Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
1998-1999-2000
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
CHILD SUPPORT LEGISLATION AMENDMENT BILL (No. 2) 2000
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Community
Services,
the Hon Larry Anthony MP)
ISBN: 0642 440506
CHILD SUPPORT LEGISLATION AMENDMENT BILL (No. 2)
2000
OUTLINE AND FINANCIAL IMPACT STATEMENT
The Child Support Legislation Amendment Bill (No. 2) 2000 (the Bill)
gives effect to four measures relating to child support announced as part of the
Government’s 2000-01 Budget. It also gives effect to several non-Budget
measures.
Lower child support percentages for children with whom
liable parent has 10% to 30% contact
There is currently no
allowance in the child support formula for the costs of caring for a child for
less than 30% of the time. Under this measure, if a non-resident parent has
contact with his or her child or children for between 10% and 30% of the time,
the child support formula percentages will be reduced. This is to recognise the
additional costs of contact faced by non-resident parents and to encourage
parents to maintain contact with their children. Contact of at least 10%, but
less than 20%, will generally lead to a reduction in the child support
percentage by two percentage points (eg, from 18% to 16% for one child).
Contact of at least 20%, but less than 30%, will generally lead to a reduction
by three percentage points (eg, from 18% to 15% for one child).
Date of
effect: 1 July 2001, or (should Royal Assent not be given on or before that
date) on proclamation
Financial
impact: 2000-01 $1.4m.
2001-02 $16.4m.
2002-03 $14.5m.
2003-04 $15.2m.
Lower
cap on income subject to child support formula assessment
Under
this measure, the Average Weekly Earnings (AWE) figure that sets the
“cap” on payer taxable income that is subject to child support
formula assessment will be aligned with that used for the payee’s
disregarded income figure (the “all employees average weekly total
earnings” figure instead of the “full-time adult average weekly
total earnings” figure). This will result in a lower
“cap”.
Date of effect: 1 January 2001, or (should Royal
Assent not be given on or before that date) on proclamation
Financial
impact: 2000-01 Nil
2001-02 Nil
2002-03 Nil
2003-04 Nil
Income
earned for the benefit of resident children
This measure will
create a new ground for departure from the child support formula assessment for
a parent who has income from a second job, regular overtime, or some similar
source, that is earned for the benefit of a child (natural, adoptive or
step-child) or children in the parent’s current family. For this to
apply, the additional income must not be earned as part of the normal earning
pattern established by the parent before the current family was established, and
must not come from normally expected improvements in the parent’s earning
pattern (eg, mandatory overtime or normal incremental increases). The amount of
income to be excluded will be limited to a maximum of 30% of the parent’s
total income.
Date of effect: 1 January 2001, or (should Royal Assent not
be given on or before that date) on proclamation
Financial
impact: 2000-01 $0.3m.
2001-02 $0.7m.
2002-03 $0.7m.
2003-04 $0.7m.
Increase
in deductible child maintenance expenditure for family tax benefit and child
care benefit
This measure will increase the family tax benefit
and child care benefit income test deductions for child support payers from 50%
to 100%, by allowing a dollar for dollar deduction for any child support paid.
This will mean that child support payers with children in a new family will have
their family tax benefit and child care benefit assessed on income that reflects
the actual income available to their new family.
Date of effect: 1 July
2001, or (should Royal Assent not be given on or before that date) on
proclamation
Financial
impact: 2000-01 $0.1m.
2001-02 $5.3m.
2002-03 $5.7m.
2003-04 $6.1m.
Administrative
arrangements
This measure will make changes in child support,
taxation and social security legislation to reflect the fact that the child
support function has moved from the Treasury portfolio to that of Family and
Community Services. In particular, the Child Support Registrar will no longer
be the Commissioner of Taxation. However, close links between the child support
and taxation functions will be maintained so that the child support assessment,
collection and enforcement activities continue undisrupted.
Date of
effect: Royal Assent
Financial
impact: 2000-01 Nil
2001-02 Nil
2002-03 Nil
2003-04 Nil
Departure
prohibition orders
This measure will set up a system of departure
prohibition orders so that, in certain cases of a child support payer having
persistently failed to meet his or her child support commitments, the payer may
be prevented from leaving Australia without either discharging all debts or
making satisfactory arrangements to discharge them. The system will mirror
closely the existing departure prohibition order system in place under the
Taxation Administration Act 1953.
Date of effect: Royal
Assent
Financial
impact: 2000-01 Nil
2001-02 Nil
2002-03 Nil
2003-04 Nil
Minimum
rate of child support
This measure will set up a regulation
making power to allow certain amounts to be excluded from income so that the
current $260 minimum child support liability will not apply.
Date of
effect: Royal Assent
Financial
impact: 2000-01 Nil
2001-02 Nil
2002-03 Nil
2003-04 Nil
Supporting
documents
Under this measure, it will no longer be a requirement
that supporting documents, supplied with a party’s application to
depart from the child support formula assessment, be provided to the other party
to the child support arrangement. Similarly, supporting documents
supplied with the other party’s reply to the first party’s
application for departure will not have to be given to the first party.
However, the application or response form itself will continue to be made
available to the other party, as required by natural justice.
Date of
effect: Royal Assent
Financial
impact: 2000-01 Nil
2001-02 Nil
2002-03 Nil
2003-04 Nil
Definition
of eligible carer
Currently, an assessment may be made of child
support payable to a non-parent who is providing care to a child who has left
home, whether with or without parental consent, and whether with or without
reasonable cause. The child support scheme should not be seen to condone or
assist the breakdown of families. Accordingly, this measure will generally
provide that carers who are not parents or legal guardians of a child cannot be
eligible carers, and therefore cannot get child support, if a parent or legal
guardian has not consented to the arrangement. However, if it is unreasonable
for the child to live at home because of extreme family breakdown or because of
a serious risk to the child’s physical or mental wellbeing from violence
or sexual abuse at home, the carer can be an eligible carer.
