The Department of Human Services deducts child support payments from your adjusted taxable income. Taxable income is made up of the income earned from your wages, investments, a business (if applicable) and any taxable government payments. Tax-deductible child support includes child support collected and managed by the Department of Human Services (DHO) and self-managed child support.
The child support paid can be in either cash payments or non-cash items; both are tax deductible. Income is one of the main factors that affect how much child support you pay or receive, but the DHO may use a different calculation than the Australian Tax Office to determine your payable child support in the first place. If you pay child support, this can affect the calculated income used to determine how much you may receive for family assistance payments, low income supplements or carer allowances.
Although child support is tax deductible, spousal maintenance payments you have made usually are not. If you pay both child support and spousal maintenance, it is important to remember this difference. For the recipients of child support, child support payments you receive are generally not subject to tax.
This is the same for recipients of spousal maintenance payments and is due to the fact that the Australian Tax Office does not include these payments as income. It is necessary to pay tax on certain government benefit payments received from Centrelink or the Department of Human Services. For taxable payments, the tax payable can be deducted by the department before you receive it.