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Child Support Legislation Amendment Bill 2001

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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)



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.