10.6.2 Child and Spousal Maintenance Income

Last amended: 18 June 2010

Child maintenance

Child maintenance received by a pensioner from the parent of a child or a partner/former partner is not assessed as ordinary income under the income test for income support purposes. It is, however, taken into account under the maintenance income test for "more than the base rate" of Family Tax Benefit Part A and for child related payments in respect of DVA saved children.    

There is an important distinction between child support payments received and child support payments paid. Child support payments received by a person are not assessed under the ordinary income test that applies to service pensions. However, child support payments paid by a person are included within that person's assessable income.

Effect on additional free area for dependent children for income test

Maintenance income payments do not reduce the additional free area provided for dependent children.

Spousal maintenance

Spousal maintenance payments are usually made periodically but can be received as lump sums. Spousal maintenance is distinct from a property settlement, which is the return of a person's own property.

Assessment of spousal maintenance in the hands of the receiver

For the person who receives spousal maintenance, the maintenance is not assessed as ordinary income under the income test for income support purposes. It is, however, taken into account under the maintenance income test for family payment purposes.    

Assessment of spousal maintenance in the hands of the payer

Where a person is claiming or receiving income support and part of their income is used to pay spousal maintenance, it is necessary to look at the facts in each case to determine whether the income used to pay spousal maintenance should be assessed as income.     

Maintenance income paid - discretion to exclude from the income test

The VEA does not exclude maintenance income payments, in the hands of the payer, from the income test. The basis for allowing a favourable discretion to exclude (in some circumstances) spousal maintenance amounts, in the hands of the payer, from the income test is that those amounts may be regarded as not being available for the person's own use or benefit. This may allow a reasonable finding that they do not fall within the definition of income within the VEA.

Individual circumstances must be considered

The individual circumstances of each case must be carefully considered to determine whether this expectation, of the amounts not being available for use by the payer, is correct. Where a delegate is reasonably satisfied that a valid and binding spousal agreement exists, then the maintenance income may be excluded from the pension assessment of the payer.    

Where a divorced or separated couple subsequently reconcile, maintenance income payments may still be required under a continuing court order. In this circumstance the continued exemption of the payments from the income test would not be appropriate, owing to the expectation under the VEA that members of a couple will pool and share their combined financial resources.