Child support is a critical aspect of ensuring that children receive the financial support they need to thrive, particularly in the event of separation or divorce.
In Australia, child support laws are designed to fairly distribute financial responsibility between parents.
One common question our property settlement lawyers are asked is whether selling a house counts as income for child support. In this article, we will explore the relevant laws in Australia to shed light on this important issue.
Understanding Child Support in Australia
The Department of Human Services (DHS) oversees the Australian child support system through its subsidiary, Services Australia, in accordance with the Child Support (Assessment) Act 1989.
The primary objective of the system is to ensure that both parents contribute proportionately to their children’s financial well-being, regardless of the family’s dynamics.
Assessment of Child Support
Child support in Australia is assessed based on a formula that takes into account various factors such as each parent’s income, the number of children involved, and the amount of time each parent spends with the children (shared care).
The formula calculates each parent’s child support obligation, which represents the amount they are expected to contribute to the child’s upbringing.
Income for Child Support Purposes
When calculating child support, the definition of income under the Child Support (Assessment) Act 1989 is quite comprehensive. It includes various types of income, such as:
1. Salary and Wages: This includes regular earnings from employment, including bonuses, allowances, and commissions.
2. Investment Income: Income generated from investments, such as rental properties, dividends, and interest.
3. Business Income: Profits from self-employment, sole proprietorships, and partnerships.
4. Superannuation: Some components of superannuation may be considered income for child support purposes.
5. Government Benefits: Certain government payments, such as the Parenting Payment and Newstart Allowance, may also be included.
Does Selling a House Count as Income for Child Support?
The question remains: does selling a house count as income for child support? In general, selling a house itself is not considered income for child support purposes.
However, it’s important to note that if the money obtained from selling the house is then invested, generates income (e.g., interest, dividends, or rental income), or leads to an increase in a parent’s overall income, then that income may be taken into account for child support calculations.
Adjustments and Special Circumstances
It’s worth mentioning that child support assessments are not always straightforward. In some cases, parents might face certain circumstances that warrant adjustments to the standard formula. For instance:
1. High Costs of Caring for Children: If a parent incurs significant expenses in caring for the children, such as medical bills or educational costs, this may be considered in child support calculations.
2. Non-disclosure of Income: If one parent suspects the other is intentionally hiding income or assets to reduce child support obligations, the affected parent can seek an investigation and potential adjustment by DHS.
Child Support Example Case
We recently had a client named Rick who sought our assistance after his recent divorce. Rick was concerned about his child support obligations and specifically inquired whether selling his house would be considered income for the purpose of child support.
To help Rick, we first carefully reviewed the relevant laws about child support in Australia. We explained that selling a house itself does not count as income, but any income generated from the sale’s proceeds or investments might impact the overall child support calculation.
Next, our divorce lawyers conducted a thorough analysis of Rick’s financial situation, taking into account his income, assets, and any potential capital gains from the house sale. We also advised him to properly document the proceeds to avoid any future disputes.
By collaborating with him, we ensured that he understood his child support obligations and rights, thus empowering him to make informed decisions regarding his financial responsibilities for his children.
Seek Legal Advice: Does Selling a House Count as Income for Child Support?
Does selling a house count as income for child support? In Australia, selling a house in itself does not count as income for child support. The proceeds from the sale are considered an asset and not directly factored into child support calculations.
However, any income generated from the sale’s proceeds or investments may affect the overall income of a parent and could be taken into account for child support purposes.
For specific and accurate advice tailored to your circumstances, it is essential to seek professional legal counsel or consult the Department of Human Services.
Director of Melbourne Family Lawyers, Hayder manages the practice and oversees the running of all of the files in the practice. Hayder has an astute eye for case strategy and running particularly complex matters in the family law system.