Date of
effect: Royal Assent
Financial
impact: 2000-01 Nil
2001-02 Nil
2002-03 Nil
2003-04 Nil
Technical
amendments
Under this measure, a number of technical amendments
will be made to correct and clarify minor matters in the child support
legislation.
Date of effect: Royal Assent, or, if anomalies arising from
past amending legislation are being corrected, with retrospective effect to the
date of effect of the relevant amending legislation
Financial
impact: 2000-01 Nil
2001-02 Nil
2002-03 Nil
2003-04 Nil
The
measures in the Bill will impact on the following
legislation:
• the Child Support (Assessment) Act
1989 (referred to in this Explanatory Memorandum as the Assessment
Act);
• the Child Support (Registration and Collection) Act
1988 (referred to as the Registration and Collection
Act);
• the A New Tax System (Family Assistance) Act
1999;
• the Income Tax Assessment Act
1936;
• the Social Security (Administration) Act
1999; and
• the Taxation Administration Act
1953.
PRELIMINARY
Clause 1 of the Bill sets out how the amending Act is to be
cited.
Clause 2 specifies that the amending Act commences on Royal
Assent, subject to certain exceptions specified.Clause 3 provides that
each Act that is specified in a Schedule to the amending Act is amended or
repealed in accordance with the applicable items in those Schedules.
SCHEDULE 1 – LOWER CHILD SUPPORT PERCENTAGES FOR CHILDREN WITH WHOM LIABLE PARENT HAS 10% TO 30% CONTACT
Summary of proposed changes
There is currently no allowance in the child support formula for the
costs of caring for a child for less than 30% of the time. Under this measure,
if a non-resident parent has contact with his or her child or children for
between 10% and 30% of the time, the child support formula percentages will be
reduced. This is to recognise the additional costs of contact faced by
non-resident parents and to encourage parents to maintain contact with their
children. Contact of at least 10%, but less than 20%, will generally lead to a
reduction in the child support percentage by two percentage points (eg, from 18%
to 16% for one child). Contact of at least 20%, but less than 30%, will
generally lead to a reduction by three percentage points (eg, from 18% to 15%
for one child). The amendments are consistent with the treatment of shared care
for family tax benefit under the A New Tax System (Family Assistance) Act
1999.
Explanation of the changes
The definition of “eligible carer” in section 5 of the
Assessment Act covers a person who is the sole or principal provider of ongoing
daily care for the particular child. It also covers a person who either
“shares care of the child substantially equally with another person”
or who has “major contact” or “substantial contact” with
the child (the meanings of all of these terms are provided by section
8).
As provided by subsection 8(3), in a shared care arrangement in which
one person is the principal provider of care and a second person provides care
for at least 30%, but less than 40%, of the time, the second person is
categorised as having substantial contact (for 35% of the time), and the first
person is categorised as having major contact (for 65% of the time). Thus, each
is an eligible carer. Accordingly:
• under section 25, each may
apply for child support; and
• under Subdivision E of Division 2
of Part 5, each (as a liable parent in relation to the other person) will have a
modified child support percentage to recognise the care given by the other
person.
A liable parent who has contact with the child for less than 30%
of the time is not, therefore, an eligible carer, nor is there any modification
made to the person’s child support percentage to recognise the care. This
measure does not make eligible carers out of liable parents who are providing
the newly recognised lower levels of care. Therefore, these liable parents will
not be able to apply for child support in their own right. However, they may
have their child support liability adjusted to recognise the costs of
contact.
Item 1 inserts new section 8AA to provide definitions of
the two newly recognised lower levels of care. A parent providing care for at
least 10%, but less than 20%, of the time is categorised as having
“moderate contact” with the child (for 15% of the time). A parent
providing care for at least 20%, but less than 30%, of the time is categorised
as having “intermediate contact” with the child (for 25% of the
time). Alternatively, if the parent and each eligible carer of the child agree
that the parent should be taken to have moderate or intermediate contact, then
the parent is so categorised.
These two new terms will form the basis of
subsequent amendments to reduce the parent’s child support percentage in
the various circumstances that may apply.
Item 7 inserts into
Division 2 of Part 5 of the Assessment Act new Subdivision DA to provide
how a liable parent’s child support percentage for a child is to be
reduced if he or she has moderate or intermediate contact with the
child.
Through new section 46A, the new Subdivision will apply
if:
• the entitled carer to whom child support is payable by the
liable parent for a child or children is the sole or principal provider of
ongoing daily care for the child or children;
• the liable parent is
not an eligible carer of any child eligible for administrative assessment under
the Assessment Act of whom the liable parent and the entitled carer are the
parents; and
• the liable parent has moderate or intermediate contact
with the child or any of the children.
New section 46B provides a table
under which the liable parent’s child support percentage is ascertained.
The table generally provides that moderate contact will lead to a reduction in
the child support percentage by two percentage points (eg, from the usual 18% to
16% for one child), and that intermediate contact will lead to a reduction by
three percentage points (eg, from 18% to 15% for one child).
Subdivision
E of Division 2 of Part 5 provides for the child support percentages of parents
in shared care arrangements. For the Subdivision to apply, both parents must
basically be eligible carers of the child or children (and each is essentially a
liable parent in relation to the other). Item 8 repeals
paragraph 48(1)(e) in Subdivision E and substitutes a new paragraph
(including a new table of child support percentages) to recognise the effects on
the percentages of moderate or intermediate care provided by one of the parents
as a liable parent.
