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1998-1999-2000-2001
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
CHILD SUPPORT LEGISLATION AMENDMENT BILL (No. 2) 2000
FURTHER SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendments to be moved on behalf of the Government
(Circulated by the authority of the Minister for Community
Services,
the Hon Larry Anthony MP)
ISBN: 0642 464006
CHILD SUPPORT LEGISLATION AMENDMENT BILL (No. 2) 2000
OUTLINE AND FINANCIAL IMPACT STATEMENT
These amendments provide for two new measures relating to family tax
benefit (FTB) and change the commencement provisions for some of the measures in
the Bill, in light of the delayed passage of the Bill.
Waiver of
FTB eligibility
The first new measure builds on the existing rule
in the FTB provisions that prevents a child from being an FTB child of an
individual who has less than 10% care of the child. The new measure will retain
the 10% care threshold, but will provide further rules to allow a non-resident
parent, who may be entitled to receive part of an FTB entitlement on the basis
of care for the child of between 10% and 30%, to waive his or her eligibility
for FTB for a period. This will allow the resident parent to receive the full
amount of FTB for the child for the period.
Date of effect: 1 December
2001, or (should Royal Assent not be given on or before that date) on
proclamation
The total financial implications (costs) of this measure
are:
2001/02 2002/03 2003/04 2004/05 TOTAL
$1.1 m. $0.6 m. $0.6
m. $0.6 m. $2.9 m.
Recovery from FTB of amounts of a person’s
child support debt
The second new measure relates to a person who
has failed to pay, by the due date, a child support debt of the person in
respect of one or more children, and who is also entitled to be paid FTB, by
instalment or for a past period, for those children. In that case, the Child
Support Registrar will have the discretion to require that that FTB be paid to
the Registrar by the Secretary (to the Department of Family and Community
Services) in whole or partial satisfaction of the child support
debt.
Date of effect: 1 July 2002, or (should Royal Assent not be given
on or before that date) on proclamation
The total financial implications
(costs) of this measure
are:
2001/02 2002/03 2003/04 2004/05 TOTAL
$2.3 m. nil nil $0.1
m. $2.4 m.
Changed commencement dates
The measures
in the Bill for which the commencement dates will change (due to the delayed
passage of the Bill) are:
• lower child support percentages for
children with whom liable parent has 10% to 30% contact (Schedule 1) – now
to commence on 1 July 2002 (formerly
1 July 2001);
• lower cap on income subject to child
support formula assessment (Schedule 2) - now to commence on
1 January 2002 (formerly 1 January 2001);
and
• income earned for the benefit of resident children (Schedule
3) - now to commence on Royal Assent (formerly
1 January 2001).
The commencement dates for all other measures
in the Bill are not to change. The changed dates mean that the costing for the
package of measures in the Bill has changed.
Date of effect: Royal
Assent
The total financial implications (savings) of these Government
amendments, including the changes to the commencement dates,
are:
2000/01 2001/02 2002/03 2003/04 TOTAL
-$1.7 m. -$11.6 m. $3.3
m. $0.6 m. -$9.4 m.
The total overall costs for the measures in the Bill,
incorporating all of the Government amendments,
are:
2000/01 2001/02 2002/03 2003/04 TOTAL
$0.1 m. $10.8 m. $24.2
m. $22.6 m. $57.7 m.
NOTES ON AMENDMENTS
Amendments 1 to 6 change the commencement provisions in the Bill
for three of the Budget measures, due to the delayed passage of the Bill. The
measures in the Bill for which the commencement dates will change
are:
• lower child support percentages for children with whom
liable parent has 10% to 30% contact (Schedule 1) – now to commence on
1 July 2002 (formerly 1 July 2001);
• lower cap on
income subject to child support formula assessment (Schedule 2) - now to
commence on 1 January 2002 (formerly 1 January 2001);
and
• income earned for the benefit of resident children (Schedule
3) - now to commence on Royal Assent (formerly
1 January 2001).
The commencement dates for all other measures
in the Bill are not to change.
These commencement changes will themselves
commence on Royal Assent.
The remaining amendments add a new Part 2,
containing items 18 to 26, to the end of Schedule 1 to the Bill. The new
items are not directly related to the rest of Schedule 1.
Amendment
7 reorders all of the original amendments contained in Schedule 1 into
Part 1 of the Schedule.
Amendment 8 inserts the new Part 2,
containing new items 18 to 26, providing variously for both new
measures.
The first new measure introduced by these amendments relates to
the waiver of FTB eligibility and is addressed by items 18 to
21.
Item 20 inserts into the A New Tax System (Family
Assistance) Act 1999 new subsections 25(1A), (1B), (1C) and (1D). These
new subsections do not change the 10% care threshold that is already provided by
section 25, but provide additional rules that allow a non-resident parent who
has between 10% and 30% care of a child to waive, by written declaration,
eligibility for FTB in respect of the child for a nominated period.
New
subsection 25(1A) applies if the following requirements are all
met:
• there has been, or will be, a pattern of care in relation to
a child during which the child was, or will be, an FTB child of more than one
individual;
• one of the individuals makes, or has made, a claim
for FTB in respect of the child for some or all of the period of the pattern of
care;
• that claiming individual had, or will have, care of the
child for not less than 10%, but less than 30%, of the period;
and
• that individual makes a written declaration waiving his or
her eligibility for FTB in respect of the child for a nominated
period.
