House of Representatives

Explanatory Memorandum

Circulated By the Authority of the Minister for Families, Housing, Community Services and Indigenous Affairs, the Hon Jenny Macklin MP

OUTLINE

The bill contains several measures amending the child support legislation and the family assistance law.

Child support income estimates

This bill introduces amendments to the income estimate provisions in the child support legislation to align estimate periods with financial years rather than with child support periods. These amendments will make it easier for parents to estimate their income and for reconciliation to be done through an automated process. These amendments do not affect the length of the child support period, which remains at 15 months. These amendments only change the period over which income estimates are reconciled from 15 months, to a financial year. The reconciliation process checks a parent's estimate of their income against their actual income, so that the correct income is used in child support calculations. This will help improve the accuracy of child support calculations to make sure that the correct information is used.

Percentage of care

The family assistance law and the child support legislation differ in how they deal with care percentages and changes in care for a child. This bill aligns care determinations made under the family assistance law and the child support legislation. This will allow parents or carers who are entitled to family tax benefit and are also child support payers or payees to have the same care determinations made for a child where the care of the child involves more than one carer.

Non-payment of family tax benefit for non-lodgment of tax returns

The bill also makes minor amendments to the family assistance law to exclude two circumstances from the provisions that prevent payment of family tax benefit on the basis of an income estimate if relevant tax returns have not been lodged.

Other amendments

This bill makes minor amendments to the A New Tax System (Family Assistance) Act 1999 and the Child Support (Registration and Collection) Act 1988.

Financial impact statement

Child support income estimates

The financial impact of the income estimates component of the bill is negligible. However, failure to implement the changes will have a financial impact through less efficient processes.

Percentage of care

This component of the bill relates to the 2009-10 Budget Measure 'Care determinations - alignment across Family Assistance Office and Child Support Program'. The measure will provide savings of $0.5 million over four years. The fiscal cost of this measure is as follows:

This financial impact includes impacts for the Department of Human Services, Centrelink and the Department of Families, Housing, Community Services and Indigenous Affairs.

Non-payment of family tax benefit for non-lodgment of tax returns

These costs are further to the financial impact of the original measure contained in the 2008-09 Budget - Responsible Economic Management - Family Tax Benefit - cease fortnightly payments for recipients who do not lodge tax returns. The additional cost is as follows:

Total resourcing

NOTES ON CLAUSES

Clause 1 sets out how the new Act is to be cited, that is, as the Child Support and Family Assistance Legislation Amendment (Budget and Other Measures) Act 2010.

Clause 2 provides a table that sets out the commencement dates of the various sections in, and Schedules to, the new Act. The provisions generally all commence on 1 July 2010.

Clause 3 provides that each Act that is specified in a Schedule is amended or repealed as set out in that Schedule.

This explanatory memorandum uses the following abbreviations:

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'AAT' means the Administrative Appeals Tribunal;

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'AAT Act' means the Administrative Appeals Tribunal Act 1975;

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'Child Support Assessment Act' means the Child Support (Assessment) Act 1989;

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'Child Support Registration and Collection Act' means the Child Support (Registration and Collection) Act 1988;

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'Family Assistance Act' means the A New Tax System (Family Assistance) Act 1999;

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'Family Assistance Administration Act' means the A New Tax System (Family Assistance) (Administration) Act 1999;

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'FTB' means family tax benefit; and

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'SSAT' means the Social Security Appeals Tribunal.

Schedule 1 - Child support income estimates

Summary

This Schedule introduces amendments to the income estimate provisions in the Child Support Assessment Act to align estimate periods with financial years rather than child support periods. These amendments will make it easier for parents to estimate their income and for reconciliation to be done through an automated process. These amendments do not affect the length of the child support period, which remains at 15 months. These amendments only change the period over which income estimates are reconciled from 15 months, to a financial year. The reconciliation process checks a parent's estimate of their income against their actual income, so that the correct income is used in child support calculations. This will help improve the accuracy of child support calculations to make sure that the correct information is used.

Background

In order to make a child support assessment, the Registrar must determine a parent's child support income. Division 7 of Part 5 of the Child Support Assessment Act provides rules for determining a parent's adjusted taxable income based on reference to taxable income for last relevant year of income and reference to estimate of adjusted taxable income for the rest of the current child support period.

Currently, for parents who elect to estimate their adjusted taxable income for the child support period (or remainder of the period), the estimate applies until the end of the child support period which can be up to 15 months. Reconciliation for the child support period can only occur when the parent's actual adjusted taxable income is known for all of the child support period.

The practical effect of the current rules is that parents may have a child support period that covers three financial years. This means that their estimate cannot be reconciled until tax returns for the three financial years have been assessed and the parent's actual adjusted taxable income for those years has been provided to the Registrar. This can and does lead to long delays before the reconciliation process can occur.

This Schedule amends the current provisions in Subdivision C of Division 7 of Part 5 of the Child Support Assessment Act such that the estimate period will only be for an income year. This will align the estimate period with the income year and simplify and reduce delays in the reconciliation process.

Explanation of the changes

Part 1 - Amendments

Amendments to the Child Support Assessment Act

Item 1 makes a consequential amendment to the definition of adjusted taxable income in subsection 5(1) of the Child Support Assessment Act so that it also refers to the new rules regarding adjusted taxable income in subsections 61(1) and 63(1).

Items 2 to 8 inserts new definitions into subsection 5(1) for applicable YTD income amount, application period, determined ATI, estimated ATI amount, income component amounts, income election and partial year income amount. Each of these definitions is used in the new estimate rules set out in Schedule 1 to the bill.

Item 9 repeals the definition of remaining period and substitutes a new definition that reflects the two different remaining periods that are applicable under the new rules.

Item 10 to 11 inserts new definitions into subsection 5(1) for start day and underestimated an income amount.

Item 12 makes a technical amendment to subsection 43(1), which allows subsection 43(1) to be subject to any other reference to adjusted taxable income within Part 5 of the Child Support Assessment Act.

Item 13 amends paragraph 44(1)(d) to reflect the changes that are being made to section 60 of the Child Support Assessment Act.

Item 14 amends the simplified outline for Division 7 of Part 5 of the Child Support Assessment Act as set out in section 55J to reflect that, where a parent estimates his or her adjusted taxable income, this is for a year of income rather than a child support period.

Item 15 omits existing references to subsection 60(3) in paragraphs 56(2)(d) and 57(7)(b) of the Child Support Assessment Act and substitutes a reference to new paragraph 60(1)(b).

Item 16 amends the heading for Subdivision C of Division 7 of Part 5 to reflect that an estimate will no longer be for the remainder of the current child support period.

Item 17 repeals sections 60 to 60B and substitutes a new section 60. New section 60 sets out how a parent can elect to use an estimate of their adjusted taxable income in assessing the costs of the child to the parent for the whole income year or remaining days in an income year. This amends the previous requirement that the estimate would apply for the remainder of a child support period, which can be up to 15 months.

New section 60 applies to the first election of an estimate that a parent makes for a year of income. New subsection 60(1) provides that, where a parent is to be assessed in respect of the costs of a child of the parent for a day in a child support period, the parent may elect that the year of income is to be the amount that applies under new subsection 60(2) or (3). New paragraph 60(1)(b) is similar to existing subsection 60(3), with some minor changes in the language used. This provision sets out when a parent can make a first election of an income estimate for an income year. This can only occur if the election is not more than 85 per cent of the parent's adjusted taxable income determined in accordance with section 43 for the last relevant year of income, or an amount the parent declares is their adjusted taxable income for the last relevant year of income where the Registrar is satisfied that this is correct.

