Child support is a vital component of ensuring children receive the financial care they need following the separation of their parents. One area that often causes confusion and dispute is how salary sacrificing arrangements affect the calculation of child support payments.

In this article, we explain how salary sacrifice is treated under Australian family law and what separated parents need to know. If you are dealing with a child support matter or have questions about your financial obligations or entitlements, the experienced family lawyers at Maatouks Law Group are here to help you understand your rights and responsibilities.

What Is Salary Sacrifice?

Salary sacrifice is a financial arrangement between an employee and their employer where the employee agrees to forgo part of their future earnings in exchange for certain benefits. These benefits may include:

  • Motor vehicles
  • Superannuation contributions above the standard guarantee
  • Electronic devices
  • Rent or mortgage payments
  • School fees or childcare costs

While salary sacrifice can be a legitimate way to reduce taxable income and gain certain lifestyle advantages, it can also have implications for child support assessments.

How Child Support Is Calculated in Australia

In Australia, the Department of Services Australia – Child Support (formerly the Child Support Agency) calculates child support based on several key factors, including:

  • The income of both parents
  • The number of children
  • The percentage of care each parent provides
  • The cost of raising children

The income figure used in these assessments is known as the “adjusted taxable income”, which includes taxable income, reportable fringe benefits, total net investment losses, foreign income, tax-free pensions or benefits, and reportable superannuation contributions—including those made through salary sacrificing.

Does Salary Sacrifice Reduce Child Support Obligations?

In short—no, salary sacrifice should not reduce your child support obligations.

Some parents may attempt to lower their taxable income through salary sacrifice, assuming this will reduce their assessed child support payments. However, Australian child support laws are designed to prevent this type of manipulation. When determining a parent’s income for child support purposes, salary sacrifice arrangements are added back into the adjusted taxable income to reflect the parent’s full financial capacity.

The Child Support Registrar has broad powers to investigate and reassess income if they believe a parent is not providing accurate financial information or is deliberately minimising their income.

Real-Life Implications of Salary Sacrifice

If one parent suspects the other is engaging in excessive or strategic salary sacrifice to reduce their child support obligations, they can request a change of assessment. This process allows the Registrar to consider whether the salary sacrifice is genuine or structured to avoid higher payments.

For example, if a parent is redirecting a large portion of their income into superannuation or leasing a luxury vehicle through salary sacrifice, the other parent may argue that this reduces the funds available for the child’s support.

In these cases, the Registrar may:

  • Add the sacrificed income back into the paying parent’s adjusted taxable income.
  • Recalculate the child support assessment accordingly.
  • Investigate whether the arrangement is part of a broader attempt to evade financial responsibility.

If the matter becomes more complex or contentious, legal assistance is highly recommended. At Maatouks Law Group, our family lawyers are experienced in navigating disputes involving financial transparency and child support obligations.

What the Courts and Registrar Consider

When evaluating salary sacrifice arrangements in child support assessments, the Child Support Registrar or the Court (if involved) will look at:

  • Whether the arrangement is standard practice in the person’s industry or role
  • Whether the salary sacrifice is voluntary and within the individual’s control
  • The nature of the sacrificed benefits (e.g., superannuation contributions vs luxury goods)
  • Whether the arrangement affects the parent’s ability to financially support the child

The Family Law Act 1975 (Cth) and the Child Support (Assessment) Act 1989 (Cth) both empower the relevant authorities to look beyond reported taxable income to determine a fair and accurate assessment.

Seeking Legal Advice in Child Support Disputes

If you believe that your ex-partner is using salary sacrifice arrangements to avoid paying fair child support—or if you are unsure how your own salary packaging could affect your obligations—it’s essential to seek legal advice.

At Maatouks Law Group, we’ve built a reputation for providing reliable, strategic, and compassionate legal advice across all aspects of family law. Our team can help you:

  • Understand how child support is calculated in your specific situation
  • Apply for a change of assessment if you suspect financial misconduct
  • Respond to claims or audits by the Child Support Registrar
  • Ensure your child receives the financial support they are entitled to

Conclusion

Salary sacrificing may reduce your taxable income, but it does not eliminate your responsibility to financially support your child. Australian child support laws are designed to ensure fairness and prevent parents from hiding or minimising income through salary packaging arrangements. Whether you are the paying or receiving parent, understanding how salary sacrifice affects your child support assessment is crucial.

For trusted legal guidance in child support or any family law matter, contact Maatouks Law Group. We are committed to helping families navigate these complex financial and legal issues with integrity, expertise, and care.