For example, if two children are currently divided
between two parents, a daughter with the mother and a son with the father, then
the child support percentage for each parent is worked out under the
Subdivision. These amendments now recognise, for example, that the father may
also provide care of at least 10%, but less than 30%, to the
daughter.
Subdivision F of Division 2 of Part 5 deals with children with
two liable parents, the carer entitled to child support being someone other than
either of the parents. In that case, the obligation to pay child support of
each of the parents is calculated by applying the basic formula to each liable
parent in turn, and then subjecting the sum of the figures calculated to a cap.
The amendment made under this measure by item 9 to Subdivision F
merely adds the new Subdivision DA (inserted by item 7) to the
existing list of elements of the child support formula that need to be treated
in that way.
Subdivision G of Division 2 of Part 5 deals with the case of
a liable parent in relation to two or more carers entitled to child support.
Again, the child support percentage needs to be modified to recognise moderate
or intermediate contact by the liable parent with the child or children
concerned. Section 54 currently operates by splitting the total available child
support between the entitled carers on the basis of the “number of
children in carer’s care” as a proportion of the “total number
of children”. Accordingly, the reduced available child support (reduced
because of the moderate or intermediate contact) must be split between the
entitled carers. This is achieved by the amendments made by items 10 to
13.
Item 10 amends the definition of “number of children
in carer’s care” in paragraph 54(1)(b) to recognise moderate or
intermediate contact. Item 11 makes a minor correction to the definition
in that paragraph of “total number of children” (it has always been
intended to mean the sum of the “number of children in carer’s
care” for each entitled carer in relation to whom the liable parent is a
liable parent). Item 12 provides a new table of child support
percentages that allows for moderate or intermediate contact. Item 13
omits an existing rule in subsection 54(2) to round the second decimal place of
a child support percentage to either 0 or 5 because, under this measure, more
precise calculations of the percentage are necessary (as can be seen from the
new table).
Item 14 adds a new example to the existing examples
that appear at the end of section 54. The new example illustrates the way
the provision will work with regard to moderate or intermediate care.
As
mentioned above, it is section 8 that generally allocates a level of care to a
liable parent or entitled carer for the purposes of the Assessment Act. This
will now be supplemented by new section 8AA (inserted by item 1) to
recognise moderate or intermediate care.
However, if care levels have
been allocated under a court order or registered parenting plan and the
order or plan is being contravened without reasonable excuse, then section 8A,
rather than section 8, applies. Under section 8A, if a person has more
care of the child than is provided for in the order or plan, then that person is
taken to have care of the child only to the extent permitted by the order or
plan. Similarly, if a person has less care of the child than is provided
for in the order or plan, then the amount of care that person has of the child
is to be worked out on the basis of the level of care (if any) that that person
actually has of the child.
Section 8A exists to prevent a person from
obtaining a higher level of child support, on the basis of the contravention of
the order or plan, than would have been payable if he or she were exercising the
level of care provided for by the order or plan. Similarly, section 8A prevents
child support being payable for a higher level of care than is actually being
provided by a carer.
As a result of section 8A, it may be the case that
something less than the full amount of available child support is payable. This
may happen if one parent ceases to be an eligible carer because he or she
actually has care of the child for less than 30% of the time, but the other
parent still has only shared care or substantial or major contact as provided
for by the court order or parenting plan. In this case, Subdivision H of
Division 2 of Part 5 sets the child support percentage.
This measure is
accommodated within section 8A and Subdivision H in a way that avoids the
following anomalous situations occurring:
• A carer who was
receiving a reduced level of child support because the order or plan allocates
moderate or intermediate care to a liable parent should not be able, by
contravening the order or plan so that he or she actually has sole care, to
obtain the full amount of the available child support.
• However, in a
case in which less than the full amount of available child support is payable
(as described above in relation to Subdivision H), section 8A will already have
had the effect of reducing the child support payable and it is not appropriate
that it be reduced further because a liable parent actually has moderate or
intermediate contact with the child.
The amendments made by items 2 to
6 to section 8A, and by items 15 and 16 to Subdivision H, are
consistent with the amendments made to section 8 and the rest of Division 2, but
prevent these anomalous situations occurring. Firstly, the care levels provided
by the court order or parenting plan are compared with actual care levels. If
the order or plan allocates to a parent moderate or intermediate care, then,
regardless of actual care levels, the parent is taken to have the allocated
level of care. Secondly, however, a moderate or intermediate care level (after
the application of section 8A) is compared with the total care levels of the
child provided by the carer or carers. If less than the full available amount
of care is allocated, then the parent is taken to have not moderate or
intermediate care, but zero care.
Section 74A in the Assessment Act is
the provision that sets down the date of effect on an annual rate of child
support of a change in care. This general rule is to apply equally to the newly
recognised lower levels of care. Accordingly, item 17 adds reference to
moderate and intermediate care to that section.
This measure commences on
1 July 2001, or (should Royal Assent not be given on or before that date) on
proclamation.
SCHEDULE 2 – LOWER CAP ON INCOME SUBJECT TO CHILD SUPPORT FORMULA ASSESSMENT
Summary of proposed changes
Under this measure, the Average Weekly Earnings (AWE) figure that sets
the “cap” on payer taxable income that is subject to child support
formula assessment will be aligned with that used for the payee’s
disregarded income figure (the “all employees average weekly total
earnings” figure instead of the “full-time adult average weekly
total earnings” figure). This will result in a lower
“cap”.
