Assessments of every parent who pays or receives child support, even if private arrangements are in place, are currently underway in preparation for the new Child Support Scheme, which commences on 1 July 2008. The General Manager of the Child Support Agency, Matt Miller, has asked parents to check their details carefully because a new formula will be used to calculate child support payments. Details need to be up-to-date to allow the Child Support Agency to issue an accurate assessment and ensure that the right amount of child support or family assistance is paid.
The new child support formula is part of the overhaul of the Child Support Scheme the Howard Government initiated following a parliamentary review into the Child Support Scheme. The current formula, which uses fixed percentages of income to work out child support, has been criticised for being inequitable and not taking into account factors such as the different costs associated with raising children of different ages, the time each parent spends caring for the child/children, and the effect of income tax. In comparison, the new formula, according to Mr Miller, “will better reflect the cost of raising children and treats parents’ incomes more equally”.
The new formula is based on the costs associated with raising children. It recognises that such costs will vary depending on the household’s income levels, the number of children and the age of the children. Other key elements of the new formula include:
- Both parents’ incomes will now be taken into account and considered equally;
- The same self-support amount – an amount that accounts for the costs of supporting oneself after separation – will be subtracted from each parent’s income before child support is calculated;
- Shared care of the children will be better acknowledged. This means a non-residential parent who looks after their child at least once a week (14% of care), may pay less child support in recognition of the costs involved; and
- Parents who have children (natural or adopted) living with them from subsequent relationships will now have an amount for the support of these children deducted from their income when calculating child support. This will help to ensure that children from first and subsequent families are treated more equally.
The new formula is one of a number of changes being made to the Child Support Scheme. For more information about the new Scheme, visit the Child Support Agency’s website www.csa.gov.au.