Child Support Reform: Case Examples
These child support examples show, for each case, calculated support and/or other financial measures. The examples were developed to complement our reform proposals and critique of the current system.
Key Takeaways for Parents
The way Australia’s child support system works often comes as a surprise to parents when they first become involved with it. The income shares model resembles alimony because payments depend on the financial circumstances of both parents.
- Your payment can change when either parent’s income changes, even if the care arrangement stays the same; and
- A simpler formula could provide more certain support based mainly on how care time is divided.
The reform examples demonstrate ways to provide solid support for children without making one parent responsible for financially assisting their ex.
Case Examples
The examples demonstrate how new child support models could be used to fix the following flaws with the current scheme.
- A parent on a lower income is give excessive credit for care costs.
- Support is taken away from the main carer as their income increases.
- The main carer can be required to maintain the other parent.
- Effective marginal tax rates are excessively high.
- Support amounts don’t align with the division of care time.
- Support amounts per night of extra care can be extremely high.
Time share = proposed new formula I
Hybrid = proposed new formula II
Income share = current formula / system
Note: These examples were generated using rate settings of 15.4% and 7.4% for the new formula. Our proposed rates have since been revised to 15% and 5%.
Set 1: Cost of Children
Lesson: New models (time share, hybrid) produce more realistic care costs.
1A. Low-income carer
Carer: $30k, 10/14 nights
Payer: $75k, 4/14 nights
Child age: 6
Time share | Hybrid | Income share
Carer cost/night: $18 | $18 | $26
Payer cost/night: $32 | $32 | $26
New models allow for different spending rates based on income.
1B. Medium-income carer
Carer: $75k, 10/14 nights
Payer: $75k, 4/14 nights
Child age: 6
Time share | Hybrid | Income share
Carer cost/night: $32 | $32 | $42
Payer cost/night: $32 | $32 | $42
New models avoid cost inflation from adding incomes.
1C. Wide income gap
Carer: $30k, 10/14 nights
Payer: $150k, 4/14 nights
Child age: 6
Time share | Hybrid | Income share
Carer cost/night: $23 | $33 | $47
Payer cost/night: $46 | $46 | $47
New models’ costs more realistic for low-income carers.
Set 2: Support and Income of Main Carer
Lesson: Support is withdrawn as carer income rises under current scheme (income sharing).
2A. Low-income carer
Carer: $30k, 10 nights (+3)
Payer: $75k, 4 nights (-3)
Child ages: 10, 14
Time share | Hybrid | Income share
Nightly: $52.21 | $52.21 | $124.81
Annual: $4,084 | $4,084 | $9,762
Support too high for low-income carer under income sharing.
2B. Median-income carer
Carer: $75k, 10 nights (+3)
Payer: $75k, 4 nights (-3)
Child ages: 10, 14
Time share | Hybrid | Income share
Nightly: $52.21 | $52.21 | $84.96
Annual: $4,084 | $4,084 | $6,645
Support cut for middle-income carer under income sharing.
2C. High-income carer
Carer: $120k, 10 nights (+3)
Payer: $75k, 4 nights (-3)
Child ages: 10, 14
Time share | Hybrid | Income share
Nightly: $52.21 | $52.21 | $47.65
Annual: $4,084 | $4,084 | $3,727
Support cut again for high-income carer under income sharing.
Set 3: Support When Care is Close to Even
Lesson: The main carer can be required to pay large amounts of support under income sharing.
3A. 9:5 care division
Carer: $120k, 9 nights (+2)
Payer: $50k, 5 nights (-2)
Child ages: 10, 14
Time share | Hybrid | Income share
Nightly: $34.81 | n/a | n/a
Annual: $1,815 | -$94 | -$1,475
Dominant carer pays support under income sharing.
3B. 8:6 care division
Carer: $120k, 8 nights (+1)
Payer: $50k, 6 nights (-1)
Child ages: 10, 14
Time share | Hybrid | Income share
Nightly: $34.81 | n/a | n/a
Annual: $908 | -$1,384 | -$5,902
Main carer pays heavy support under income sharing.
