Child support is calculated based on the parent's taxable income, which includes income from all sources, including salary sacrifice arrangements. However, non-taxable income, such as government benefits or child support payments from a previous relationship, is not included in the calculation.
Where you have a private arrangement in place, salary packaging will not generally have any impact on your child support payments. Salary packaging may impact the amount of benefit you receive from Centrelink, and other financial payments such as Child Support.
It is not possible to try and reduce your income by strategies such as salary sacrifice or negative gearing of rental properties. The CSA will add these amounts back in to your gross income for the relevant period. If you have a child support debt you cannot discharge this debt through bankruptcy.
The Child Support Agency can use a Section 72A notice to gain access to superannuation in some limited circumstances.
There is no general division of superannuation in divorce. Each circumstance is different, so a 50/50 division should not be assumed. The division of superannuation in a divorce will be based on the settlement agreement or court order.
Essentially, super is considered as property in the event of a relationship breakdown, so like any other asset it can be divided between partners by agreement or court order. This includes marriage or de facto relationships, both heterosexual or same sex.
If you share joint custody of your child, child support may be necessary if there is a large disparity in income between you and your ex-partner, or if you do not care for the children equally (50/50).
You and your employer agree for you to receive less income before tax and in return your employer pays for certain benefits of similar value for you. This means you pay less tax on your income. A salary sacrifice arrangement reduces your taxable income, meaning you may pay less tax on your income.
2. What is the maximum child support in Australia? You can calculate the maximum child support amount using the combined income of both parents, up to 2.5 times the annual equivalent of the Male Total Average Weekly Earnings, as well as the Costs of Children Table.
Salary sacrificing into super offers several benefits. The amount you salary sacrifice into super is generally taxed at 15 per cent, which for most people will be less than the tax you may pay on that income1 personally if it was paid to you as salary.
What Happens if I Salary Sacrifice Too Much? If you salary sacrifice too much, the excess salary sacrifice amount will be assessed and taxed at your individual tax rate for the financial year, minus a 15% tax offset received to account for the contributions tax paid on the salary sacrifice amounts.
Benefits of salary sacrifice
You can pay less tax. These contributions are taxed at 15%, which is generally lower than the tax you'd pay if you received it as take-home pay. It can reduce your taxable income so you may pay less income tax.
Child support does not count as taxable income. Furthermore, how much child support you receive appears to have no significant tax consequences in Australia. Child support payments received can reduce Family Tax Benefit Part A.
For income test purposes, the amounts you paid and the benefits you provided for the maintenance of your child will be deducted from the total of the other components that make up your adjusted taxable income.
Salary sacrifice is an agreed arrangement that you have with your employer so that you can receive part of your gross salary as a benefit rather than as a salary. The value of this benefit is paid from your gross salary, i.e. before tax.
If you make $70,000 a year living in Australia, you will be taxed $14,617. That means that your net pay will be $55,383 per year, or $4,615 per month. Your average tax rate is 20.9% and your marginal tax rate is 34.5%.
If you have a very low income, your income tax rate may be lower than the 15% contributions tax deducted for salary sacrifice, so you could pay less tax by making after-tax contributions rather than salary sacrifice.
Salary sacrifice reduces your taxable income, so you pay less income tax. Only 15% tax is deducted from your salary sacrifice amount compared to the rate you pay on your income, which can be up to 47% (including the Medicare Levy).
Your assessment will end if any of the following occur: the child turns 18, unless they're still in secondary education, and we accept an application to extend the assessment. the child marries or starts living in a marriage like relationship. someone else adopts the child.
50/50 custody arrangements do not necessarily absolve parents of child support obligations. Child support has less to do with how much time each parent spends caring for their children and instead has everything to do with which parent has a higher income.
Do you pay less child support if you have another child? Yes. Your assessment is based on the number of dependent children that you have. If you have a child with a new partner, then that new child is considered a dependent.
A 60/40 split in divorce refers to the partition of assets in which one party receives 60% and the other receives 40% of the marital assets. This division is not predetermined or standardised under Australian law; it depends on the particular circumstances of each case.
How is Superannuation viewed in a divorce. The Family Law Act 1975 generally views superannuation as property that should be split during a divorce. However, it is not exactly the same as other assets because superannuation is usually held within a trust – so it won't be converted into a cash asset.
If you and your partner can't agree on how to split your super, you can seek a court order from the Family Court to make the decision on your behalf. Under the provisions of the Family Law Act, a court must be satisfied that any super split is just and equitable for both partners.