Explanation of the changes
One of the cases in which Division 2 of Part 5 of the Assessment Act
modifies the basic child support formula, provided by Division 1, is when a
liable parent has high child support income.
Under section 42, if a
liable parent’s child support income amount is more than 2.5 times the
yearly equivalent of the “relevant AWE amount” (ie, the full-time
adult average weekly total earnings figure), then the liable parent’s
adjusted income amount is calculated using a formula that effectively imposes a
cap based on that relevant AWE amount.
A different income measure is
applied in section 46 in relation to the entitled carer’s disregarded
income amount. In that case, the measure is the “EAWE amount” (ie,
the all employees average weekly total earnings figure).
Item
1 amends section 42 to change the income measure to the one used in
section 46. This is a more realistic measure of income, is consistent with
the treatment of the entitled carer’s income and effectively lowers the
cap on liable parent income used in the child support assessment.
The cap
on the child support income amounts of two liable parents, in relation to a
child or children under section 52 is also to be lowered in the same way.
Item 2 achieves this.
This measure commences on 1 January 2001, or
(should Royal Assent not be given on or before that date) on proclamation.
SCHEDULE 3 – INCOME EARNED FOR THE BENEFIT OF RESIDENT CHILDREN
Summary of proposed changes
This measure will create a new ground for departure from the child
support formula assessment for a parent who has income from a second job,
regular overtime, or some similar source, that is earned for the benefit of a
child (natural, adoptive or step-child) or children in the parent’s
current family. For this to apply, the additional income must not be earned as
part of the normal earning pattern established by the parent before the current
family was established, and must not come from normally expected improvements in
the parent’s earning pattern (eg, mandatory overtime or normal incremental
increases). The amount of income to be excluded will be limited to a maximum of
30% of the parent’s total income.
Explanation of the changes
Part 6A of the Assessment Act allows the Registrar to determine that the
normal administrative assessment provisions of the Act are to be departed from
in individual cases. A departure determination may be made to vary the liable
parent’s, or the entitled carer’s, income.
This measure
provides a new ground for such a departure determination to be made. The ground
would be that a liable parent, or an entitled carer, earned, derived or received
income for the benefit of a child (natural, adoptive or step-child) or children
in the liable parent’s, or entitled carer’s, current family. The
result of the departure determination would be to reduce or increase the child
support liability of the liable parent to the entitled carer.
Paragraphs
98S(1)(b) and (d) currently allow the Registrar to vary the liable
parent’s, or entitled carer’s, child support income amount in a
departure determination. However, before doing so in response to an
application, section 98C provides that the Registrar must be satisfied as to
certain matters, including that one or more of the prescribed grounds for
departure exists. Paragraph 98C(2)(a) provides that the grounds for departure
are the same as apply to a court under subsection 117(2).
Items 2 to
5 modify subsection 117(2) to provide the new ground in the form of new
subparagraphs 117(2)(c)(iii) and (iv). The child that is the subject of the new
ground is referred to as the “resident child” of the liable parent
or entitled carer.
Item 6 inserts new section 117A to elaborate on
the new ground. In particular, the new section provides that a child is a
resident child only if:
• the child normally lives with the liable
parent;
• the child is under 18;
• the child is not a member
of a couple;
• the liable parent or entitled carer (respectively) is
either a parent of the child, or is or was a member of a couple of which the
other member is or was a parent of the child (ie, a step-parent of the child);
and
• the child is not a child of whom both the liable parent and the
entitled carer are the parents.
An example of the last point is when a
couple with two children separate and each parent has one of the children living
with him or her. Each of these children may not be a subject for the income
earning behaviour targeted by this measure in so far as the other parent is
concerned. For example, the liable parent will not get a reduction in his or
her child support income amount (in relation to the child support payable to the
entitled carer) for extra income earned for the child who is living with the
liable parent.
New section 117A also prevents the new ground from
applying if the “additional amount” of the liable parent’s, or
entitled carer’s, child support income amount was earned, derived or
received in certain circumstances. The amount must not have been earned,
derived or received in accordance with a pattern established before the child
became a resident child of the liable parent or entitled carer. Nor, if the
child has been a resident child from birth, must the pattern have been
established before the liable parent or entitled carer could reasonably have
been aware of the pregnancy that resulted in the child’s birth. (This is
to establish that the motivation in earning the extra income was to benefit a
child who, if not already born, was at least clearly expected.)
Lastly,
even if the amount passes that test of when the pattern was established, it must
not have been earned, derived or received through alterations to the pattern
that could reasonably be expected to occur in the ordinary course of events.
For example, income earned from regular or seasonal overtime, seasonal
employment, mandatory overtime, shift work conditions, normal increases in pay
and normal career advancements would be excluded.
The new ground having
been provided, item 1 inserts new subsection 98S(3A) to provide that, in
making a departure determination under the new ground, the Registrar must not
reduce the child support income amount by more than 30%, to the extent that the
reduction is attributable to the new ground (more than one ground may
apply).
Item 7 makes a similar provision in section 118 for when a
court makes a departure determination.
This measure commences on 1
January 2001, or (should Royal Assent not be given on or before that date) on
proclamation.
SCHEDULE 4 – INCREASE IN DEDUCTIBLE CHILD MAINTENANCE EXPENDITURE FOR FAMILY TAX BENEFIT AND CHILD CARE BENEFIT
Summary of proposed changes
This measure will increase the family tax benefit and child care benefit
income test deductions for child support payers from 50% to 100%, by allowing a
dollar for dollar deduction for any child support paid. This will mean that
child support payers with children in a new family will have their family tax
benefit (FTB) and child care benefit (CCB) assessed on income that reflects the
actual income available to their new family.