New subsection 60(2) provides that, if a parent makes the election before the start of, or on the first day of, the year of income, the total of the income component amounts, as estimated by the parent, is their adjusted taxable income for that year of income.

New subsection 60(3) provides that, if a parent makes the election during the year of income but not the first day of the year of income, they must work out the amount that is to be their income for each day in the remaining period, using the method statement in subsection 60(4). The parent must also provide an estimate of each income component amount for the period starting on the first day of the year of income and ending on the day immediately before the election was made. This amount is the parent's year to date amount. Although the year to date amount is not used to calculate a parent's child support liability, it is used in the reconciliation process in new Division 7A of Part 5 to ensure that the correct income is used to determine a parent's child support liability.

New subsection 60(4) provides a method statement that must be followed where a parent makes a partial year first election during an income year, rather than on the first day of the income year.

Step 1 of the method statement in new subsection 60(4) requires the parent to estimate each income component for the remaining period, starting on the day the parent makes the election and ending on the last day of the year of income. In step 2, the amounts in step 1 are added together to get the partial year income amount. Steps 3 and 4 annualise the parent's estimate for the remainder of the year so that an annual amount is used to determine the parent's child support income for a day in the child support period for the remainder of the income year that the estimate applies.

Example

Alex provided a first income election on 4 September 2010. This included a year to date amount of $3,000 and a remaining period estimate of $40,000. This amount includes Alex's income for each component amount set out in new subsection 60(2).

The amount estimated is annualised by dividing $40,000 by the number of days in the application period ($40,000 divided by 300 days for the period 4 September to 30 June inclusive), and multiplying the result ($133.33) by 365 days.

The annualised amount under subsection 60(4) is $48,667 ($133.33 x 365 days).

New subsection 60(5) sets out the start day if the parent makes their first income election during the income year to which the estimate is to apply. New paragraphs 60(5)(a) and (b) provide two options for when the election must start. These are that the election must start either on the day the election is made or the first day of a child support period if this day is after the day the election is made and before the end of the current income year.

New subsection 60(6) prevents a parent from making a first election under new section 60 for any part of the application period that an income amount order is in force in relation to the parent.

New subsections 60(7) and (8) set out how an election under new section 60 must be made. New subsection 60(7) provides that the parent must give the Registrar notice of the election in the manner specified by the Registrar. New subsection 60(8) sets out what the notice must specify. The notice must provide the amount determined under new subsection 60(2) or (3). It also must include each of the income component amounts estimated by the parent if new subsection 60(2) applies. If new subsection 60(3) applies, the notice must include the start day for the partial year election along with each of the income component amounts for the year to date amount and for the remaining period.

Item 18 repeals subsection 61(1) and substitutes new subsections 61(1) and (1A). New subsection 61(1) sets out that the effect of the election under new subsection 60(1), for the application period, is that the parent's adjusted taxable income is the amount that the parent elected to be their adjusted taxable income under new subsection 60(2) or (3). New subsection 61(1A) specifies when an application period starts and ends for an election made under new subsection 60(1).

Item 19 omits the reference to 'child support period' and substitutes 'application period for the election' in subsection 61(2) to ensure that any impact is only for the application period to which the election applies.

Item 20 omits the reference to the child support period in subsections 61(3) and (4).

Item 21 repeals subsection 62(1) and substitutes new subsection 62(1). New subsection 62(1) allows a parent to revoke an income election at any time, which may be before or after an application period has started.

The note after new subsection 62(1) provides that, if an application period has started, then, following the revocation under new subsection 62(1), a new election must be made under new subsection 62A(1). If the application period has not started, for example, the election was made before the year of income and therefore the start day of the application period has not occurred, no further action is required by the parent unless they want to make another new election for the income year.

Item 22 repeals subsection 62(3) to allow a parent to provide new elections for periods where there is an income amount order. This ensures that, when the income amount order ceases to apply, the parent's estimate reflects their actual circumstances. Changes to elections where there is an income amount order can only occur if the first election occurred when an income amount order did not apply.

Item 23 inserts after section 62 new section 62A, which sets out the method that must be followed for second and subsequent estimates within a year of income. New subsection 62A(1) sets out the method statement that must apply if the parent revokes an income election (made under new section 60 or 62A) after the application period for the income election has started during an income year and provides a new income estimate. Step 1 of the method statement in new subsection 62A(1) requires the parent to estimate each income component for the remaining period starting on the day the parent makes the election and ending on the last day of the year of income, 30 June. In step 2, the amounts in step 1 are added together to get the partial year income amount. Steps 3 and 4 apply to annualise the parent's estimate for the remainder of the year so that an annual amount is used to determine the parent's child support income for a day in the child support period for the remainder of the income year that the estimate applies.

New subsection 62A(2) provides that, subject to new subsection 62A(3), the start day for the election is the day the election is made. New subsection 62A(3) provides that, if an event occurred before the election was made that resulted in a parent's income being higher than the estimated amount previously provided, then the start day for the new election is from the date that the event occurred. It is intended that this will assist in preventing a payer who estimates their income from having a debt, if their estimate does not accurately reflect their income, following the reconciliation process.

Example

Alex provided an estimate of $40,000 that applied from 1 July. On 7 September, Alex got a pay rise to $50,000. Alex did not notify the Registrar of this pay rise until 1 December. As the later election is greater than the original election, it is applied from the date of the event, being the pay rise, which is 7 September.

New subsection 62A(4) provides that the parent must give the Registrar notice of the election under new section 62A in the manner specified by the Registrar. New subsection 62A(5) sets out what the notice must specify, which is the annualised amount determined under subsection 62A(1), the start day for the election and the income component amounts, estimated under the method statement in new subsection 62A(1), for the partial year income amount.

Item 24 repeals subsections 63(1) and (2) and substitutes new subsections 63(1), (2) and (2A). New subsection 63(1) provides that, where new subsection 62A(1) applies for an application period, the parent's adjusted taxable income is the amount that the parent elected under new subsection 62A(1). The application period for an election under new subsection 62A(1) is set out in new subsection 63(2). New subsection 63(2A) has the same effect as subsection 63(2) prior to these amendments, with minor amendments that clarify the provision, with the effect that changes to an election will not affect a parent's ongoing child support liability while an income amount order applies.

The note to new subsection 63(2A) provides that the heading of section 63 is amended.

Items 25 to 27 make minor amendments to subsections 63(3) and (4) to reflect changes to the estimate period and estimate provisions.

Item 28 inserts new subsections 63AA, 63AB, 63AC, 63AD, 63E and 63AF after section 63.

New section 63AA sets out when a Registrar may refuse to accept an income election. New subsection 63AA(1) provides that, where a parent makes an estimate for the entire year of income under subsection 60(2) and the Registrar is satisfied that the amount worked out is less than the amount the Registrar considers likely to be the parent's actual adjusted taxable income, the Registrar may refuse to accept the income election.

New subsection 63AA(2) applies to income estimate elections made under subsection 60(3) where the parent provides a partial year income amount and a year to date amount. Where the Registrar is satisfied that the partial year income amount is likely to be less than the parent's actual adjusted taxable income for the remaining period in relation to the income election, the Registrar may refuse to accept the income election. Where the Registrar is satisfied that the year to date income amount for the year of income, estimated under new paragraph 60(3)(b), to which the income election relates is likely to be more than the actual year to date amount for the year, the Registrar may refuse to accept the income election.

