What exactly does the child support you paid count towards? Is it taxable income for the other person receiving the payment?
Child support can be a confusing topic. When it comes to raising a child, several costs can and do arise, and you may be wondering which of those should be covered by child support.
The purpose of this article is to briefly discuss what the child support you paid goes towards and other frequently asked questions regarding the payment.
An Introduction To Child Support
Child support payments are commonly made from one party to another following a divorce or separation. The purpose of the payment is to assist with the costs associated with raising a child financially.
In Australia, child support is regulated by the Child Support (Assessment) Act 1989.
The child support payer is usually the party who either works or has more income and assets, and the other party is the one with whom the children primarily live with.
When the Department of Human Services assesses child support, they will send a letter containing reports and details on the assessment. This assessment will determine a lump sum to be paid regularly from one party to the other, the primary caretaker of the children.
The amount reflected in the child support assessment is the amount that will be received. However, any other payments made by the parent paying for the scheme in that period can be credited by the department towards the child support they must pay.
What Does Child Support You Paid Cover?
You may be wondering what exactly child support payments cover.
The answer to this question will be different depending on the financial circumstances of both parents, and the standard of living the children are accustomed to.
Here are the variety of items that the child support you paid will typically cover:
- Medical expenses
- School fees
- Extracurricular activities (If agreed upon)
What Are Prescribed Payments?
In the situation where the payer of the child support maintains less than 14% of the child care responsibilities, the child support you paid may cover up to 30% of the total additional expenses:
- Vehicle usage and maintenance costs
- School uniforms and textbooks
- Other publish school fees
- Essential medical and dental fees
- Rent and mortgage repayments
- Child care
Does The Child Support You Paid Cover Other Expenses?
Any additional expenses beyond what is highlighted above, such as private schooling and extracurricular activities, will usually only be covered by the child support you paid if both the payer and payee of the child support has agreed to cover their costs.
Both parents need to agree to cover the entire figure or portion of such payments.
Suppose, for example, the receiver of the child support wishes to send a child to private school, and the payer does not and has not shown any intention to that effect.
In that case, they will not have to pay anything towards private schooling costs if the other parent decides to enrol their children in private school regardless.
Is The Child Support You Paid Taxable Income?
Taxable income constitutes income earned from avenues such as a business, wages, some government payments and investments. You may be then wondering, where exactly do child support payments fit in with all this?
Is the child support you paid taxable income?
The short answer is no – child support payments are, in fact, not a tax deduction that is allowable because they are:
1. Not incurred in gaining or producing assessable income;
2. Private or domestic; and
3. Child support payments may be made via non-monetary means, as well as cash payments.
Therefore, the child support payment receiver does not need to worry about paying taxes on the cash payments or even assets they receive from you in place of monetary child support payments.
Importance of Seeking Legal Advice
When discussing matters such as the child support you paid, it is essential to remember that everyone’s child support assessment will be different and aim to consider their financial circumstances.
If you feel as though your child support assessment has failed to take into account your circumstances, you should get in contact with an experienced family lawyer as soon as possible to advise you on the next steps you can take.
Here at JB Solicitors, we’ll make the process as pain-free as possible. We have fixed-fee pricing for family law, giving you a clear sense of the costs from the start, and we will be sure to help you out every step of the way.
With years of experience under our belt, we pride ourselves on making each client’s family law experience as positive as possible.
Contact JB Solicitors today to speak with one of our friendly and experienced family lawyers.
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