Explanatory Memorandum
(Circulated by the authority of the Treasurer,the Hon. John Dawkins M.P.)CHAPTER 14
THE CHILD SUPPORT (REGISTRATION AND COLLECTION) ACT 1988
PENALTY FOR LATE PAYMENT OF CHILD SUPPORT
Amends the penalty provisions by repealing the initial flat rate penalty and substituting a per annum rate on the balance outstanding each month
THE CHILD SUPPORT (REGISTRATION AND COLLECTION) ACT 1988
PART 5 - PAYMENT AND RECOVERY OF CHILD SUPPORT DEBTS
PENALTY FOR LATE PAYMENT OF CHILD SUPPORT
Summary of proposed amendments
14.1 This amendment removes the flat rate $20 penalty each month and modifies the way the ongoing monthly calculation is made.
14.2 The present penalty provisions impose a flat rate penalty of $20 on every monthly amount of child support that is not paid by the due date. While the amount remains unpaid it separately attracts a penalty calculated at the rate of 20% per annum (s67). The two penalties are mutually exclusive in that it is only the greater that is ultimately payable. In other words when the per annum rate amount exceeds $20 it is the former amount that is payable.
14.3 The administrative and accounting complications that this causes are extensive. The Agency is required to continually monitor the per annum rate against the flat rate to see which penalty is payable. In practice it is not always done and clients of the Agency cannot easily be kept informed of penalty amounts accruing on their accounts.
14.4 The decision to repeal the flat rate in favour of a single per annum calculation will enable system savings to be achieved and more importantly enable the Agency to calculate each month the penalty which has accrued and inform the client.
Explanation of the proposed amendments
14.5 The amendment repeals sub section 67(1) and replaces it with a new subsection (1) and (1A) the effect of which is to impose a penalty on the balance outstanding each month at a rate specified in the Income Tax Assessment Act for unpaid income tax [Clause 35].
14.6 Subsection 67(1A) is inserted for the purpose of breaking the legislative nexus between monthly payment liabilities and the balance outstanding at any time. The balance outstanding is simply the sum of all the monthly amounts unpaid and it is this amount which attracts penalty each month.
14.7 Section 4 is amended to include the definition of "month" as one of the 12 months of the year [Clause 31(a)] and section 116 is amended to ensure that a certificate produced by the Registrar as evidence may specify a single figure of the outstanding amount [Clause 41].
14.8 The amendment will apply to amounts of child support unpaid on and after 1 January 1993.
Clauses involved in the proposed amendment
Clause 2 proposes the amendment apply from 1 January 1993
Clause 31(a) inserts the definition of "month" in the Interpretation Part
Clause 35(1) amends the basis of the penalty calculation
Clause 35(1A) breaks the nexus for penalty purposes between monthly payment liabilities and the balance outstanding
Clause 41 ensures evidentiary requirements are met if a certificate which contains a single figure of the total amount outstanding is produced by the Registrar.