New subsection 63AA(3) applies to subsequent income estimates made under new subsection 62A(1). As with subsection 63AA(1), where a parent provides an estimate for partial year under subsection 62A(1) and the Registrar is satisfied that the amount worked out is less than the amount the Registrar considers likely to be the parent's actual adjusted taxable income, the Registrar may refuse to accept the income election.

New subsections 63AA(4) and (5) are the same as existing subsections 60A(2) and (3). New subsection 63AA(4) provides that, in making a decision to refuse an income election, the Registrar may use information he or she has obtained and may conduct an inquiry into the matter. New subsection 63AA(5) provides that, subject to the objection provisions in the Registration and Collection Act, if the Registrar refuses to accept an income election, it is taken never to have been made.

New section 63AB is a renumbered version of existing section 60B and sets out the notice requirements where the Registrar refuses to accept an income election.

New sections 63AC, 63AD and 63AE allow a parent or the Registrar to amend a year to date amount that has been provided under new section 60.

New section 63AC allows a parent to provide a new estimate of their year to date income amount. New subsection 63AC(1) may apply if a parent has made an election under new subsection 60(1), which includes a year to date income amount, or the parent has made a new election for a year to date income amount under new subsection 63AC(1). If the parent is satisfied that the year to date income amount that they provided is incorrect, they may elect a new year to date amount to replace the year to date income amount that they previously provided. This is subject to the reconciliation provisions under new sections 64, 64A, 64AC or 64AD having not applied.

New subsection 63AC(2) provides that a parent makes an election under new subsection 63AC(1) by giving a notice to the Registrar in the manner specified by the Registrar. New subsection 63AC(3) sets out that the notice must specify the amount that the parent elects to be their new year to date amount for the year of income and the estimate of each income component amount for the year to date amount.

New subsection 63AD(1) provides that, if the Registrar is satisfied that the amended year to date income amount for the year of income to which the election relates is likely to be more than the actual year to date amount for the year, the Registrar may refuse to accept the election. Although the year to date income amount is not used to calculate the parent's new child support liability for the estimate period, it will be used to reconcile the estimate when actual ATI for that financial year becomes known.

When the Registrar reconciles the estimate(s) of a year of income in which an estimate has been made under new subsection 60(3), the Registrar compares the parent's actual income for the partial year period, less the year to date amount, with the amount a parent estimated for a year of income. If the parent's actual income, less the year to date income, is greater than the estimate, then the parent's income is taken always to have been the actual income less the year to date income. If a parent has provided a year to date amount that is too high, this will provide an inaccurate picture of the parent's actual income for the year of income. This provision will assist in ensuring that an accurate year to date amount is provided because the Registrar has the power to refuse an election.

New subsection 63AD(2) provides that, in making a decision to refuse an income election, the Registrar may use information he or she has obtained and may conduct an inquiry into the matter. New subsection 63AD(3) provides that, subject to the objection provisions in the Registration and Collection Act, if the Registrar refuses to accept an income election, it is taken never to have been made.

New subsection 63AD(4) provides that, if the Registrar refuses to accept the election under new subsection 63AC(1), he or she must give written notice of the decision to the parent. New subsection 63AD(5) sets out that the notice must set out a parent's review rights. New subsection 63AD(6) provides that a contravention of subsection 63AD(5) does not affect the validity of the decision.

New section 63AE provides for the Registrar to determine a new estimate of a parent's year to date income amount where he or she is satisfied that the amount is incorrect. New subsection 63AE(1) may apply if a parent has made an election under new subsection 60(1), which includes a year to date income amount, or the parent has made a new election for a year to date income amount under new subsection 63AC(1). If the Registrar is satisfied that the year to date income amount that the parent provided is incorrect, the Registrar may determine a new year to date amount to replace the year to date income amount previously provided.

New subsection 63AE(2) provides that, if the Registrar makes a determination under new subsection 63AE(1) the Registrar must give written notice of the determination to the parent. New subsection 63AE(3) sets out that the notice must set out a parent's review rights. New subsection 63AE(4) provides that a contravention of new subsection 63AE(3) does not affect the validity of the decision.

New section 63AF sets out the amount that is a parent's applicable year to date income amount that is used in the reconciliation process. If the parent has provided a year to date income amount under section 60, this amount will be their applicable YTD income amount unless the parent or the Registrar has changed the year to date income amount under either new section 63AC or 63AE. If the year to date income amount has been amended, the amount specified in the last notice provided by the parent or the determination given by the Registrar is the applicable YTD income amount.

Items 29 to 44 make minor consequential amendments to paragraph 63A(1)(a), subsections 63A(2) and (3), paragraph 63B(1)(a), subsections 63B(2) and (3), paragraph 63B(3)(a), subparagraph 63B(3)(b)(i), paragraphs 63C(1)(a), (b) and (c) and subsection 63C(2).

Item 45 repeals sections 64 and 64A and substitutes new Division 7A of Part 5 of the Child Support Assessment Act.

New Subdivision A of Division 7A of Part 5 sets out the rules for reconciliation where actual adjusted taxable income is known. New section 64 sets out the reconciliation process where there has only been one income estimate election for an income year. New subsection 64(1) sets out when new section 64 is to be applied in assessing a parent in relation to the costs of a child of the parent for a day in a child support period. The following conditions must be met for reconciliation to occur: new paragraph 64(1)(a) requires that the days that are being reconciled occur in the application period for an income election relating to a year of income; new paragraph 64(1)(b) requires that the parent has only made one income election for the income year; and new paragraph 64(1)(c) requires that the parent's actual adjusted taxable income has been ascertained by the Registrar (for example, the information has been made available by the Commissioner of Taxation following assessment of a parent's income tax).

New paragraph 64(1)(d) provides that, if there has been a determination under new subsection 64AB(1) in relation to the parent, then reconciliation can only occur if the actual adjusted taxable income is greater than the determined adjusted taxable income for the income year. New paragraph 64(1)(e) provides that, if the Registrar has made an amendment to a parent's assessment of child support payable under section 63A, 63B or 63C, then, in order for reconciliation to occur, the Registrar must determine that new section 64 should apply in relation to the parent. This has a similar application as existing subsection 64(2A) of the Child Support Assessment Act.

New subsections 64(2) and (3) set out the reconciliation process that must be followed if the conditions for reconciliation are met.

New subsection 64(2) applies where a parent has provided an income election that applies for the entire income year. If the parent's actual adjusted taxable income for the year of income is greater than the amount the parent elected, the parent's adjusted taxable income for that year is taken to be, and always to have been, the parent's actual adjusted taxable income for that year.

New subsection 64(3) applies when there has been an election for part of a year of income under new subsection 60(3). In these situations, if the difference between the parent's actual adjusted taxable income and the applicable year to date amount for that income year is greater than the partial year income amount, the parent's adjusted taxable income for that year is taken to be, and always to have been, the amount worked out under new subsection 64(4). New subsection 64(4) requires that the amount that is worked out under new paragraph 64(3)(b) must be annualised in order to compare it with the annualised election determined under the method statement in new subsection 60(3A).

Example

Alex provided an first income election on 4 September 2010. This included a year to date amount of $3,000 and a remaining period estimate of $40,000. This amount is annualised under new subsection 60(3A) to be $48,829.

In August 2011, the Registrar becomes aware that Alex's actual adjusted taxable income for the 2010-2011 income year was $55,000. Therefore Alex's actual adjusted taxable income for the remaining period of 4 September 2010 to 30 June 2011 is $52,000 ($55,000 less $3,000). This is annualised to be $63,267. In this case, reconciliation must occur because $63,267 is greater than Alex's election of $48,667. Therefore the annualised amount of $63,267 is taken to have been Alex's adjusted taxable income for the period 4 September 2010 to 30 June 2011.

