How a lump sum payment to your Ex could affect your child support obligations

I pay child support to my ex, but my ex has recently received a significant lump sum of cash – will this mean that I can pay less child support?

Generally speaking, a child support assessment takes into account the taxable income of the child’s parents, the care arrangements for the child/children and the costs of the child/children but a common question is what happens if the receiving parent comes into a large some of money, for example, a lottery win, funds withdrawn from their superannuation, an inheritance or a personal injury payout, and does that change the child support assessment?

The short answer is that “it depends”.  Where a parent receives a substantial amount of money that does not form part of their taxable income, then the money may be taken into account in deciding whether or not to change a child support assessment.

Filing an Application to Change Assessment

There are limited circumstances where a paying parent can make an Application to Change Assessment – Special Circumstances with the Child Support Agency (CSA) to decrease the child support assessment on account of the income and/or financial resources of the other parent. If you were a paying parent, and you wanted a review of the child support assessment, then the specific ground for this type of Application with the CSA is Reason 8, that is “The child support assessment is unfair because of the income, earning capacity, property or financial resources of one or both parents”.

If you became aware that the other parent of your child/children was in receipt of a large sum of money, you can make an application with the CSA under Reason 8 to change your child support assessment. Once you have submitted your Application with the CSA, they will provide your Application and supporting documents to the other parent. The other parent usually then has 28 days to provide a response to the CSA.

What does the Child Support Agency consider?

When deciding an outcome of an Application, the Registrar of the CSA must consider things such as:-

1. The amount of funds paid to the receiving parent;
2. Whether or not the lump sum payment puts the receiving parent in a better financial position than the paying parent;
3. If money has come from a receiving parent’s early withdrawal of their superannuation, the basis for the early withdrawal of superannuation. For example, if the money was released due to a financial hardship application, then the Registrar may not find that the funds should be taken into account for child support purposes;
4. If the money has come from a compensation payout, the Registrar will need to consider the nature of the payout and what portion of the funds may account for the parent’s loss of future income or their earning capacity; and
5. If the money comes from a windfall (for example, an inheritance or a lottery win), whether or not the funds increase the receiving parent’s capacity to contribute to the costs of the child/children.

The CSA will consider all of the evidence before making their decision. They may contact either party for further information if required. The Registrar will then notify the parties in writing of that decision and, if applicable, a new child support assessment will be issued. If either parent is not happy with the decision, then they can object to the decision within certain time limits and ask for the CSA to review the decision. 

If you are considering making an application to change your current child support assessment due to your ex-partner receiving a lump sum payment, then we strongly recommend that you obtain legal advice to discuss your options and to review your application before lodging your application with the CSA. Contact our office to make an appointment with one of our solicitors to discuss your circumstances and obtain advice on your situation on (07) 4963 2000 or through our online contact form below.