In this case, the child is taken not to be an FTB child of that
individual for the nominated period.
New subsection 25(1B) applies if the
following requirements are all met:
• there has been, or will be, a
pattern of care in relation to a child during which the child was, or will be,
an FTB child of more than one individual;
• the Secretary is
satisfied that, if one of the individuals were to claim FTB in respect of the
child for some or all of the period of the pattern of care, the Secretary would
be satisfied that that “claiming” individual would have had, or
would have, care of the child for not less than 10%, but less than 30%, of the
period; and
• that individual makes a written declaration waiving
his or her eligibility for FTB in respect of the child for a nominated
period.
In this case, the child is taken not to be an FTB child of that
individual for the nominated period.
New subsection 25(1B) allows an
individual who has not previously claimed FTB to waive eligibility for FTB
without having to claim payment first. This contrasts with new subsection
25(1A), which covers an individual who has previously claimed FTB and who
subsequently wishes to waive eligibility.
New subsection 25(1C) enables
an individual to revoke such a declaration to waive eligibility.
New
subsection 25(1D) provides that a written declaration or a revocation must be
made in a form and manner required by the Secretary.
The heading to
section 25 is also amended to reflect the new scope of the
provision.
Item 21 makes consequential amendments to ensure that
subsections 25(2) and (3) apply to individuals covered by new
subsections 25(1A) and (1B), as well as to individuals covered by existing
subsection 25(1).
Items 18 and 19 also make consequential
amendments. Both add to existing references to subsection 25(1), reference to
new subsections 25(1A) and (1B) – again, the same treatment should apply
to all cases covered by section 25. Item 18 does this to the definition
in subsection 3(1) of “FTB child” for child care benefit purposes,
and item 19 amends paragraph 22(7)(c) relating to a pattern of
care.
This first new measure will commence on 1 December 2001, or (should
Royal Assent not be given on or before that date) on proclamation.
The
second new measure introduced by these amendments relates to the recovery from
FTB of amounts of a person’s child support debt and is addressed by
items 22 to 26.
Item 26 inserts new section 72AB into the
Child Support (Registration and Collection) Act 1988 (the
Registration and Collection Act). The new section applies if a person is
entitled to be paid FTB by instalment or for a past period, and if the person
has at least one FTB child (for whom he or she is eligible for FTB) who is also
a “designated child support child”.
A designated child
support child is basically a child in respect of whom the person has a
registrable maintenance liability of a kind mentioned in section 17 of the
Registration and Collection Act. However, it must be the case that an amount
payable under the liability is a “child support debt” (see
section 30 of that Act) and the amount has not been paid, in whole or in
part, even though the day when it was due and payable under section 66 has
passed.
If the new section applies, the Registrar may give a notice to
the Secretary directing the Secretary to deduct from each instalment amount of
FTB by instalment, or from an amount of FTB for a past period, an amount
specified, or worked out as specified. The notice must comply with certain
requirements to give effect to the Registrar’s discretion.
Item
24 inserts new sections 227 and 228 into the A New Tax System (Family
Assistance) (Administration) Act 1999. New section 227 provides a rule
comparable to the existing section 226, under which the Commissioner of Taxation
essentially may recover a person’s primary tax liability from family
assistance entitlements. The Secretary must, if given a notice under new
section 72AB of the Registration and Collection Act, make the directed
deductions from a person’s FTB entitlement and pay them to the Registrar.
The person’s FTB entitlement may be reduced to nil as a result of the
deductions.
New section 228 limits the amount that may be deducted in
this way. Firstly, no more may be deducted than the total amount of the
person’s child support debts on the day of the deduction. The
person’s child support debts in this sense are debts mentioned in new
subsection 72AB(2) of the Registration and Collection Act.
Secondly, only
that part of the person’s FTB entitlement that relates to the designated
child support child or children in question may be deducted. This rule applies
if the person has at least one FTB child (for whom he or she is eligible for
FTB) who is not a designated child support child. The amount that may be
deducted is worked out on the basis of the difference between the person’s
FTB entitlement for all FTB children and the FTB entitlement that would
apply if each designated child support child were not an FTB child of the
person. That is, the second (notional) FTB entitlement relates to the FTB
children who are not designated child support children. Thus, the
difference between the two amounts represents the FTB entitlement for the
designated child support child or children.
Thirdly, there is a special
rule if each FTB child of the person is a designated child support child (ie,
there are no remaining FTB children) and if an “income support
payment” or an “income support supplement” is payable to the
person. The payments covered are social security pensions and benefits, and
veterans’ affairs service pensions and income support supplements. These
people receive their rent assistance, for example, as part of their FTB rather
than their main payment. In this case, there is no intention to recover the
rent assistance part of the FTB. Therefore, the amount that may be deducted is
worked out on the basis of the difference between the person’s FTB
entitlement and the “forgone amount” (the forgone amount being
primarily the rent assistance that is no longer received as part of the main
payment). A person who has other FTB children who are not designated child
support children will continue to have a rent assistance entitlement as part of
the FTB that is preserved by the second rule mentioned above.
Items 22
and 23 make consequential amendments to the FTB payment and inalienability
rules to allow this measure to work correctly.
Item 25 makes sure
that a decision to give a notice requiring FTB to be deducted (and paid to the
Registrar) is reviewable.
This second new measure will commence on 1 July
2002, or (should Royal Assent not be given on or before that date) on
proclamation.