How Is Child Support Calculated in Australia? The 8-Step Formula Explained

Child support in Australia isn't decided by a judge or based on what seems fair to either parent. It's calculated using a fixed formula set by Services Australia — the same formula applied to every assessment across the country. Understanding how it works puts you in control.

The 8-Step Child Support Formula

Step 1 — Work Out Each Parent's Adjusted Taxable Income (ATI)

This isn't simply your taxable income from your tax return. Adjusted taxable income includes:

• Taxable income (from your tax return)
• Reportable fringe benefits (e.g. a company car)
• Reportable employer super contributions (above the compulsory rate)
• Net investment losses (added back in)
• Foreign income not included in taxable income
• Tax-free government pensions and allowances

Importantly, your new partner's income is not included. Child support is calculated only on the biological or adoptive parents' incomes. If a parent earns less than the self-support amount, Services Australia uses the self-support amount as their income floor.

Step 2 — Subtract the Self-Support Amount

The self-support amount is the income a person needs to support themselves. In 2026 it is $31,046. This is subtracted from each parent's ATI to give their Child Support Income (CSI).

Example: Parent A earns $85,000 ATI. Their CSI is $85,000 − $31,046 = $53,954.

Step 3 — Calculate Combined Child Support Income

Add both parents' CSI figures together. This gives the Combined Child Support Income (CCSI).

Step 4 — Work Out Each Parent's Income Percentage

Divide each parent's CSI by the CCSI. This gives the proportion of total income each parent represents. For example, if Parent A's CSI is $53,954 and the CCSI is $83,954, Parent A's income percentage is 64%.

Step 5 — Determine the Costs of the Children

Services Australia uses an expenditure table that estimates what it costs to raise children at different income levels. The figure increases with combined income and the number of children. You don't calculate this yourself — it comes from the table.

Step 6 — Apportion Costs Between Parents

Each parent's income percentage is applied to the total cost figure to determine their expected contribution. A parent with a 70% income share contributes 70% of the costs.

Step 7 — Apply the Care Cost Offset

A parent who spends time with the child is already meeting costs directly — food, housing, transport, activities during that time. Services Australia calculates a care percentage and offsets this against each parent's contribution. More care time means a larger offset.

Step 8 — Calculate the Transfer Amount

The final figure is the difference between what each parent is expected to contribute and what they are already spending through direct care. The parent whose expected contribution exceeds their direct care spending pays the difference to the other parent.

Worked Example 1: 30/70 Care Split

Parent A: $85,000 income, 30% care. Parent B: $55,000 income, 70% care. Two children aged 8 and 11.

Worked Example 2: Equal 50/50 Care

Same parents and children, but equal shared care.

Equal care significantly reduces the transfer amount — but doesn't eliminate it, because the income difference still means Parent A has a higher expected contribution.

What Counts as Income for Child Support?

Income for child support purposes is broader than most people expect. Beyond base salary, Services Australia includes:

• Rental income and investment earnings
• Business income (including for sole traders and company directors)
• Reportable fringe benefits and salary-packaged items
• Reportable super contributions above the statutory rate

What if a Parent is Self-Employed?

Services Australia uses adjusted taxable income as reported to the ATO. However, if they believe a self-employed parent is minimising their income through the business structure, they can apply a notional income based on earning capacity. This is addressed through a Change of Assessment under Ground 4 or Ground 6.

What if My Ex Hides or Understates Income?

Services Australia can request income information directly from the ATO. If they believe a parent is voluntarily under-employed, they can impute an income based on what that person could reasonably earn. A Change of Assessment is the correct mechanism to address this.

What if Your Income Changes?

Child support assessments are based on the most recent tax return. If your income changes significantly during the year, you can apply for a re-assessment. Services Australia applies a 15% threshold: if your income changes by more than 15% compared to the figure used in the assessment, a new assessment will be issued.

Changes are not backdated beyond the application date, so it's worth applying promptly.

Private Agreement vs Services Australia Assessment