10 Ways NOT To Reduce Your Child Support

Here are 10 ways NOT to reduce your child support if you are the payer and receive child support assessments. It all depends on your Adjusted Taxable Income, which is your taxable income plus adjustments Services Australia makes.

Adjusted Taxable Income

When Services Australia assesses your child support, they start with the taxable income on your latest tax return.
But then they make adjustments or even a Change of Assessment to get to your Adjusted Taxable Income. And it is this Adjusted Taxable Income you get assessed on.

So it is all about reducing your taxable income while avoiding an adjustment or Change of Assessment.

Tax v Child Support

In principle, tax and child support pull in the same direction. Whatever reduces your tax, usually also reduces your child support. But not always.

So having cleared this up, here are 10 ways NOT to reduce your child support.

1 – Super Salary-Sacrifice

Salary-sacrificing super reduces your taxable income and hence your tax since the salary sacrifice happens out of your before-tax income. 
However, Services Australia adds your salary-sacrificed super contributions (reportable superannuation contributions) back. As a result, salary-sacrificing super doesn’t reduce your child support.

2 – Negative Gearing 

The losses you incur when you negatively gear a passive investment are reported in your tax return. 
Services Australia adds these investment losses back to your adjusted taxable income. So investment losses won’t reduce your child support either.

3 – Exempt Foreign Income

Some foreign income is exempt in Australia, meaning you don’t pay Australian income tax on it. The most common example is when you work overseas.

However, even though you don’t pay tax on exempt foreign income in Australia, you still pay child support on it, because Services Australia adds exempt foreign income back to your taxable income.

4 – Reportable Fringe Benefits

Your employer or company might pay certain expenses on your behalf. For example a company car, your rent or a gym membership.
These payments would not go into your taxable income, so you don’t pay tax on these (your employer pays FBT instead). However, Services Australia adds these fringe benefits back if they are ‘reported’ on your tax return as reportable fringe benefits.

5 – Non-Commercial Losses

The losses you incur in your business as a sole trader can only offset other income if you meet the non-commercial loss provisions.
If you don’t, you have to defer these losses, so they neither reduce your tax nor your child support. Eventually they will, but not in the year you incur the loss.

6 – Capital Losses

While investment losses get added back to your taxable income, capital losses don’t. So you might think that a capital loss will reduce your child support in the year of the loss.

But it doesn’t. Capital losses can only be offset with capital gains, but not with other income. So the capital loss just gets carried forward without having any effect on your child support until you have a capital gain.

7 – Sudden Drop in Income

You might restructure your affairs and then drastically reduce your income from one year to another.
In response, the other parent will most likely apply for a Change of Assessment and Services Australia will assess your income based on previous years.

8 – Not Lodging Tax Returns

Services Australia bases their assessment of your child support on your latest tax return. So you might think that one way around child support is to just not lodge any tax returns.

However, Services Australia will almost certainly assess a default income for you.

9 – Not Paying

At first, just not paying the assessed amount looks like an option. Currently, there is over AUD 1.5 billion in child support owed in Australia. 
However, you will probably receive a Departure Prohibition Order so you can’t leave Australia. And if you work as an employee, Services Australia can ask your employer to withhold child support directly at the source.

10 – Moving to a Reciprocating Country

Australia has reciprocating arrangements with a long list of countries. If you move to one of these, Services Australia will still be able to enforce your payment obligations. 

So this is how NOT to do it.  Here are your alternatives: 25 Ways to Pay Less Child Support

Makes sense? Reach out when you are ready.

Last Updated on 03 March 2025