New subsection 64(5) provides that, if an income amount order has applied in relation to a parent for any part of the application period for the income election, then reconciliation must not occur for the entire income year. This is because, if an income amount order is in place during an application period, the child support assessment is changed to reflect the income amount order. The reconciliation provisions cannot be applied as they do not allow for a comparison between the actual adjusted taxable income of a parent against the income amount used in the child support assessment based on an income amount order. This is consistent with the position that the level of child support specified in an income amount order (either a court order or departure order) should not be retrospectively reconciled by the Registrar.

New section 64A sets out the reconciliation process where there are multiple estimates within the year of income to which the elections apply. New subsection 64A(1) sets out when new section 64A is to be applied in assessing a parent in relation to the costs of a child of the parent for a day in a child support period. The following conditions must be met for reconciliation to occur. New paragraph 64A(1)(a) requires that the days that are being reconciled occur in the application period for an income election relating to a year of income. New paragraph 64A(1)(b) requires that the parent has made more than one income election for the income year, and new paragraph 64A(1)(c) requires that the parent's actual adjusted taxable income has been ascertained by the Registrar (for example, the information has been made available by the Commissioner of Taxation following assessment of a parent's income tax).

New paragraph 64A(1)(d) provides that, if there has been a determination under subsection 64AB(1) in relation to the parent, then reconciliation can only occur if the actual adjusted taxable income is greater than the determined adjusted taxable income for the income year. New paragraph 64A(1)(e) provides that, if the Registrar has amended a parent's assessment of child support payable under section 63A, 63B or 63C, then, in order for reconciliation to occur, the Registrar must determine that new section 64A should apply in relation to the parent. This has a similar application as the existing subsection 64(2A) of the Child Support Assessment Act.

New subsection 64A(2) provides that, if a parent's actual adjusted taxable income less their applicable year to date income amount is greater then the estimated ATI amount, then the amount for each application period of an income election is taken to be, and always to have been, the amount worked out for that income election using the method in new subsection 64A(4).

New subsection 64A(3) sets out the method statement that must be applied in order to work out the parent's estimated ATI amount for the year of income. Step 1 of the method statement requires working out the daily rate for each income election, during the year of income that has an application period that ended before the last day before the end of the income year. If the parent provides a first estimate that applies from 1 July of an income year, step 1(a) applies to that estimate. If the parent's first estimate was a partial year estimate under new subsection 60(3), then step 1(b) applies. For any subsequent estimates made under new subsection 62A(1) that end before the end of the income year, step 1(b) also applies.

Example

Jess provides an income estimate to start on 1 July 2010 of $50,000. Jess subsequently changes this election on 1 December 2010 to be $10,000 for the remainder of the income year. A further change is made on 1 April 2011 and for the remaining period until 30 June 2011, when Jess estimates an income of $7,000 for the remaining part of the income year.

Applying step 1(a) of the method statement, Jess's daily rate for the first estimate is $50,000 divided by 365 which amounts to $136.99 per day.

For the period 1 December 2010 to 30 June 2011, applying step 1(b), the daily rate is $10,000 divided by 212, which amounts $47.17 per day.

For the period 1 April 2011 to 30 June 2011, there is no requirement to determine a daily rate under step 1 of the method statement.

Step 2 requires multiplication of each amount determined under step one, by the number of days in the application period to determine the actual estimate for each of these periods.

Continuing with Jess's example, for the period 1 July 2010 to 30 November 2010, the daily rate is $136.99 and the number of days in the period is 153. Therefore the amount for this application period in step 2 is $136.99 multiplied by 153, which equals $20,959.

For the second period of 1 December 2010 to 31 March 2011, the daily rate in step 1 was $47.17 and the number of days in the application period is 121. Therefore, the amount for this application period in step 2 is $47.17 multiplied by 121, which equals $5,708.

Step 3 requires that the amounts in step 2 be added together.

For Jess, the two amounts of $20,959 and $5,708 are then added to give a total for step 4 of $26,667.

For step 4, add the amounts in step 3 to the partial year income amount worked out under new subsection 62A(1), where the application period ends on the last day of the income year.

In this example, the partial year income amount is the $7,000 that Jess estimated for the period 1 April 2011 to 30 June 2011.

Adding this to the step 3 amount of $26,667 gives an estimated ATI amount of $33,667.

New subsection 64A(4) provides the method statement that must be applied in order to determine, for the purpose of new subsection 64A(2), the amount for each income election. As set out in new subsection 64A(1), this can only be applied when actual adjusted taxable income has been ascertained by the Registrar.

Step 1 of the method statement is finding the difference between the estimated ATI amount and the actual ATI amount. Step 2 then requires that the result in step 1 be divided by the total number of days in the application periods for each income election relating to the year of income that was made by the parent. The result is the additional daily rate.

Example

The Registrar ascertains that Jess's actual adjusted taxable income for 2010-11 is $40,000.

The difference between $40,000 and the amount that Jess estimated of $33,667 is $6,333.

The total number of days in the application periods for which income elections were applied in the year of income is 365 and therefore the additional daily rate is $17.35.

Step 3 provides that, for each income election, multiply the additional daily rate by the number of days in each application period for that income election to produce the underestimated amount.

For Jess, there were three income elections made:

Income election 1 - 1 July 2010 to 30 November 2010, which is 153 days.

Income election 2 - 1 December 2010 to 31 March 2011, which is 121 days.

Income election 3 - 1 April 2011 to 30 June 2011, which is 91 days.

For income election 1, the underestimated amount is $17.35 multiplied by 153 days, which equals $2,655; for income election 2, $17.35 multiplied by 121 days, which equals $2,099; and for income election 3, $17.35 multiplied by 91 days which equals $1,579.

Step 4 provides that, for each income election, add the underestimated amount determined in step 3 to the relevant amount worked out in step 2 of the method statement in new subsection 64A(3) or the partial year of income amount worked out under new subsection 62A(1).

Income election 1 is $20,959 plus $2,655 = $23,614

Income election 2 is $5,708 plus $2,099 = $7,807

Income election 3 is $7,000 plus $1,579 = $8,579

Step 5 requires that each of the income elections in step 4 must be annualised.

In the example above, the annualised amount for income election 1 is $23, 614 divided by 153 days and multiplied by 365, which is $56,334.

For income election 2, the annualised amount is $7,807 divided by 121 days and multiplied by 365, which is $23,220.

For income election 3, the result is $8,579 divided by 91 and multiplied by 365, resulting in and annualised amount of $34,410.

New subsection 64A(5) provides that, if an income amount order has applied in relation to a parent for any part of the application period for the income election, then reconciliation must not occur for the entire income year. This is because, if an income amount order is in place during an application period, the child support assessment is changed to reflect the income amount order. The reconciliation provisions cannot be applied as they do not allow for a comparison between the actual adjusted taxable income of a parent against the income amount used in the child support assessment based on an income amount order. This is consistent with the policy that the level of child support specified in an income amount order (either a court order or departure order) should not be retrospectively reconciled by the Registrar.

New section 64AA is similar to existing subsection 64(5) in the Child Support Assessment Act and provides that the Registrar must give effect to the application of new section 64 or 64A in relation to the parent.

New Subdivision B of Division 7A of Part 5 sets out the circumstances when a parent's income election can be reconciled based on ATI determined by the Registrar.

