25 Ways to Pay Less Child Support
Here are 25 ways to reduce your child support if you are the payer. If you receive child support, then this is what to look out for. Some of these measures are more extreme than others. Some are legal, some definitely not.
So here is what you can do as the payer (and to look out for as the payee):
1 – Move Overseas
If you relocate to a country, which Australia doesn’t have a social security agreement with – for example, Cook Islands, Samoa, PNG, Yukon or Israel – then Services Australia can’t reach you, even if you stop paying altogether. You just face the music if you ever come back.
If you already owe child support at the time you want to leave, the Australian Federal Police might stop you with a Departure Prohibition Order.
2 – Do a Binding Agreement
If you think your career or business will grow and progress, then a binding agreement will lock your child support in at current levels. All future promotions are yours. Any increase in income won’t affect your child support.
3 – Apply for a Change of Agreement
If your current agreement is untenable, you can apply to the Court to reduce the agreed amount. You must give valid reason, like a serious illness, accident, or bankruptcy,
With a binding agreement, all cards are on the table while you negotiate. Once you have signed, the only option left is to either move overseas or request a change.
Assessments
But ….if you are on an assessment, then your child support is linked to your taxable income. And that gives you 22 more ways to reduce your child support.
4 – Increase your Care Percentage
The more time you spend with your children, the less you pay. Try to get at least 2 nights per fortnight.
5 – Work Less
The less you earn, the less you pay. If your income is below the Self-Support Amount, you don’t pay any child support.
In 2023, the self-support amount is AUD 27,508.
6 – Work for Cash
Working for cash and then not declaring the income is a fraud, but it does save you tax and reduces your child support.
7 – Increase Work-Related Expenses
In your previous life, work-related expenses saved you income tax. Now each dollar you claim in work-related expenses gives you a double-whammy of less tax AND less child support.
8 – Increase Non-Reportable Fringe Benefits
Most fringe benefits are reportable. Reportable means they are ‘reported’ on your tax return. That means Services Australia can see them thanks to their data sharing with the ATO and adds the back to your income.
However, some fringe benefits are not reportable and so don’t get added back. Go for those ones.
9 – Run Your Own Business
Running your own business gives you more options to influence your income. How much depends on your set-up. Make sure your tax agent works with you on this one.
10 – Re-Invest Profit
Invest profit back into the business. For example, buy assets that qualify for an immediate write-off, ramp up your marketing and business development, or hire more staff. But only do what makes sense business-wise. Don’t spend money just to get a tax deduction.
11 – Avoid Non-Commercial Losses
If you have other income, make sure your business losses qualify as commercial losses so the non-commercial loss provisions don’t apply.
If you incur non-commercial losses, they get deferred, so reduce neither your current tax nor your current child support.
12 – Focus on Expansion
Focus on expansion and new business ideas, By the time these bear fruit, you might no longer be paying child support.
13 – Invest for Capital Gains
If you invest for income, that income will increase your child support. Examples are high-dividend stocks or commercial real estate.
But if you invest for capital gains, you can postpone realising that capital gain until you are well and truly out of child support territory.
Examples are residential property and cryptocurrency.
14 – Hold Assets in Another Name
Buy income-producing assets in another person’s name who you trust, for example, your parents. But consider how this affects their pension or other benefits.
15 – Hold Assets Within a Trust
Hold income-producing assets within a discretionary trust that you don’t control, and then have trust income distributed to other beneficiaries while you are on child support.
For you not to control the trust, make sure you are neither the appointor nor the trustee nor the specified individual, and the trust has at least three beneficiaries.
16 – Offset Capital Losses
Services Australia adds investment losses aka capital losses back to your taxable income to calculate your child support.
Let’s say your property makes a $500k loss over five years and then a $500k profit over the following five years. So all up your child support should be zero since you didn’t actually make any money.
However, this is not how it works. Services Australia will add the loss back to your income, so you pay a lot more child support than if you had evened out the return.
17 – Be Proactive
If your circumstances significantly change and you can foresee your income dropping by at least 15%, tell Services Australia. They don’t backdate and hence you don’t get a refund for overpaid child support.
18 – Time Your Lodgement
If your income has dropped, lodge your tax return as quickly as possible since Services Australia bases their assessment on your latest tax return lodged.
But if your income has increased, then register with a tax agent to extend your lodgement deadline from 31 October to a later date. Yes, you will have to pay catch-up but it buys you time.
19 – Avoid a Change of Assessment
The other parent can request a change of assessment, for example, if your income suddenly drops and you can’t explain why.
Services Australia usually favours the applicant (ie. your ex) in a change of assessment, so best to avoid this.
20 – Keep your Income Steady
Keep your income steady. To achieve that, you must start as early as possible to optimise your child support.
For example, if you are on $60k one year, $120k the next, and then $60k again in the third year, you run the risk that Services Australia locks you in at $120k through a Change of Assessment.
21 – Become a High-Income Earner
As your income increases, the percentage of your income going to child support decreases. Once you hit a certain threshold (AUD 206,310 from 1 January 2023 onwards), any additional income is no longer subject to child support.
22 – Have Another Child
Of course, you won’t have a child just to decrease the child support for another child.
But if you decide to have a child with your new partner for all the right reasons, then the child support for your other child will most likely go down.
23 – Encourage Your Ex to Work
The smaller the difference between your incomes, the less you pay.
Contrary to common belief, your child support is actually not about how much you earn in absolute terms, but about the difference between the two incomes.
24 – Apply for a Review
Apply for a receiver income review, if the other parent could work or could work more but chooses not to. This one depends on the age of your children and the respective care percentages.
To learn more about the framework for reducing your child support: 5 Things That Determine Your Child Support
25 – Layer Across Tax Havens
Due to the data-sharing agreements of tax agencies across the globe, this no longer works as well as it used to in days gone by.
However, there is still some room to ‘park’ overseas income by layering a structure across several jurisdictions, using nominee directorships and bearer shares (most likely qualifies as tax evasion).
This only works if the income is derived overseas and stays overseas. Once the income is connected to Australia, it is almost impossible to move it back overseas without catching AUSTRAC and the ATO’s attention.
So these are 25 ways to pay less child support. All this might sound straightforward, but the devil is in the detail. So make sure you get an accountant who understands child support to help you.
Makes sense? Reach out when you are ready.
Last Updated on 03 March 2025
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