Explanation of the changes
The income test for FTB and CCB involves, in part, working out an
individual’s “adjusted taxable income” under Schedule 3 to
the A New Tax System (Family Assistance) Act 1999. Under clause 2
of that Schedule, that amount is the sum of a number of prescribed income
components, less the amount of the individual’s “deductible child
maintenance expenditure”. That expenditure amount is provided by
clause 8.
Under clause 8, if an individual incurs an amount of child
maintenance expenditure during an income year, 50% of the amount is deductible
child maintenance expenditure. This amount is not taken into account in working
out the individual’s adjusted taxable income.
Under this measure,
100%, instead of only 50%, of child maintenance expenditure is to be excluded
from adjusted taxable income. Item 1 achieves this. Thus, a child
support payer’s FTB and/or CCB will be assessed on income that reflects
the actual income available to their new family.
This measure commences
on 1 July 2001, or (should Royal Assent not be given on or before that date) on
proclamation.
SCHEDULE 5 – ADMINISTRATIVE ARRANGEMENTS
Summary of proposed changes
This measure will make changes in child support, taxation and social
security legislation to reflect the fact that the child support function has
moved from the Treasury portfolio to that of Family and Community Services. In
particular, the Child Support Registrar will no longer be the Commissioner of
Taxation. However, close links between the child support and taxation functions
will be maintained so that the child support assessment, collection and
enforcement activities continue undisrupted.
Explanation of the changes
The thrust of these amendments is to preserve as much as possible the
current operation of the relevant child support, taxation and social security
legislation at the same time as formally separating the child support function
from the taxation function.
The existing functions of the Child Support
Registrar that are of an administrative nature (ie, the general administration
of the Assessment Act and the Registration and Collection Act, and providing
annual reports) will become functions of the Secretary to the Department of
Family and Community Services.
Otherwise, the role of Registrar will
continue for all other functions under the two Acts. However, the Registrar
will no longer be the Commissioner of Taxation as currently provided, but will
be the person holding or acting in the position known as the General Manager of
the Child Support Agency. If such a position should not exist at some time in
the future, the Registrar will be a person in the public service, at Senior
Executive Service level, who holds or is acting in a position specified in
writing by the Secretary.
These changes are made to the Assessment Act by
items 13 and 14, and to the Registration and Collection Act by items
38, 39 and 41.
The office of Deputy Registrar is no longer required.
The provision in the Registration and Collection Act providing for Deputy
Registrars is repealed by item 40.
The rest of the amendments
made by this Schedule are consequential on the main changes described above.
The most important of these are set out below.
The secrecy provisions in
the Assessment Act are amended by items 16 to 29, in the Registration and
Collection Act by items 44 to 56, and in the Income Tax Assessment
Act 1936 by item 68.
Now that the Registrar will no longer
be the Commissioner, provisions are being inserted into the Assessment Act by
item 30, and into the Registration and Collection Act by
item 57, that achieve the following:
• The Registrar
will be able to ask clients to provide their tax file numbers. Also, there will
be provision (in the Assessment Act only) for the effect of failure to provide
such a number. These provisions are modelled on sections 75 and 76 of the
Social Security (Administration) Act 1999 and section 8 of the
A New Tax System (Family Assistance) (Administration) Act
1999.
• The Registrar will be able to require the Commissioner
to provide information, in the possession of the Commissioner, about people
(including tax file numbers). Information may be required in this way only for
the purposes specified in the new provisions. For the Assessment Act, the
purposes relate to the administrative assessment of child support and child
support terminating events under the Act. For the Registration and Collection
Act, the purposes relate to the recovery of debts due to the Commonwealth under
the Act. Furthermore, for both Acts, information may be required so as to
identify a person for the purposes specified. These provisions are modelled on
section 204A of the Social Security (Administration) Act
1999.
Section 202 of the Income Tax Assessment Act
1936 is amended by item 69 to record that the administration of
the Assessment Act and the Registration and Collection Act are objects of the
tax file number system.
Section 8WD of the Taxation Administration
Act 1953 is to be repealed by item 73 – it is no
longer appropriate that the Assessment Act and the Registration and Collection
Act be regarded as “taxation laws”. However, the effect of that
repeal is that a person carrying out child support duties will no longer be
exempt from the offences contained in sections 8WA and 8WB. To overcome this,
those two sections are amended by items 71 and 72 to refer to the
new provision within section 202 of the Income Tax Assessment Act
1936 (inserted by item 69) relating to the objects of the tax
file number system.
These secrecy and tax file number amendments are to
ensure that the flow of information between the Child Support Agency and the
Australian Taxation Office that is integral to the child support function
continues to operate effectively.
Section 72 of the Registration and
Collection Act currently allows a child support debt of a person to be
recovered, wholly or partly, from a tax refund owing to the person. Because the
Registrar and the Commissioner will no longer be one and the same, this
provision needs to be more elaborate, although the effect will be essentially
the same. The Registrar will be able to require the Commissioner to pay an
amount not exceeding the amount of the child support debt to the Registrar to be
offset against the child support debt (see item 58).
The new
section 72 will apply if the Commissioner would otherwise be required, under
section 8AAZLF of the Taxation Administration Act 1953, to refund
an amount to a person who also owes a child support debt. Note that an amount
will be refundable under that specified section only if all tax debts of the
person are already dealt with under the running balance account system in the
taxation legislation.
If the Registrar requires the Commissioner to pay
an amount in these circumstances, the Commissioner must pay the required amount
as soon as practicable, and the Registrar must apply the amount against the
child support debt. Should the child support debt have been discharged, wholly
or partly, in between the Registrar requiring the amount to be paid by the
Commissioner and receiving the payment, then the amount, or any residual amount,
is to be paid by the Registrar to the person.