New subsection 64AB(1) provides that the Registrar may determine an amount that he or she considers appropriate to be the parent's adjusted taxable income for that year, where actual adjusted taxable income is not known within 12 months from the end of the income year to which the election(s) apply. New subsection 64AB(2) provides that, if a determination is made under new subsection 64AB(1), then, in relation to the parent, the amount determined is the parent's determined ATI for the year of income and the Registrar must give notice of the determination to the parent. New subsection 64AB(3) sets out that the notice in new subsection 64AB(2) must set out the parent's review rights. New subsection 64AB(4) provides that a contravention of new subsection 64AB(3) does not affect the validity of the determination.

New section 64AC is similar in form to new section 64, with the difference being that the Registrar applies a determined ATI in new section 64AC rather than the actual adjusted taxable income. Similarly, new section 64AD is similar in form to new section 64A, with, again, the difference being that the Registrar applies a determined ATI in new section 64AD rather than the actual adjusted taxable income.

New section 64AE is similar in form to new section 64AA, with the reference being to decision made under new section 64AC and 64AD rather than new sections 64 or 64A.

New Subdivision C of Division 7A of Part 5 of the Child Support Assessment Act sets out the penalty provisions for this Division. New section 64AF sets out when a parent is liable to pay a penalty.

New subsection 64AF(1) provides the general requirements that must be met for a penalty to apply. That is, the parent made an income election, the parent's actual adjusted taxable income has been ascertained by the Registrar and the parent has underestimated an income amount in making the income election.

New subsections 64AF(2) and (3) set out the specific requirements that must be met, depending on the number of elections and when the elections were made. New subsection 64AF(2) applies to parents who only make one election during an income year. New paragraph 64AF(2)(a) sets out when a penalty applies if the parent made an income election for a whole income year under new subsection 60(2). New paragraph 64AF(2)(b) sets out when a penalty applies if the parent made a partial year income election under new subsection 60(3). In each of these cases, if the parent's actual adjusted taxable income is at least 10 per cent greater than the amount that the parent elected, then the parent is liable to pay a penalty to the Registrar.

New subsection 64AF(3) applies to parents who have made more than one income election during the income year. In these situations, if the parent's actual adjusted taxable income is at least 10 per cent greater than the parent's estimated ATI amount, as determined under subsection 64A(3), then the parent is liable to pay a penalty to the Registrar.

New section 64AG provides for the amount of the penalty under new subsection 64AF(1).

New subsection 64AG(1) applies to each income election made by the parent relating to the year of income where a parent is liable to pay a penalty under new subsection 64AF(1). The amount of the penalty is 10 per cent of the difference between the administrative assessment based on the income election and the administrative assessment of child support made following reconciliation.

New subsection 64AG(2) provides that the penalty is a debt due to the Commonwealth by the parent. The debt becomes due and payable when the administrative assessment of child support is made under new section 64AA in relation to the parent.

New section 64AH provides that the Registrar may remit the whole or part of a penalty if the parent has underestimated an income amount because there has been an amendment of an Income Tax Assessment Act, or because of a ruling or determination under that Act. The Registrar may also remit whole or part of the penalty for some other reason if the Registrar thinks that it is fair or reasonable to do so. This provision allows the Registrar to make concessions for parents where it can be seen that there was no intention to misuse the estimates provisions to defer payment. This is consistent with current policy in relation to estimates penalty remissions.

New subsection 64AH(2) provides that, if the Registrar decides to remit only part of the penalty or not to remit any part of the penalty, then he or she must give written notice to the parent who is liable to pay the penalty. New subsection 64AH(3) provides that the notice must give a statement of the parent's review rights. New subsection 64AH(4) provides that a contravention of new subsection 64AH(3) does not affect the validity of the decision.

Item 46 repeals and substitutes subparagraphs 65A(1)(b)(i) and (ii). This is a minor amendment to ensure that regard is had to the new provisions in this section.

Item 47 repeals and substitutes paragraph 146BA(1)(d). This is a minor amendment to ensure that regard is had to the new provisions in this section.

Amendments to the Child Support Registration and Collection Act

Item 48 makes amendments to the table in section 80. The amendment ensures that a parent can object to a decision that is made concerning a change to an applicable year to date amount under new sections 63AD and 63AE.

Items 49 and 50 make minor consequential amendments to subsections 80(1) and 110U(1).

Part 2 - Transitional provision

Item 51 sets out the transitional arrangements for income elections made for the period 1 April 2008 to 30 June 2010. For parents to whom an income election applies in this period, the rules in force in the Child Support Assessment Act prior to these amendments will continue to apply. However , subitem 51(4) provides that the current section 64 will only apply for income elections made in this period at the discretion of the Registrar, or if the parent requests that reconciliation be considered. As estimates must be manually reconciled during the transitional period, the Registrar requires discretion to prioritise resources to cases of most need. If a parent requests that reconciliation be considered, the Registrar must review the parent's circumstances and, if reconciliation can occur under the rules in section 64, the current rules must be applied.

As a consequence , subitem 51(6) gives the Registrar the discretion to determine that existing section 64 may apply in these circumstances. This means that the Registrar has the discretion to reconcile parents who are more likely to underestimate their income or where parents initiate reconciliation. This ensures that the Registrar prioritises resources to cases of most need.

Item 52 provides an application provision for Western Australian exnuptial children. In order for child support provisions to be applied in Western Australia they must be adopted by the Parliament of Western Australia . Subitem 52(2) provides that the transitional provisions in item 51 continue to apply from 1 April 2008 until the day before the new provisions are adopted.

Schedule 2 - Percentage of care

Summary

The Family Assistance Act and the Child Support Assessment Act differ in how they deal with care percentages and changes in care for a child. This Schedule aligns care determinations made under the family assistance law and the child support legislation. This will allow parents or carers who are entitled to FTB and are also child support payers or payees to have the same care determinations made for a child where the care of the child involves more than one carer. This will reduce inconsistencies and unnecessary duplication of processes and decision making between both Acts.

Background

The Family Assistance Act and the Child Support Assessment Act differ in how they deal with care percentages and changes in care. This can, and often does, result in different percentages of care being determined for the purpose of assessing a person's FTB and for a person's child support assessment, causing confusion for families. It can also mean that families do not receive their correct assessments of FTB and child support unless they separately notify the Family Assistance Office and Child Support Agency.

A parent's eligibility for FTB and ultimately their rate or entitlement may be affected by their percentage of care. The percentage of care may also affect a parent's child support assessment as a payee or a payer.

This Schedule aligns care determinations made under the family assistance law and the relevant child support legislation. This will allow parents or carers who are entitled to FTB and are also child support payers or payees to have the same care determinations applied for a child where the care of the child involves more than one carer.

This measure will remove duplication of effort in the administration of the family assistance law and the child support legislation and will simplify the service delivery arrangements. It will also mean that families will have a consistent decision regarding care across both agencies that will assist in their dealings with government.

This alignment is achieved by deeming a prior care determination which is still in force by the Secretary for FTB purposes to have effect for the purposes of the child support legislation, and vice versa. Such a decision may create review rights under the child support legislation or under the family assistance law. However, to promote finality, once a parent has sought review of the decision under one or other of the schemes, no further review of the decision under the other scheme will be available.

In order to allow a single decision to have effect for the purposes of both child support and FTB, some changes in approach to the determination of percentage of care as between child support and FTB are necessary. In broad terms, a percentage of care will generally be based upon the actual care arrangements which are likely to continue into the future, determined on the basis of information provided to the Secretary or Registrar by the parents or carers, for a care period. Often, the care will be in accordance with an agreement, parenting plan or order, such that the terms of the agreement, plan or order can assist the decision-maker to determine a percentage of care.

