Today the amount of periodic child support that one parent is
required to pay the other is determined according to the cost of
care for a child (based on cost of care tables) which is then
apportioned between the parents according to the amount of time the
child spends overnight with each parent and the income of the
The amount of income of the parents applied by the Child Support
Agency is not the net taxable income of the parents but is the
"adjusted income" of the parents which can be greater
than the net taxable income of the parent. This occurs because
deductions that are allowed by the Tax Office are disallowed by the
Child Support Agency, such as mortgage payments in respect of
investment properties or because the Child Support Agency
determines that a parent is under utilising his or her earning
Not only are child support payments not claimable as tax
deductions, the adjusted income of a party used as a basis of the
child support determination, is the gross and not the income of the
parent net of tax.
The establishment of a Child Support Trust, and execution of a
binding child support agreement can be a tax effective method for
making provision for future payment of periodic and non-periodic
Another alternate arrangement for payment of child support other
than by way of periodic assessment by the Child Support Agency is
for parents to enter into a lump sum child support agreement.
If you would like to discuss child support issues or obtain
advice concerning a child support agreement or a child support
trust, please contact:
Swaab was recently named a 2009 Winner in the
ALB Employer of Choice awards, and was winner 'Best Law Firm in
Australia (Revenue < $20m)' and 'Attribute Award for
Exceptional Service (Australia Wide)'
in the 2008 BRW- Client Choice Awards.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
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