Stage 1 Reforms - July 2006 changes

Minimum annual rate of child support

Prior to 1 July 2006, the minimum annual rate of child support (which at that time was $260 per year had not been indexed since it was first introduced in 1999. This means that the minimum amount has decreased in value due to inflation. From 1 July 2006 the minimum payment has been linked to the Consumer Price Index (CPI) rate from when the minimum rate was introduced in 1999.

Linking the minimum rate to CPI means that it will initially increase to around $6 per week. Continuing yearly indexing will maintain the minimum rate's real value.

Newstart and related payments to non-residents

Non-resident parents who receive Newstart and other related payments (for example, Youth Allowance, Sickness Allowance, and Newstart Mature Age) and have care for their children for 30 per cent of nights per year are eligible to receive the 'with child' rate of relevant income support payments.

Non-resident parents who have care of a child for 14 percent and 34 per cent of nights per year will now have access to the 'with child' rate. This gives parents a financial incentive to have more contact with their children.

Having access to the 'with child' rate of income support payment is an additional $16.50 per week above the standard rate.

Fairer 'capacity to earn' provisions

Parents can be required to pay additional child support (or be entitled to receive less) if the Child Support Agency (CSA) determines they have a higher capacity to earn. Previously this could occur even when there were legitimate changes to their circumstances. For example, a payer may have needed to work less because of new caring responsibilities or they may have lost their job, however they may still have been required to pay child support on their previous income. This change limits the circumstances under which a parent's income for child support assessment purposes can be increased.

Legislation that limits the circumstances under which a parent can be considered to have a higher income for child support purposes has been passed. This applies to cases where there is evidence that a major motivation of a parent's employment decision is to reduce child support liabilities or affect the other parent's child support liability.

These changes allow for improved flexibility in assessing a parent's capacity to earn, allowing the parent to make decisions about work and life in the same way as parents in intact families.

Lower cap on child support

The cap for people with the highest child support liability has been decreased to bring their child support payments closer in line with the actual costs of children.

The cap for high-income earners who pay child support decreased from approximately $139,347 to $104,702. All payees affected by the reduced cap, where the non-resident parent does not have a second family, will continue to receive at least $16,423 per year ($316 per week) in child support.

Increased prescribed non-agency payments

The limit on prescribed non-agency payments has been raised from 25 per cent to 30 per cent.

Parents with child support obligations can now pay up to 30 per cent of their child support towards designated costs such as school fees and medical expenses (i.e. prescribed non agency payments) in any payment period. When both parents agree, non-agency payments will still be permitted for up to 100 per cent of the liability.

Additional resources for CSA to investigate and enforce compliance

The CSA is better equipped to investigate and enforce compliance of non-resident parents who are not meeting their child support obligations and those who are avoiding their obligations by reducing their taxable income and those who make cash payments to avoid taxation.

Helping separating parents agree on parenting plans and child support payments

Parents have access to Family Relationship Centres (FRCs) and related services for information, support and advice about child support arrangements and child support issues.

FRCs provide separating parents assistance in agreement making, counselling, and mediation and in understanding the Child Support Scheme and family law system.

Related information

Child Support Policy

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