How does Salary Packaging affect me if I pay or receive Child Maintenance?
If you are salary packaging with your employer and you are currently paying or receiving Child Maintenance it is important that you understand that your income for your Child Support Assessment will increase.
Your income for Child Maintenance purposes is your adjusted taxable income (as determined by the Child Support Agency) less; the self-support amount; less any relevant dependent child amount; less any multi-case allowance.
EXAMPLE: Bob has an annual Gross income of $50,000 and is currently paying Child Maintenance. Bob is employed by a Public Benevolent Institution and is currently salary packaging car loan payments to the value of $15,899 through his employer.
To calculate Bobs’ Income for Child Maintenance purposes The Child Support Agency will do the following:
Note: The Reportable Fringe Benefit Amount (RFBA) is calculated by multiplying the total amount of rent salary packaged by Bob by 1.8868 (i.e. $15,899 x 1.8868) as per the ATO’s formula.
How will Bob’s Child Maintenance payments be affected?
Before entering into a salary packaging arrangement Bob’s adjusted taxable income used in determining his child support obligations was based on an annual income of $50,000.00
After salary packaging Bob’s adjusted taxable income has increased to $64,101.
This may mean that Bob’s Child maintenance payments will have increased as a result of Salary Packaging.
It is important that you speak to the Child Support Agency to see how this impacts your individual payment amounts.
What amounts are reported to the Child Support Agency?
Bob must declare his taxable income of $34,101 PLUS his Reportable Fringe Benefit Amount of $30,000.
DISCLAIMER: This information is designed to assist you to understand the implications of salary packaging, however it is not to replace appropriate and individualised financial advice. Community Salary Packaging takes no responsibility for the way you apply this information to your personal circumstances.