However, where the written arrangement or order is not being complied with, there will continue to be potential for the child support assessment or rate of FTB to continue to reflect the terms of the written arrangement or order. This may occur for a period of up to 14 weeks if the person with reduced care disagrees with the new arrangement and is taking reasonable action to have the written arrangement or order complied with. In special circumstances, this period may be extended, but not beyond 26 weeks.

In situations where care arrangements change, and parents advise either the Secretary or Registrar in a timely way, their changed percentage of care may have an effect from the date the care arrangement changed. However, if the parents or carers delay in providing this information to the relevant agency, the changed percentage of care may be limited as to the date from which it may be reflected in the assessment of child support or the determination of FTB.

Explanation of changes

Part 1 - Amendments

Amendments to the Family Assistance Act

Items 1 to 5 insert new definitions into subsection 3(1) of the Family Assistance Act for application day, care arrangement, care period, change of care day and child support care determination.

Item 6 makes a consequential amendment to the definition of FTB child in subsection 3(1). This amendment ensures that, for the purpose of a claim for child care benefit, the reference in the definition is to the provisions as amended by this Schedule.

Items 7 to 10 insert new definitions into subsection 3(1) for interim period, percentage of care, percentage range and reduced care of a child.

Item 11 repeals and substitutes paragraph (a) of the definition of regular care child in subsection 3(1).

Item 12 repeals subsections 22(6A) to (6D).

Items 13 and 14 make consequential amendments to subsection 22(7) and the note at the end of subsection 22(7).

Items 15 and 16 make minor consequential amendments to section 25 and 25A.

Items 17 repeals and substitutes paragraph 27(2)(b). New paragraph 27(2)(b) uses the new term used in these provisions of 'percentage of care'.

Item 18 adds new Subdivisions D, E and F to Division 1 of Part 3 of the Family Assistance Act. These subdivisions are the general rules that determine an individual's percentage of care for a child.

New Subdivision D of Division 1 of Part 3 sets out the rules that must be applied in determining an individual's (the adult's) percentage of care where this is required under the family assistance law.

Sections 35A and 35B require the Secretary to make a principal determination of care, and deal with situations both where an adult has no care of a child, and where an adult has had, or will have, a pattern of care. These sections will cover situations where there has been no prior determination of care for a particular family and where a prior determination has been revoked.

New section 35A sets out the rules where the adult has no care of a child. There are two situations where new section 35A may be applied. The first situation is set out in new subsection 35A(1) where the adult or the adult's partner claims FTB under Part 3 of the Family Assistance Administration Act. The second situation is set out in new subsection 35A(2) where a previous determination made under new section 35A or 35B has been revoked.

In both situations the Secretary must determine the adult's percentage of care if various conditions are met. These conditions are that: there is no care but the child would be an FTB child of the adult because of the application of a qualifying period under section 23 of the Family Assistance Act or the individual would be an FTB child under subsection 22(2), (3), (4) or (6) if there had been or were to be a pattern of care under a care arrangement relating to the child; the adult is not a partner of another adult who has an FTB child under subsection 22(2), (3), (4) or (6); and one of the exceptions in new section 35C or 35D apply or new section 35G applies. If these conditions are met, the Secretary must determine the adult's percentage of care in accordance with whichever of section 35C, 35D or 35G applies.

New section 35B sets out the rules where the adult has had, or will have, a pattern of care for a child. There are two situations where new section 35B may be applied. The first situation is set out in new subsection 35B(1) where the adult or the adult's partner claims FTB under Part 3 of the Family Assistance Administration Act. The second situation is set out in new subsection 35B(2) where a previous determination made under new section 35A or 35B has been revoked. In both situations, if there has been or will be a pattern of care for a child who is an FTB child of the adult under subsection 22(2), (3), (4) or (6) and the adult is not a partner of another individual for whom the child is also an FTB child under subsection 22(2), (3), (4) or (6), then the Secretary must determine the adult's percentage of care.

New subsection 35B(3) provides that the percentage determined under new subsection 35B(1) or (2) must correspond with the adult's actual care of the child unless an exception in new section 35C, 35D or 35G applies, as provided for in new subsection 35B(4).

New sections 35C and 35D set out the two exceptions to the use of actual care to determine the adult's percentage of care that may be applied where there is a care arrangement that is not being complied with.

New section 35C is an exception rule that applies where there is a care arrangement in relation to the child which is no longer being complied with. Provided the adult with reduced care has taken reasonable action to ensure the care arrangement is complied with, they will continue to have a care percentage based on the care arrangement rather than actual care, for an interim period. For example, a parent may be negotiating with the other parent to have the care arrangement complied with, or seeking advice and assistance from a family relationship centre, or taking action through other dispute resolution processes.

The note at the end of new subsection 35C(1) provides that new section 35C will not apply in certain circumstances as set out in new section 35F.

If new section 35C applies, the Secretary must determine that, under new section 35A or 35B, two percentages of care apply in relation to the adult. New subsections 35C(3) and (4) set out what are these percentages. The first percentage of care is the extent of care the adult should have under the care arrangement. The second percentage is the adult's actual care. For new section 35A, this will be zero per cent and, for new section 35B, this is the percentage of actual care that the adult will have during the care period if the action to have the care arrangement complied with were not to succeed.

Example

Jo and Nic share care of their five year old son, Stuart, and each receives FTB for Stuart. They have a court order that provides who Stuart is to reside with and their actual care currently accords with the extent of care under the care arrangement. The Secretary determines that the percentage of care for Jo is 40 per cent and for Nic is 60 per cent. On 2 September, the actual care changes. Nic notifies that the actual care for Stuart now is that Jo has 20 per cent and Nic has 80 per cent. Jo does not agree with the change of actual care and is taking action to have the court order complied with. The Secretary is satisfied that the actual care does not comply with the care arrangement and that Jo is taking reasonable action in relation to this. Therefore, new section 35C applies in determining the percentage of care for Jo and for Nic. The two percentages that are determined for Jo are the extent of care under the care arrangement of 40 per cent and actual care of 20 per cent. The two percentages that are determined for Nic are the extent of care under the care arrangement of 60 per cent and actual care of 80 per cent.

New section 35D applies where the reasonable action being taken by the adult with reduced care is to make a new care arrangement that would result in a percentage of care that is less than the current care arrangement but more than the actual care they currently have. For new section 35D to apply, there must be special circumstances that exist in relation to the adult who has reduced care of the child. It would generally be inappropriate for an exception to the use of actual care to apply if the adult with reduced care is not taking action to have the current care arrangement complied with. However, the ability to use the extent of care that is being sought under a new care arrangement if special circumstances exist is intended to enable some flexibility for unusual cases.

If new section 35D applies, new subsection 35D(2) provides that the Secretary must determine, under new section 35A or 35B, two percentages of care in relation to the adult. New subsection 35D(3) provides that the first percentage is the extent of care that the adult would have under the new care arrangement if this were to apply. New subsection 35D(4) provides that the second percentage is the actual care that the adult will have if the new care arrangement were not to be made.

Example

Jo and Nic's current care arrangement is used to determine the actual care for Stuart at 40 per cent for Jo and 60 per cent for Nic. The actual care then ceases to accord with the care arrangement and Jo now has actual care of 20 per cent and Nic has 80 per cent. Jo does not agree with the change of actual care and is taking action to make a new care arrangement so that Jo's extent of care would be 35 per cent and Nic's would be 65 per cent. The Secretary is satisfied that Jo is taking reasonable action in relation to this. Jo also provides information that satisfies the Secretary that special circumstances exist in relation to her case. Therefore, the two percentages of care for Jo are the extent of care under the new care arrangement (if it were to be made) of 35 per cent and actual care of 20 per cent. The two percentages of care for Nic are the extent of care under the new care arrangement (if it were to be made) of 65 per cent and actual care of 80 per cent.