3C. Even care
Carer1: $120k, 7 nights
Carer2: $50k, 7 nights
Child ages: 10, 14
Time share | Hybrid | Income share
Nightly: n/a
Annual: $0 | -$2,673 | -$8,558
Equal carer pays heavy support under income sharing.
Set 4: Income of Payer
Lesson: New models keep effective marginal tax rates (EMTRs) to acceptable levels.
Note: EMTR is the % of a pay increase that goes to tax and child support.
4A. Low-income payer
Carer: $60k, 10 nights (+3)
Payer: $30k, 4 nights (-3)
Child ages: 10, 12, 14
Time share | Hybrid | Income share
Nightly: $23.42 | $23.42 | $53.32
Annual: $1,832 | $1,832 | $4,170
… + tax: $4,229 | $4,229 | $6,567
EMTRs: n/a
Little support due to low income.
4B. Median-income payer
Carer: $60k, 10 nights (+3)
Payer: $75k, 4 nights (-3)
Child ages: 10, 12, 14
Time share | Hybrid | Income share
Nightly: $58.54 | $58.54 | $112
Annual: $4,579 | $4,579 | $8,796
… + tax: $22,001 | $22,001 | $26,218
EMTRs: 39% | 39% | 44%
New models keep EMTR down.
4C. High-income payer
Carer: $60k, 10 nights (+3)
Payer: $120k, 4 nights (-3)
Child ages: 10, 12, 14
Time share | Hybrid | Income share
Nightly: $74.96 | $102 | $233
Annual: $5,863 | $8,000 | $18,252
… + tax: $40,295 | $42,432 | $52,684
EMTRs: 41% | 45% | 59%
New models keep EMTR <50%.
Set 5: Support and the Division of Care
Lesson: New models make support proportionate to extra care / missed care.
5A. Shared care
Carer: $75k, 9 nights (+2)
Payer: $75k, 5 nights (-2)
Child ages: 10, 14
Time share | Hybrid | Income share
Nightly: $52.21 | $52.21 | $118
Annual: $2,722 | $2,722 | $6,133
New models produce sensible nightly support rate.
5B. Regular care
Carer: $75k, 12 nights (+5)
Payer: $75k, 2 nights (-5)
Child ages: 10, 14
Time share | Hybrid | Income share
Nightly: $52.21 | $52.21 | $50.98
Annual: $6,806 | $6,806 | $6,645
Similar support levels under all 3 models.
5C. No payer care
Carer: $75k, 14 nights (+7)
Payer: $75k, 0 nights (-7)
Child ages: 10, 14
Time share | Hybrid | Income share
Nightly: $52.21 | $52.21 | $70.02
Annual: $9,528 | $9,528 | $12,778
New models maintain consistent nightly rate.
Set 6: Child Support Targets
Lesson: Introducing a community-wide support target produces more sensible assessments. It contains payer support at high incomes. For the hybrid version, it allows for a measured boost in support for low-income carers.
6A. Median-income payer
Carer: $50k, 11 nights (+4)
Payer: $75k, 3 nights (-4)
Child ages: 10, 14
Time share | Hybrid | Income share
Nightly: $52.21 | $52.21 | $80.27
Annual: $5,445 | $5,445 | $8,371
New models produce sensible nightly support rate.
6B. High-income payer
Carer: $50k, 11 nights (+4)
Payer: $120k, 3 nights (-4)
Child ages: 10, 14
Time share | Hybrid | Income share
Nightly: $66.86 | $92.49 | $156
Annual: $6,972 | $9,645 | $16,230
Hybrid model gives boost to low-income carer.
6C. Very high-income payer
Carer: $50k, 11 nights (+4)
Payer: $150k, 3 nights (-4)
Child ages: 10, 14
Time share | Hybrid | Income share
Nightly: $76.62 | $107 | $195
Annual: $7,991 | $11,167 | $20,331
New models sensibly contain support.