The new section also
operates to reduce, by force of law, the amount that the Commissioner is
required to refund to the person, under section 8AAZLF, by the amount paid to
the Registrar.
This measure commences on Royal Assent.
SCHEDULE 6 – DEPARTURE PROHIBITION ORDERS
Summary of proposed changes
This measure will set up a system of departure prohibition orders so
that, in certain cases of a child support payer having persistently failed to
meet his or her child support commitments, the payer may be prevented from
leaving Australia without either discharging all debts or making satisfactory
arrangements to discharge them. The system will mirror closely the existing
departure prohibition order system in place under the Taxation
Administration Act 1953.
Explanation of the changes
Item 1 inserts after Part V of the Registration and Collection Act
a new Part VA dealing with departure prohibition orders (DPOs).
Division 1 – Registrar may make departure prohibition orders
Division 1 allows the Child Support Registrar to make a DPO. New
section 72D provides that a DPO may be made (in the approved form) to
prohibit a person from leaving Australia if:
• the person has a
“child support liability” (see new section
72E);
• satisfactory arrangements for the liability to be wholly
discharged have not been made;
• the person has, in the
Registrar’s opinion, persistently, and without reasonable grounds, failed
to pay child support debts in relation to a child or children (any failure to
pay child support debts in relation to a marriage is not taken into account);
and
• in the Registrar’s opinion (on reasonable grounds), it is
desirable to prevent the person from leaving Australia without either paying the
debt in full or making satisfactory arrangements to do so.
In forming an
opinion about whether a person has persistently, and without reasonable grounds,
failed to pay child support debts of the type mentioned, the Registrar must have
regard to certain matters. These are: the number of times a debt of that type
has not been paid when due; the number of times that recovery action in relation
to such debts has been taken, and the outcome of that action; the capacity of
the person to pay such debts; and other appropriate matters.
New section
72E describes the child support liability that the person must have for the DPO
provision to operate. Firstly, an amount must be payable under a registrable
maintenance liability of a kind mentioned in section 17 (ie, in relation to a
child or children, rather than in relation to a marriage). Secondly, that
amount (which, under section 30, is a debt) must not have been paid, in
whole or in part, even though the day when it was due and payable under section
66 has passed.
Division 2 – Offence provisions
Division 2 contains only new section 72F. This section provides that a
person must not leave Australia if:
• a DPO is in force in respect
of the person (and the person knows or is reckless about the existence of the
DPO); and
• if the departure is not authorised by a departure
authorisation certificate (DAC) (and the person knows or is reckless about the
absence of a DAC).
If the person contravenes this section, he or she
commits an offence that attracts a maximum penalty of 60 penalty units,
imprisonment for 12 months, or both.
Division 3 – Administrative requirements
This Division sets out the administrative requirements surrounding
DPOs.
Firstly, new section 72G stipulates that the Registrar must notify
the person in respect of whom a DPO is made that the DPO has been made, and must
do so in the approved form and as soon as practicable.
Secondly, the
Registrar must give (as soon as practicable) a copy of the DPO to the Secretary
of the Department of Immigration and Multicultural Affairs, along with
information likely to enable identification of the person. However, this does
not apply if the person is an Australian citizen. This provision is to enable
the Secretary of that Department to establish whether a person in respect of
whom the DPO has been made is also the subject of a deportation order under the
Migration Act 1958. Clearly, two such orders could not operate
consistently - indeed, the deportation order would prevail (as provided by new
subsection 72H(2)). The Secretary needs to know about a DPO to ensure that
there is no confusion among enforcement officers as to which order prevails.
However, since an Australian citizen cannot be deported, the Secretary does not
need to know if a DPO is made in respect of a citizen.
Lastly, the
Registrar must give (as soon as practicable) a copy of the DPO, along with
information likely to enable identification of the person for the purposes of
the new Part VA, to other appropriate people who fall within the range of people
prescribed by regulation for this purpose. The people prescribed by
subregulation 13(3) of the Taxation Administration
Regulations 1976 (the equivalent to this regulation making
provision) are: the Chief Executive Officer of Customs, the Commissioner of
Police of the Australian Federal Police and the Secretary to the Department of
Foreign Affairs and Trade. The intention is that the same people be prescribed
for the purposes of new subsection 72G(5). The reason for not specifically
listing these people within the primary legislation is that portfolio changes
may require adjustments that would be more efficiently handled by regulation
than by legislative amendment.
The reason for providing these people with
the information outlined above is so that they may assist in enforcing the DPO
to prevent the person concerned from leaving Australia.
New section 72H
makes it clear that a DPO is in force from the time it is made until it is
revoked, or until it is set aside by a court. However, as mentioned above, it
is not in force during any period during which a deportation order is in
force.
Under new section 72I, the Registrar is under an obligation to
revoke a DPO if the person concerned has discharged the debt wholly, or has made
satisfactory arrangements to discharge it wholly, or if the debt is completely
irrecoverable (in the Registrar’s opinion).
However, even if this
is the case, the Registrar must not revoke the DPO if he or she believes that
the person may later become subject to a child support liability in respect of,
or arising out of, matters that have occurred, unless satisfied that the
liability will be wholly discharged, that satisfactory arrangements will be made
for its discharge, or that it will be completely irrecoverable.
Apart
from the obligation to revoke a DPO as described above, the Registrar has
a discretion to revoke or vary it if desirable to do so.
Any
revocation or variation under this section may be on application by the person
or on the Registrar’s own motion.
