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1997-98
THE PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
HOUSE OF REPRESENTATIVES
CHILD SUPPORT
LEGISLATION AMENDMENT BILL 1998
SUPPLEMENTARY EXPLANATORY
MEMORANDUM
Amendments and new clause to be moved on behalf of
the Government
(Circulated by authority of the
Assistant
Treasurer, Senator the Hon Rod Kemp)
General outline and financial impact.................................................... 1
1. Credit for Certain Non Agency
Payments.............................................. 3
The supplementary amendment amends the Bill to insert new provisions amending
the Child Support (Registration and Collection ) Act 1988 to modify the
way in which non agency payments may be credited against a child support
liability.
Date of effect: The amendments contained in Part 1 of Schedule
11A will commence on 1 July 1998. The amendments contained in Part 2 of Schedule
11A will commence on 1 July 1999.
Proposal announced: 1998-99
Budget, 12 May 1998
Financial impact: Nil
Compliance cost impact: Nil
1.1 Schedule 11A of the supplementary amendment amends the
Bill to insert new provisions amending the Child Support (Registration and
Collection ) Act 1988 (the Registration and Collection
Act).
1.2 Part 1 of Schedule 11A of the
supplementary amendments will amend the Registration and Collection Act to allow
the Registrar to:
· accept payments made to the payee or a third party where the payer and payee intended these payments to be maintenance without the need for special circumstances
· accept non cash maintenance as an acceptable substitute for maintenance where the payer and payee intended this to be maintenance
· refuse to credit an amount as maintenance where there are special circumstances.
1.3 Part 2 of Schedule 11A of the supplementary amendments will amend the Registration and Collection Act to allow the Registrar to:
· credit up to 25% of the payer's monthly child support liability where certain approved payments are made by the payer.
1.4 The purpose of the amendments is to
allow:
l the Registrar greater
flexibility in crediting payments, including non cash maintenance, intended by
both the payer and payee as
maintenance
l the paying parent
the discretion to pay up to 25% of their monthly child support liability in
certain approved payments.
1.5 Sections 71 and 71A of the Registration and Collection Act
currently operate so that amounts paid directly by the payer to the payee or
a third party can only be credited against an enforceable maintenance liability
in limited circumstances. These are referred to as Non Agency Payments.
1.6 The Registrar can only credit an amount paid directly to the payee
if:
l at the time the payment was
made both the payer and payee intended it to be payment towards the enforceable
maintenance liability (either partially or completely) and
l the Registrar is satisfied
that, in the special circumstances of the particular case, the amount received
by the payee should be treated as having been made to the
Registrar.
1.7 Under section 71A the Registrar can only credit a payment
made to a third party to discharge a debt owed by the payee, the payer or both
the payer and the payee if the Registrar is satisfied that:
l at the time the payment was
made both the payer and payee intended it to be payment towards the enforceable
maintenance liability; and
l in
the special circumstances of the particular case, the payment should be treated
as having been made to the Registrar.
1.8 Currently, these payments are
limited to cash payments.
1.9 Sections 71 and 71A were introduced to
allow people registered for collection to bypass the CSA collection mechanism in
exceptional circumstances. The occurrence of payment by this method has been
higher than was originally envisaged and has become an important means for
parties to deal with situations where the payee requires immediate, direct
payment.
1.10 Under the existing legislation, a payer and payee may
agree that a payment direct to the payee or a third party was intended as a
payment towards an enforceable maintenance liability but the Registrar is unable
to credit the payment against the liability unless satisfied special
circumstances apply.
This means that this method of payment can not
be used as a way of paying ongoing maintenance, including child support.
Currently if a payer wants to pay child support in other ways, such as by paying
school fees or the payees mortgage, the payer and payee would be required to
make a child support agreement.
1.11 This measure forms part of the Governments response to concerns raised
by the Joint Select Committee on Certain Family Issues and goes some of the way
to addressing Recommendations 67 and 68. It is part of a package that supports
the greater use of these types of payments without undermining the requirement
that paying parents contribute to the costs of children. The proposed amendment
will give payers more choice in the form in which child support is
paid.