New subsection 35E(1) sets out when new sections 35C and 35D can be applied if the FTB claim referred to in paragraph 35A(1)(b) or 35B(1)(b) is for a past period. If a percentage of care is to be determined under new section 35A or 35B, then section 35C or 35D applies in relation to the individual as if the determination were being made on the first relevant day of the past period.

New subsection 35E(2) deals with when there is a claim for a past period and, during the past period, there has been a number of changes in care including changes that may be affected by the application of new section 35C or 35D. New sections 35C and 35D then apply to these subsequent changes in the past period as if the new determination of a percentage of care were being made on the relevant day after the revocation of the earlier determination of the percentage of care.

New section 35F provides that the exceptions in new sections 35C and 35D do not apply in certain circumstances when working out an individual's percentage of care. New subsection 35F(1) provides that new sections 35C and 35D do not apply if a percentage of care determination is to be made under subsection 35A(1) or 35B(1) and either of the date of effect provisions in paragraph 35F(1)(b) applies. New subparagraph 35F(1)(b)(i) provides that new sections 35C and 35D will not apply where the claim is for a past period and the first day of the past period is 14 weeks or more after the change of care day. New subparagraph 35F(1)(b)(ii) provides that new sections 35C and 35D will not apply where the claim is for FTB by instalment and the claim is made 14 weeks or more after the change of care day.

Example

Jo and Nic have a care arrangement for Stuart, but neither has applied for FTB. On 1 April 2011, the actual care of Stuart no longer complies with the care arrangement and Jo takes action to have the care arrangement complied with. On 25 July 2011, Jo claims FTB by instalment under section 16 of the Family Assistance Administration Act. As this is 14 weeks or more after the actual care for Stuart changed from the agreed care arrangement, new section 35C does not apply. Therefore, in relation to the period starting from when the FTB instalment claim was made on 25 July 2011, the percentage of care must be determined based on the actual care of the child. If Jo makes past period claims for FTB under section 17 of the Family Assistance Administration Act (for example, for 1 July 2010 to 30 June 2011, and 1 July 2011 to 24 July 2011), these claims will include the relevant 14-week period from the day the care ceased to comply with the care arrangement. For these past period claims, the first day of the past period is not 14 weeks or more after the change of care day. Therefore, new section 35C does apply to determine Jo's percentage of care for the past period claims.

New subsection 35F(2) provides that, if there are special circumstances in relation to the individual who has reduced care of the child, then the reference to 14 weeks in new subsection 35F(1) may be a reference to a longer period. However, new subsection 35F(3) provides that the 14 weeks cannot be extended beyond 26 weeks.

The discretion for special circumstances in new subsection 35F(2) is the same as that in new subsection 35L(4). These two provisions are complementary with the intention that the same longer period beyond 14 weeks would be determined under new subsection 35F(2) and new subsection 35L(4), if it were appropriate to apply the discretion due to special circumstances existing. The exercise of the discretion for special circumstances is discussed further under new subsection 35L(4).

New section 35G deals with when a claim is made for payment of FTB because of the death of a child (known as a lump sum bereavement payment) and the care percentage in the determination that applied immediately before the child's death includes an exception under new section 35C or 35D. In that case, the adult's percentage of care will continue to apply for the period of the lump sum bereavement payment. As a consequence, in situations where the interim period ends during the bereavement period, the percentage of care applied during the interim period will continue to apply for the remainder of the bereavement period.

New section 35H provides that, if a care arrangement applies, and the Secretary is satisfied that the actual care that an individual has is less than the extent of care the individual should have under the care arrangement, then the individual has reduced care of a child.

New section 35J provides guidance for the Secretary in working out the actual care and extent of care that an individual has of a child. New subsection 35J(1) provides that actual care may be worked out based on the number of nights that the child has been or will be in the care of the individual during the care period. New subsection 35J(2) provides that the extent of care under a care arrangement may be worked out based on the number of nights that the child should have been or is to be in the care of the individual during the care period under the care arrangement.

Both of these requirements are for guidance and new subsection 35J(4) provides that they do not limit the application of new section 35B, 35C, 35D or 35H. New subsection 35J(3) provides that a child cannot be in the care of more than one individual at the same time. Therefore, if the number of nights in care does not appropriately reflect the actual care or extent of care the individual has, then the Secretary may use a different method to determine the percentage of care. An example of where nights in care may be shown not to be appropriate would be where a child does not stay overnight with a parent because the parent works night shifts but the parent does provide significant periods of daytime care.

New section 35K sets out when a decision under either new section 35A or 35B is to apply if either of new sections 35C and 35D did not apply, or new section 35G applied in relation to an individual. In either of those situations, the percentage of care determined under new section 35A or 35B applies from the application day unless it is revoked.

New subsection 35K(2) sets out the application day for an initial determination of a percentage of care. If the FTB claim is for a past period or for the payment of FTB by instalment, the application day is the first day of the care period. The first day of the care period is the first day that the individual has a pattern of care for the child where the child's care involves more than one carer. If the claim is for payment of FTB because of the death of a child, then the application day is the day the claim is or was made.

New subsection 35K(3) sets out the application day for a determination of a percentage of care after revoking an earlier determination. The application day is the first day of the care period that begins after the revocation. Therefore, if there has been a revocation of a percentage of care determination and the individual has nil or 100 per cent care of the child for a period immediately following the revocation, a new determination of a percentage of care will not be made until, and unless, there is a pattern of care for the child where the child's care involves more than one carer.

New section 35L sets out when a determination under either new section 35A or 35B is to apply if an exception to the use of actual care in either new section 35C or 35D applied.

New paragraph 35L(1)(c) provides that the percentage of care that the adult should have had or is to have under a care arrangement as determined under new subsection 35C(3) or 35D(3), applies to the interim period. New paragraph 35L(1)(d) provides that the percentage determined under new subsection 35C(4) or 35D(4) based on actual care applies after the end of the interim period unless it is revoked.

New subsection 35L(2) sets out that the interim period starts on the application day and ends at the end of the earliest of: the day specified by the Secretary; the day before the day reasonable action ends (to have a care arrangement complied with, or to make a new care arrangement); or, if a new care arrangement begins, the day before the day that the new arrangement begins to apply.

New subsection 35L(3) limits the interim period determined by the Secretary to be generally no longer than 14 weeks starting from the day that the care changed for the individual. New subsection 35L(4) gives the Secretary the discretion to extend the 14 weeks to up to 26 weeks if there are special circumstances that warrant this occurring. The discretion to extend the period beyond 14 weeks in special circumstances is intended to enable some flexibility for unusual cases. For example, a period longer than 14 weeks may be appropriate if the actions of one person unfairly disadvantage the other person by delaying resolution of the disagreement between the parties about the care arrangements for the child and there are other circumstances that make the case unusual.

While 'special circumstances' is not defined, it is a concept that is well understood due to its use in various provisions in family assistance, social security and child support legislation and decisions by courts and tribunals on its meaning. In Re Beadle and Director-General of Social Security (1984), the AAT (Toohey J presiding) said:

An expression such as 'special circumstances' is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.

New section 35M sets out the rounding provisions where the percentage of care determined is not a whole percentage.

