 23.01) in the case of non periodic payments. The agreement should provide for registration in both locations. If you act for the Payee it is particularly important that you ensure the agreement is registered without delay. Arrears of periodic payments accruing before registration cannot be enforced. You may then be sued by your client for negligence.
• by entering into an agreement, the parties are opting out of the CSA system. To vary the agreement, both parties must agree and a new agreement drawn up. Otherwise, a court application is necessary. Draft your agreement to allow for possible changes, eg children moving house, the Payer's income changing signficantly and the like.

The benefits of an agreement is that the Payer knows their obligations for the future. The Payee likewise knows where they stand and they do not have to worry about a new assessment each year.

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Fact Sheets

Very useful summaries have been prepared by the CSA on the following topics:

Agreements
Care arrangement
Change in income
Changes you need to tell the CSA about
Changing your child support assessment in special circumstances
Child support - private collection
Do you need interpreting help?
Having a change of assessment conference? What to expect
How to obtain documents from CSA
Income information for child support payers
Information for payers who have a minimum assessment
Information for separated parents
Late Payment Penalty
Making payments to the CSA
Non-Agency Payments
Objections
Options for managing your child support
Overdue child support
Reconciliation
What is child support?

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Reforms to come in over 2006 to 2008

Reforms to the Child Support Scheme are being brought into play over the next 2 years, commening July 2006. The main change in July is the dropping of the Cap to $104,000.  Check the fact sheets below, a synopsis of which is found (not, as you would expect, on the CSA site) but at the Department of Families, Community Services and Indiginous Affairs

Factsheet One: An overview of the reforms
Factsheet Two: Questions and answers about the reforms
Factsheet Three: Stage One – Changes to the Scheme from July 2006
Factsheet Four: Stage Two - Changes to the Child Support Scheme from January 2007
Factsheet Five: Stage Three - Changes to the Child Support Scheme from July 2008
Factsheet Six: The new Child Support Formula

Happy reading!
Peter Szabo
 

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Family Law Practice Manual 5th Edition