1.12 The proposed amendments will remove the need for special
circumstances to exist where the payer pays an amount direct to the payee which
both intend to be paid in complete or partial satisfaction of an enforceable
maintenance liability. [Item 2 - repeal paragraph 71(b) and insert new
paragraph 71(b)]
1.13 The proposed amendments will also remove
the need for special circumstances to exist where the payer pays an amount to a
third party that partially or completely satisfies a debt owed by the payer, the
payee or both, where that payment was intended by both the payer and the payee
to be paid in complete or partial satisfaction of an enforceable maintenance
liability. [Item 4 - repeal paragraph 71A(b) and insert new paragraph
71A(b)]
1.14 Non cash transactions such as payment in a form
other than with money, or by the transfer of property will be an acceptable
substitute for a cash payment where both the payer and payee of an enforceable
maintenance liability intend it to be treated as satisfying an amount payable
under that liability. [Item 5 - Insert new subsection
71B(1)]
1.15 The value attributed to the non cash maintenance
will be as agreed by the payer and the payee, or in the absence of agreement as
determined by the Registrar. [Item 5 - Insert new subsection
71B(2)]
1.16 The Registrar may refuse to credit an amount under
the amended sections 71 and 71A if satisfied that in the special circumstances
of the particular case the amount ought not to be credited. Special
circumstances would include harassment or coercion of the payee in order to
obtain the payees agreement to payments of this type. [Item 6 - insert new
section 71D; Items 1 and 3 - omit "Where" and substitute "Subject to section
71D, if" in sections 71 and 71A; Item 9 - omit "or 71A" and substitute "71A or
71C" in new section 71D]
1.17 The payer of an enforceable
maintenance liability will be entitled to a credit of up to 25% of their monthly
child support liability for certain prescribed payments. A payer will not be
able to claim a credit for these types of approved payments in relation to a
liability to pay spousal maintenance under section 18 of the Registration and
Collection Act. [Item 8 - Insert new subsections 71C(1), (2) and
(5)]
1.18 To qualify for the credit the payer must have made
one or more payments of the type set out in the Regulations and must also have
paid the remainder of their monthly child support liability by the due date. If
the payer satisfies these conditions and the amount of the payment (or sum of
payments) is more than 25% of the enforceable maintenance liability in a given
month the payer will be said to have an "uncredited amount". This uncredited
amount will be able to be applied as a credit against the payer's enforceable
maintenance liability in a later month (provided the conditions for crediting
the payment are again met). [Item 8 - Insert new subsections 71C(1), (2),
(3) and (5)]
1.19 If the payer does not pay the remainder of
the enforceable maintenance liability by the due date but later pays the amount
and still has an uncredited amount arising from having made a prescribed
payment, the Registrar may then credit that amount. [Item 8 - Insert
subsection 71C(4)]
1.20 The payment options arising from this
amendment will also be available to payers and payees with a child support
liability that is not registered for collection by the Registrar. Where the
payee applies for registration of a registrable maintenance liability, unpaid
amounts taken into account in calculating an entitlement to arrears will not
include amounts that would have been credited against the liability under the
new section 71C if the liability had been an enforceable maintenance liability
at all relevant times. [Items 6 and 7 - insert new subsections 28A(7) and
39A(8)]
1.21 The amendments made by this Schedule require a
consequential amendment to Schedule 9 of the Bill which amends section
71A(b). [Amendment 3 - omit Item 60 of Schedule
9]
1.22 Amendments are also required to other items of the Bill
to include a reference to the proposed Schedule 11A. Clauses involved in the
proposed amendments are :
§ Clause 2
(line 2)- after "other than" insert of Part 2 of Schedule 11A or";
[Amendment 1]
§ Clause 2 (after line 3) - insert a new
provision subclause (2A) to provide that Part 2 of Schedule 11A commences on 1
July 1999. [Amendment 2]