Under new section 72J, the
Registrar must notify the person concerned if the DPO is revoked or varied
(whether on application or on the Registrar’s own motion). If the person
had applied for a revocation or variation, the Registrar must also notify the
person if he or she decides not to revoke or vary. Each person originally given
a copy of the DPO (as described above) must also be notified if it is revoked or
varied.
Any notice under the new section must be in the approved form and
be given as soon as practicable.
Division 4 – Departure authorisation certificates
New section 72K allows a person in respect of whom a DPO is in force to
apply (in the approved form) for a DAC.
New section 72L deals with when
the Registrar must issue a DAC on an application by a person.
The
Registrar must issue a DAC if satisfied that:
• if the DAC is
issued, it is likely that the person will leave and return to Australia within
an appropriate period; and
• within an appropriate period, it is likely
that the circumstances addressed by new subsection 72I(1) in relation to
the debt will apply to require the Registrar to revoke the DPO.
The
Registrar must also be satisfied that it is not necessary for the person to give
security for the person’s return to Australia.
If this cannot be
established, then the Registrar must, nevertheless, issue the DAC if one of two
situations exists. Either security must have been given under new
section 72M or, if the person is unable to give such security, the
Registrar must be satisfied that humanitarian grounds suggest that the DAC
should be issued or that Australia’s interests would be damaged by refusal
to issue the DAC.
New section 72M provides that a person may give
security, by specified means, for the person’s return to Australia by an
agreed day that is specified in the DAC. A later day may be specified (either
on application or on the Registrar’s own motion). However, in the case of
an application, the Registrar may refuse to substitute a later day if the person
refuses to increase the security appropriately, or to give appropriate further
security, or if the Registrar generally considers it inappropriate to exercise
the discretion.
As provided by new section 72N, the DAC is to authorise
the person to leave Australia on or before the seventh day after a day specified
in the DAC. That day must be after, but no more than 7 days after, the DAC is
issued.
The Registrar must, under new section 72O, notify the person
concerned (in the approved form and as soon as practicable) after making a
decision about an application for a DAC. If the decision is to issue a DAC, the
DAC must be copied to each person to whom the DPO was copied.
Under new
section 72P, an application to have a later day substituted must be answered, as
soon as practicable, with a notice about the Registrar’s decision on the
application. If the Registrar substitutes a later day on his or her own motion,
the person concerned must be notified as soon as practicable. If a later day is
substituted, the Registrar must also notify each person to whom the DPO was
copied.
Division 5 – Appeals and review in relation to departure prohibition orders and departure authorisation certificates
As stipulated by new section 72Q, there is generally (subject to Chapter
III of the Constitution and section 9 of the Administrative Decisions
(Judicial Review) Act 1977) access to the Federal Court to review
the making of a DPO.
New section 72R addresses aspects of the
jurisdiction of the court. New section 72S relates to orders of a court on
appeal.
New section 72T makes it clear that the Administrative Appeals
Tribunal may review the specified decisions under the new Part VA. However, as
provided by Part 2 of Schedule 6 to the Bill, should the changed
administrative law arrangements commence before this Schedule, the relevant
appeal body will be the Administrative Review Tribunal.
Division 6 - Enforcement
Under new section 72U, “authorised officers” (see new section
72X) may do the specified things if reasonably satisfied that a person in
respect of whom a DPO is in force, but no DAC is applicable, is about to leave
Australia. The specified things are aimed at preventing the person’s
departure, and include the requirement to answer questions or produce documents
for relevant purposes. As provided by new section 72V, the requirement to
answer questions or produce documents in this way overrides the common law
privilege against self-incrimination. However, the use of incriminatory
information against the person in proceedings other than under
subsection 72U(5) itself will be prevented. This is in keeping with
accepted Commonwealth criminal law policy.
Refusal or failure to comply
with a requirement to answer a question or produce a document (to the extent
specified) is an offence, attracting a penalty of 30 penalty units. Knowingly
making a false or misleading statement in this connection is also an offence,
attracting a penalty of 30 penalty units, imprisonment for 6 months, or
both.
New section 72W requires a person in respect of whom a DPO is in
force, a DAC is applicable, and who is about to leave Australia, to produce the
DAC to an authorised officer if required to do so. Otherwise, an offence will
be committed, attracting a penalty of 5 penalty units. Strict liability under
the Criminal Code applies to this provision, rather than fault
elements applying to all physical elements of the offence. This is because
of:
• the difficulty the prosecution would have in proving fault
(especially knowledge or intention) in this case;
• the fact that the
offence is minor (only 5 penalty units); and
• the fact that the
offence does not involve dishonesty or other serious imputation affecting the
person’s reputation.
Division 7 – Definitions etc.
New sections 72X and 72Y provide necessary interpretative
rules.
This measure commences on Royal Assent.
SCHEDULE 7 – MINIMUM RATE OF CHILD SUPPORT
Summary of proposed changes
This measure will set up a regulation making power to allow certain
amounts to be excluded from income so that the current $260 minimum child
support liability will not apply.
Explanation of the changes
Until amendments that took effect in 1999, it was possible for a child
support assessment to result in a liability of nil. In 1999, a general $260 pa
($5 pw) minimum liability was imposed, regardless of income. (However, a
liability of less than $260 remains possible in certain shared or divided care
assessments.)
The only exception provided is if the Registrar is
satisfied that a person’s income for the first 12 months of the child
support period will be less than $260. The narrow scope of this exception has
been a problem. For example, disability support pensioners who are long term
nursing home residents, have the majority of their pensions taken directly by
the nursing home for costs associated with the care.
The amendments made
by the two items in this Schedule allow regulations to be made to exempt certain
amounts from the meaning of income so that the $260 minimum liability will not
apply.
Regulations will be made in due course to deal with cases such as
that mentioned above.
