Explanatory Memorandum
(Circulated by the authority of the Assistant Treasurer,Senator the Hon Jim Short)General outline and financial impact
Updating references to the Social Security Act
Amends the Child Support (Assessment) Act 1989 to eliminate outdated references to the Social Security Act 1947, to reflect the changes made in the rewrite of the Social Security Act 1991 and recent amendments to that Act.
Date of effect: On the 28th day after the day on which the Act receives the Royal Assent.
Proposal announced: Not announced.
Financial Impact: None
Compliance cost impact: None
Use of election where income changed
The Child Support (Assessment) Act 1989 allows a client to elect to use an estimate of their income where this income is at least 15 per cent less than the income used to assess their child support liability. The Assessment Act also allows clients to subsequently revoke this election and make a new estimate where further changes to income occur.
This measure amends the Child Support (Assessment) Act 1989 so that the effect of this election will be prospective.
The date of effect for the estimate will usually be the date of lodgment of the estimate. Child support liabilities incurred before the estimate would be credited against the new child support liability figure taking into account their revised income estimate for the year. The child support liabilities for the remainder of the period would be calculated to ensure that the amount of the child support paid in that period reflects the income estimate for that year.
Date of effect: These amendments will commence on a day to be fixed by Proclamation. However, if the item does not commence by proclamation within the period of 6 months beginning on the day on which the Act receives Royal Assent, they commence on the first day after the end of that period. These amendments will apply in relation to elections made after the commencement of these items.
Proposal announced: 1995-96 Budget
Financial Impact: There are annual savings in running costs within CSA of $0.3m which are made up of the reduced workload for staff in recovering overpayments. Drawings on consolidated revenue for refunds of overpayments will substantially reduce.
Compliance cost impact: The amendments will reduce considerably the numbers of cases where the payee is required to repay an overpayment up to the date of the estimate. The amendment will also ensure the amount of child support for which a payer is liable will reflect their current income.
Electing for employer withholding not to apply
The Child Support (Registration and Collection) Act 1988 requires the Registrar to have employers deduct child support from payers' salary and wages wherever practicable.
This measure amends the Child Support (Registration and Collection) Act 1988 to allow an existing or future payer of child support to make an election to make payments directly to the Child Support Registrar (the Registrar). The Registrar will accept this election if he is satisfied the payer is likely to make timely payments. Payers will have the right to object to and appeal against a decision by the Registrar to refuse to accept this election.
If a payer defaults the Registrar will be able to require payments to be deducted from the payer's salary and wages and the payer will be unable to lodge another election for a period of 6 months. A payer who defaults will have strictly limited future access to this arrangement. A general restriction of 2 months will apply between the lodgment of elections in normal circumstances.
Date of effect: On the 28th day after the day on which the Act receives the Royal Assent.
Proposal announced: 1995-96 Budget
Financial Impact: Currently, approximately 30 per cent of payers are having child support withheld at source by employers from salary and wages. It is estimated that one in five of these payers are likely to take the option of opting out of employer withholding and pay directly to the Registrar. A small number of these payers may default and require the Registrar to request that the employer commence withholding child support. Annual net running costs of $0.663m are anticipated due to the cost of removing payers from employer withholding scheme, establishing direct payment arrangements, re-establishing deduction arrangements following default in payment of child support.
Compliance cost impact: The amendments will reduce the intrusion into payers' private affairs. The compliance costs for employers will reduce as the number of payers electing to pay directly to the Registrar increases.
Family Law Act 1975 changes
Amends the Child Support (Assessment) Act 1989 to reflect the relevant recent changes made to the presumptions of parentage of the Family Law Act 1975.
Date of effect: On the 28th day after the day on which the Act receives the Royal Assent.
Proposal announced: Not announced.
Financial Impact: None
Compliance cost impact: None
Employer record keeping requirements
Amends the Child Support (Registration and Collection) Act 1988 to make the child support record keeping requirements consistent with the requirements under the Income Tax Assessment Act 1936.
Date of effect: On the 28th day after the day on which the Act receives the Royal Assent.
Proposal announced: Not announced.
Financial Impact: None
Compliance cost impact: Difficult to quantify but likely to reduce compliance costs borne by employers.
Consideration of child support liabilities in property and spousal maintenance proceedings
Amends the Family Law Act 1975 to enable the Court to take into account a paying parent's potential child support liability in property and in spousal maintenance proceedings even in the absence of an administrative assessment under the Child Support (Assessment) Act 1989.
Date of effect: On the 28th day after the day on which the Act receives the Royal Assent.
Proposal announced: 1995-96 Budget
Financial Impact: Nil
Compliance cost impact: Nil