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Family Assistance and Child Support Legislation Amendment (Protecting Children) Bill 2018

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2016-2017-2018

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

FAMILY ASSISTANCE AND CHILD SUPPORT LEGISLATION AMENDMENT (PROTECTING CHILDREN) BILL 2017

 

 

 

 

 

 

ADDENDUM TO THE EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (Circulated by the authority of the

Minister for Social Services, the Honourable Dan Tehan MP)



 

FAMILY ASSISTANCE AND CHILD SUPPORT LEGISLATION AMENDMENT (PROTECTING CHILDREN) BILL 2017

 

This addendum responds to comments raised by the Senate Standing Committee for the Scrutiny of Bills in Scrutiny Digest 13 of 2017 , dated 15 November 2017, and makes corrections to the Explanatory Memorandum.

 

NOTES ON ITEMS

 

Item 1 - Interim periods

 

On page 4, in the paragraph starting with “Item 1”, delete “1U” and replace it with “21”.

 

Item 22 - Interim periods

 

On page 11, in the paragraph starting with “Item 22”, delete the words “14 to 19B” and replace them with “39 to 38”.

 

Item 25 - Interim periods

 

On page 12, in the paragraph that starts at the end of page 11 with “Item 25”, delete “2A” and replace it with “25”.

 

Item 40 - Amended tax assessments

 

On page 19, immediately before the paragraph starting with “Item 41”, insert:

 

“These provisions support the principle that parents take financial responsibility for the costs of raising their children in line with their financial capacity to do so, and align with existing rules governing the retrospective application of taxable income.

 

This will result in a retrospective adjustment to the child support assessment, and may lead to an overpayment or underpayment debt being raised against the other party in the child support case. Where the parent with the lower amended taxable income has taken timely action to amend their tax assessment, any debt raised against the other parent will be minimal. This supports the fairer treatment of child support parents who take timely action to correct any errors made in their tax assessment, particularly where another party, such as a tax agent or the Australian Taxation Office, made the error. These provisions also provide fairer outcomes for parents who, due to circumstances beyond their knowledge or control, or in special circumstances such as serious ill health or natural disaster, are unable to amend their tax assessment earlier.

 

Backdating of a lower amended taxable income is also limited by the timeliness of the lodgement of the person’s original tax assessment. Under current provisions, where a parent has not lodged their tax return when a new child support period starts, a provisional income is used. If the parent’s original tax assessment is lodged late and is lower than the provisional income, the taxable income will only apply prospectively. If the parent then meets the relevant criteria under new subsections 58A(3C) or 58A(3D) for retrospectively applying a lower amended tax assessment, the lower amended tax assessment would only retrospectively replace the original tax assessment, and would not replace the higher provisional income.”

 

Item 43 - Amended tax assessments

 

On page 21, immediately before the paragraph starting with “Item 44”, insert:

 

“These provisions support the principle that parents take financial responsibility for the costs of raising their children in line with their financial capacity to do so, and align with existing rules governing the retrospective application of taxable income.

 

This will result in a retrospective adjustment to the child support assessment, and may lead to an overpayment or underpayment debt being raised against the other party in the child support case. Where the parent with the lower amended taxable income has taken timely action to amend their tax assessment, any debt raised against the other parent will be minimal. This supports the fairer treatment of child support parents who take timely action to correct any errors made in their tax assessment, particularly where another party, such as a tax agent or the Australian Taxation Office, made the error. These provisions also provide fairer outcomes for parents who, due to circumstances beyond their knowledge or control, or in special circumstances such as serious ill health or natural disaster, are unable to amend their tax assessment earlier.

 

Backdating of a lower amended taxable income is also limited by the timeliness of the lodgement of the person’s original tax assessment. Under current provisions, where a parent has not lodged their tax return when a new child support period starts, a provisional income is used. If the parent’s original tax assessment is lodged late and is lower than the provisional income, the taxable income will only apply prospectively. If the parent then meets the relevant criteria under new subsections 58A(3C) or 58A(3D) for retrospectively applying a lower amended tax assessment, the lower amended tax assessment would only retrospectively replace the original tax assessment, and would not replace the higher provisional income.”

 

Items 46, 47 and 51 - Child support agreements

 

On page 22, immediately after the paragraph starting with “Item 47”, insert:

 

“The amendments at items 46 and 47 give effect to the policy that certain provisions in child support agreements would cease to have effect when a child support terminating event occurs due to section 142, for example, where a child leaves their parents’ care to live independently or becomes a member of a couple. This clarifies the current policy in light of differing opinions put forward by Murphy and Aldridge JJ in the recent decision of the Full Court of the Family Court of Australia Masters and Cheyne [2016] FamCAFC 255.”