This measure commences on Royal Assent.
SCHEDULE 8 – SUPPORTING DOCUMENTS
Summary of proposed changes
Under this measure, it will no longer be a requirement that supporting
documents, supplied with a party’s application to depart from the
child support formula assessment, be provided to the other party to the child
support arrangement. Similarly, supporting documents supplied with
the other party’s reply to the first party’s application for
departure will not have to be given to the first party. However, the
application or response form itself will continue to be made available to the
other party, as required by natural justice.
Explanation of the changes
Under the Assessment Act, if a party to a child support arrangement
applies to depart from the formula assessment (so that either more or less child
support is payable), the application and any supporting documentation must be
given to the other party to the arrangement. If the other party replies, that
party’s reply and supporting documentation must, similarly, be passed to
the first party. Furthermore, if a departure is initiated by the Registrar, and
if either party responds to an invitation to supply information, that response
and any supporting documentation must be passed to the other party.
If
either party does not want any supporting documentation provided to the other
party (eg, containing information on subsequent partners, medical conditions or
financial arrangements), the documentation is returned to the sender and may not
be used in the decision making process.
All pertinent information in a
departure process is contained in the application or response form –
natural justice requires that this continue to be made available to both
parties. However, this measure removes the compulsion on the Registrar to
supply supporting documentation to the other party. Thus, privacy will be
maintained, while still allowing the relevant documentation to be used in the
decision making process.
The three items in this Schedule achieve
this.
This measure commences on Royal Assent.
SCHEDULE 9 – DEFINITION OF ELIGIBLE CARER
Summary of proposed changes
Currently, an assessment may be made of child support payable to a
non-parent who is providing care to a child who has left home, whether with or
without parental consent, and whether with or without reasonable cause. The
child support scheme should not be seen to condone or assist the breakdown of
families. Accordingly, this measure will generally provide that carers who are
not parents or legal guardians of a child cannot be eligible carers, and
therefore cannot get child support, if a parent or legal guardian has not
consented to the arrangement. However, if it is unreasonable for the child to
live at home because of extreme family breakdown or because of a serious risk to
the child’s physical or mental wellbeing from violence or sexual abuse at
home, the carer can be an eligible carer.
Explanation of the changes
The key amendment in this Schedule is item 2. This inserts into
the Assessment Act new section 7B, providing the meaning of “eligible
carer” (in place of the existing definition in section 5).
The new
section picks up the current meaning of the term, but goes further. It provides
that, despite the basic rules (which always have to be met), a person who
provides care for, shares care of, or has contact with, a child of whom he or
she is not a parent or legal guardian cannot generally be an eligible carer in
relation to the child if a parent or legal guardian of the child has indicated
that he or she does not consent to the care or contact. However, if it would be
unreasonable in the circumstances for a parent or legal guardian to provide or
have that care or contact, the person can be an eligible carer.
That
unreasonable test is that the Registrar must be satisfied either that there has
been extreme family breakdown, or that there is a serious risk to the
child’s physical or mental wellbeing from violence or sexual abuse in the
home of the parent or legal guardian.
This measure commences on Royal
Assent.
SCHEDULE 10 – TECHNICAL AMENDMENTS
Summary of proposed changes
Under this measure, a number of technical amendments will be made to
correct and clarify minor matters in the child support legislation.
Explanation of the changes
The technical amendments made by this Schedule achieve the
following:
• Correct some references to other provisions and
legislation, and terms used within the child support legislation. (Items 1,
2, 4, 5, 23, 29, 30, 31, 32, 33 and 34.)
• Correct the exempt
income amount for an additional child so that it applies in relation to the age
of a child 12 months after the start of the child support period, instead of in
relation to the age of the child at the time of the assessment or amendment.
This is in line with the original intention for this provision.
(Items 3 and 6.)
• Allow the modification to the basic
formula for administrative assessment in shared or divided care cases to apply
to eligible children who have turned 18, and not just those aged under 18 as
currently provided. (Item 7.)
• Rectify a loophole under which
any assessment of over $260 pa may be varied by the Registrar to an amount below
$260. The intention is that this may only occur if both parents are, basically,
eligible carers of the child or children in question. (Items 8, 9 and
10.)
• Modify certain appeal provisions so that, if one of the
parties to a child support arrangement has first sought internal review,
either party may appeal to court, not just the one who sought internal
review. (Items 11, 12, 13, 14, 19 and 20.)
• Correct the
formulae that apply to determining whether the costs of contact with a child, or
child care costs, are so high as to justify a departure from the normal
administrative assessment of child support. (Items 15, 16, 17 and
18.)
• Modify the provision that allows child support to continue
when a child turns 18 until the end of the school year so that child support
ceases if the child should leave school before the end of the school year.
(Item 21.)
• Make sure that the continuation of child support
once a child has turned 18 is based on the assumption that the child is still 17
for the purposes of the administrative assessment provisions. (Item
22.)
• Modify the way late payment penalties are calculated to
reflect 1998 changes to the legislation that allows child support to be paid
weekly, fortnightly, four weekly or monthly instead of just monthly. (Items
24, 25, 26, 27 and 28.)
• Allow a payee to object to the Registrar
crediting an amount against the liability of a payer if the amount is credited
under section 71C of the Registration and Collection Act, as is currently
allowed for amounts credited under related provisions.
(Item 35.)
Most of the amendments made under this measure
commence on Royal Assent. However, some amendments that are necessary merely
because of anomalies in amending legislation commence with retrospective effect
to the date of the amending legislation so that there is no disruption to the
correct effect of the provisions. The retrospective commencements are specified
in clause 2 of the Bill.