Understanding Australia's comprehensive child support assessment process
The 8 Step Child Support Formula is the administrative assessment method used by Services Australia (Child Support) to calculate child support payments in Australia. This formula ensures fair and consistent calculations based on both parents' incomes, care arrangements, and the costs of raising children. Understanding each step is crucial for parents navigating child support arrangements.
The formula applies to most child support cases, though complex situations may require additional considerations or court intervention. Working with experienced child support lawyers ensures accurate calculations and proper application of the formula to your specific circumstances.
Calculate the adjusted taxable income for each parent by:
Add both parents' child support incomes together to determine the combined child support income. This total forms the basis for calculating each parent's percentage contribution to child costs.
Calculate what percentage each parent contributes to the combined income. For example, if Parent A earns $60,000 and Parent B earns $40,000 (combined $100,000), Parent A's income percentage is 60% and Parent B's is 40%.
Determine the percentage of care each parent provides based on nights per year:
Convert the care percentage to a cost percentage using the legislated table. This recognises that costs don't decrease proportionally with care - fixed costs like housing remain regardless of care arrangements.
Example: 35% care = 24% of costs, 50% care = 35% of costs
Calculate child support percentage by subtracting the cost percentage from the income percentage. A positive result means that parent pays child support; a negative result means they receive it.
Formula: Income % - Cost % = Child Support %
Use the Costs of Children Table based on the combined child support income and number of children. The table provides standardised amounts that represent the average costs of raising children at different income levels.
Multiply the costs of children by the paying parent's child support percentage to determine the annual child support amount. This is then divided by the number of payment periods (usually fortnightly or monthly).
Example: $15,000 (costs) × 25% (support %) = $3,750 per year
The basic formula may not apply or may be varied in certain circumstances:
If a parent has children from multiple relationships, the formula becomes more complex:
Significant income changes can be addressed through estimate applications or reconciliation processes to ensure fair assessments.
When parents disagree about care percentages, parenting orders or care determinations may be needed.
Connect with experienced child support lawyers who understand the 8 step formula and can ensure accurate calculations for your situation.