 

On page 22, in the paragraph starting with “Item 51”, delete “27B” and replace it with “51”.

 

On page 22, immediately after the paragraph starting with “Item 51”, insert:

 

“The amendments at items 46 and 47 affirm the operation of the current policy and would therefore not result in detriment to any person.”

 

Item 52 - Child support agreements

 

On page 23, in the paragraph that starts at the end of page 22 with “Item 52”, delete “27BA” and replace it with “52”.

 

Subitems 74(3) and 74(6) - Child support agreements

 

On page 27, immediately before the paragraph starting with “Subitem 74(5)”, insert:

 

“By preserving entitlements before commencement of this item, but ensuring that all assessments of child support from commencement onwards reflect the new policy, the commencement provision at subitem 74(3) removes the unfair outcome where a parent might be required to continue paying child support to a parent who has ceased to be an eligible carer of a child. Subitem 74(4) qualifies the operation of these amendments so that, for example, a parent who has ceased to be an eligible carer of a child may still have the option to privately enforce contractual obligations.”

 

On page 27, immediately before the paragraph starting with “Subitems 74(5) and 74(6)”, insert:

 

“Subitem 74(6) ensures an outcome similar to subitem 74(3) for the suspension of child support agreements in cases of temporary care changes.”

 

Subitems 172(2) and 172(4) - Overpayments

 

On page 38, immediately before the paragraph starting with “Subitem 172(5)”, insert:

 

“Together, subitems 172(2) and 172(4) enable the expanded recovery mechanisms in Division 1 of Part 4 of Schedule 1 of the Bill to be utilised in the recovery of amounts overpaid to payees, which will be taken to be carer debts. In these cases, the Registrar would first consider whether recovery of the overpayment could occur through a reduction in future child support entitlements or through cash repayment arrangements (that is, through mechanisms already available in the child support legislation). The expanded recovery mechanisms are only intended to be used where recovery from future child support entitlements is not possible or where negotiation with the payee on cash repayment arrangements has not been successful. Currently, the only alternative for the payer is to pursue recovery through the courts, in contrast with the range of options available for the recovery of payer debts.”

 

Item 174 - Overpayments

 

On page 39, insert:

 

Immediately before the subheading “Division 3 - Date of effect rules”, insert:

 

“These amendments are necessary to ensure that child support arrears or overpayments are not raised against parents, where it is through no fault of their own and is due to the other parent not complying with their legal obligations.

 

Currently, where a parent lodges a tax return for a period before 1 July 2008, there is no limitation to retrospectively applying a taxable income to a child support assessment. For tax returns lodged in respect of periods from 1 July 2008, a lower taxable income would not be applied where that tax return was lodged outside the Australian Taxation Office lodgement timeframe. This change was enacted so that a parent could not be disadvantaged in their child support assessment by the other parent not lodging a tax return in line with legal requirements.

 

The continuation of the pre-1 July 2008 rules has been raised by the Commonwealth Ombudsman in its Annual Report 2012-13 as they have resulted in large overpayments being raised against payees who had received and spent the child support received in good faith (based on a provisional income). Generally, where a taxable income has been applied retrospectively and was not reflective of the other parent’s earning capacity, a parent could seek review under the departure provisions in the child support legislation. However, parents can no longer access the departure provisions in these cases, given the time elapsed and the seven-year limitation on backdating departure orders.”

 

Item 176 - Overpayments

 

On page 40, immediately before the paragraph starting with “Under the new subsections 54F(3) and 54H(3)”, insert:

 

“At present, a new care percentage would only have effect from the date of notification where notification of the change in care is delayed (more than 28 days after the change in care). Item 176 amends the current rules so that a decreased care percentage would be reflected in the child support assessment from the date of the care change (while an increased care percentage would continue to be reflected from the date of notification).”

 

Item 183 - Overpayments

 

On page 41, immediately after the paragraph starting with “Item 183”, insert:

 

“This provides parents who have delayed in notifying a change of care with a transitional ‘grace period’ of 26 weeks from commencement to notify of the change of care before they become subject to the new care percentage date of effect rules.

 

As a result, a parent who had reduced their care of a child before commencement but failed to notify of the change until more than 26 weeks later would have the reduced care percentage reflected in their child support assessment from the date of the care change. This could lead to a child support overpayment or arrears debt being raised against that parent in some cases. However, this is appropriate given the reduced care percentage is an accurate measure of the lower care costs incurred by that parent as the date of the care change, and the ability to notify within a timely manner, was within the parent’s control.”