Rationale
The old formula was largely based on the payer’s income and it allowed a significant disregard of the payee’s income – up to around $45,500 a year. The changes to the scheme are, in large part, driven by the significant social and demographic changes in Australian society since the scheme was established in 1988. In particular, the educational attainment of women and changing patterns of employment of mothers and fathers over the past twenty years means that it may no longer be justifiable to base the formula on the income of only one parent. On this basis, the new formula uses an ‘income shares’ approach which treats the incomes of both parents in the same way, deducting the same self-support amount from each parent’s taxable income and allocating the combined costs of the children according to each parent’s share of the remaining combined child support income.
It is not possible to clearly demonstrate the effect of the equal treatment of parents’ incomes, because this component is heavily interactive with other components. However, there is one particular group for whom this may be a key driver of their change – that is, payees whose incomes are between the previous disregarded amount (around $45,500) and the new self-support amount ($18,252). Below, we present the results for this group of payees.
Findings
Table 10. Payees with income between the self support amount ($18,252) and the previous disregarded amount ($45,505)
| $ Per Week Net Change |
Net gain |
Net loss |
No change |
Total |
|
No. |
No. |
No. |
No. |
| $0.01 ‐$10.00 |
20,400 |
40,300 |
- |
60,700 |
| $10.01 ‐$20.00 |
22,800 |
30,300 |
- |
53,100 |
| $20.01 ‐$30.00 |
7,800 |
11,900 |
- |
19,600 |
| $30.01‐$40.00 |
8,400 |
6,100 |
- |
14,400 |
| $40.01 ‐$60.00 |
5,000 |
6,400 |
- |
11,400 |
| More than $60.00 |
2,100 |
6,200 |
- |
8,400 |
| Total |
66,500 |
101,300 |
18,600 |
186,300 |
| Overall percentage |
36% |
54% |
10% |
100% |
|
Numbers and percentages may not add due to rounding
Results are actual child support and modelled FTB
The full list of caveats should be considered when interpreting this data |
Discussion
Including a receiving parent’s income (in the same way as the paying parent’s income) does not appear to be strongly influential in determining the overall result for payees. The results are not significantly different from the overall result for payees, with around 36 per cent experiencing a gain, around 54 per cent experiencing a loss, and 10 per cent with no change. Again, in keeping with the general findings, the losses were concentrated in the $20 per week or less range.