New section 35N provides that the Secretary may make guidelines relating to the making of determinations under Subdivision D of Division 1 of Part 3. It is intended that guidelines would be made by the Secretary in relation to the existence of special circumstances if action is being taken to make a new care arrangement, or for exercising the discretion to set a period longer than 14 weeks for an interim period. If the Secretary makes guidelines under this provision, new subsection 35N(2) provides that the Secretary must have regard to any guidelines in force in making a percentage of care determination. The Child Support Registrar must also have regard to these guidelines in making determinations (see new section 54E of the Child Support Assessment Act). This helps to ensure consistency of decision-making under the family assistance law and child support legislation.

New Subdivision E of Division 1 of Part 3 of the Family Assistance Act provides the rules around revoking a determination of percentage of care.

New section 35P sets out the general rules for mandatory revocation of a determination. New subsection 35P(1) provides that the Secretary must revoke the determination if a number of conditions are met. These conditions are that: there has been a determination under new section 35A or 35B; if an exception to the use of actual care in section 35C or 35D applied, the interim period has ended; the Secretary or Child Support Registrar is notified or becomes aware that the actual care does not correspond with the individual's percentage of care for the child under the determination; and, if a new percentage were determined, it would either change the individual's shared care percentage or the new percentage would not be in the same percentage range, as defined in new subsection 35P(2), as the existing percentage of care.

For a person with a transitional new care determination (see item 100 below), the day on which a person requests a care determination under the new law would be regarded for the purpose of new paragraph 35P(1)(c) as the day the Secretary or Child Support Registrar is notified, or otherwise becomes aware, that the care of the child that is actually taking place does not correspond with the individual's percentage of care for the child under the determination (if that were found to be so).

The note following this subsection provides that the Secretary must make a new determination under new section 35A or 35B to replace the revoked determination.

New subsection 35P(2) sets out the percentage ranges for the purpose of new subparagraph 35P(1)(d)(ii).

New subsection 35P(3) sets out when the revocation of the determination takes effect. New paragraph 35P(3)(a) provides that, if the change of care day occurs during an interim period, then the revocation takes effect at the end of the interim period. Otherwise, it occurs at the end of the day before the change of care day.

New section 35Q provides that the Secretary has the discretion to revoke a determination if the same circumstances as in paragraphs (a) to (c) of new subsection 35P(1) apply, and, if a new percentage were determined, it would be different from, but in the same percentage range as, the existing percentage. This discretion allows the Secretary to maintain accurate records of changes in care and, because of the alignment provisions, it assists in keeping accurate records for FTB and child support. The note following new subsection 35Q(1) provides that the Secretary must make a new determination under new section 35A or 35B to replace the revoked determination. New subsection 35Q(2) sets out when a revocation under new section 35Q takes effect, which is the same as for mandatory revocations under new section 35P.

New section 35R provides that, where an individual has claimed FTB for a past period and there is a percentage of care determination, this determination may be revoked. The note points out that, if a determination is revoked under new section 35R, a new determination must be made under new section 35A or 35B. New subsection 35R(2) sets out when the revocation takes effect. This provision ensures consistency for individuals that claim FTB for a past period and those that claim by instalments.

New section 35S provides that the Secretary may, by legislative instrument, make guidelines relating to the revocation of determinations under this Subdivision. It is intended that guidelines would be made by the Secretary in relation to the discretionary revocation powers in Subdivision E of Division 1 of Part 3. If any guidelines are made, the Secretary must have regard to them. The Child Support Registrar must also have regard to these guidelines in revoking determinations (see new section 54J of the Child Support Assessment Act). This helps to ensure consistency of decision-making under the family assistance law and child support legislation.

New Subdivision F of Division 1 of Part 3 of the Family Assistance Act sets out how decisions under the Child Support Assessment Act are to apply under the Family Assistance Act so as to align percentage of care decisions for child support and FTB.

New section 35T provides for the alignment of care decisions made under the Child Support Assessment Act. New subsection 35T(1) sets out the requirements for new section 35T to apply. The requirements are that the Secretary is required to determine a percentage of care for an individual for FTB purposes; the Child Support Registrar has already determined a percentage of care under the Child Support Assessment Act; and the child support care determination has not ceased to apply or been revoked.

If new paragraphs 35T(1)(a), (b) and (c) are satisfied, then new paragraphs 35T(1)(d), (e) and (f) apply. These paragraphs provide that the child support care determination has effect for FTB purposes as if it is a decision under the Family Assistance Act; the percentage of care applies in the same way it would apply if it were made under the Family Assistance Act such that the date of effect rules for FTB determinations apply to the aligned decision; and the child support care determination can cease to apply or be revoked under the Family Assistance Act in the same way that a decision under that Act could be revoked or cease to apply.

New subsection 35T(2) provides that, if the child support care determination ceases to apply or is revoked under the Child Support Assessment Act, then new section 35T ceases to apply to the child support care determination.

New section 35U sets out how reviews of a care percentage determination that occur under the child support law will apply for family assistance purposes. The intention is that a person can seek review of a care percentage decision under the family assistance or child support provisions, but that, at each level of review, only one decision can be made, and the decision applies for both the family assistance and the child support law. This will be the same for review of decisions internally and by the SSAT and the AAT.

New subsection 35U(1) deals with when the Child Support Registrar reviews a decision about a person's percentage of care under the objection provisions in the Registration and Collection Act and the result is a varied decision or a new determination being made. New section 35T then applies as if the review decision is the child support care determination that will apply for FTB purposes.

New subsection 35U(2) provides that, if the SSAT reviews a care percentage decision under the Registration and Collection Act and the result is that the decision is varied or a new determination is substituted, then the child support care determination in new section 35T that will apply for FTB purposes is taken to be the varied or substituted decision by the SSAT.

New subsection 35U(3) applies if the AAT reviews a decision under the AAT Act and the review includes consideration of a care percentage determination made under the Child Support Assessment Act or a care percentage determination that has been applied under new section 54K of the Child Support Assessment Act. If the result of the review is that the decision is varied or a new determination is substituted, then the child support care determination in new section 35T that will apply for FTB purposes is taken to be the varied or substituted decision by the AAT.

Items 19 to 21 make consequential amendments to paragraph 59(1)(a), the note at the end of subsection 59(1) and the table in subsection 59(2).

Amendments to the Family Assistance Administration Act

Item 22 inserts a new definition for care percentage decision into subsection 3(1).

Item 23 inserts a new subsection 105(4A). New subsection 105(4A) provides that an internal review of a care percentage decision, initiated by the Secretary, must not occur if there has already been a review of the care percentage decision under the objection provisions in the Registration and Collection Act. This is because a new care percentage decision due to such an objection would also apply for FTB purposes and there is not to be more than one internal review for a care percentage decision by the Secretary and the Child Support Registrar.

Item 24 repeals subsection 109A(1) and substitutes new subsections 109A(1) and (1A). New subsection 109A(1) is similar to the current subsection 109A(1), except that it excludes a reference to a review of a care percentage decision. New subsection 109A(1A) allows a person to apply to the Secretary or the Child Support Registrar for review of a care percentage decision under the family assistance law.

Item 25 amends subsection 109A(2) to reflect the change made by item 24.

Item 26 inserts a new subsection 109A(2A). New subsection 109A(2A) provides that an internal review of a care percentage decision, initiated by an applicant, must be rejected by the Secretary if there has already been review of the care percentage decision under the objection provisions in the Registration and Collection Act. This is because a new care percentage decision due to such an objection would also apply for FTB purposes and there is not to be more than one internal review for a care percentage decision by the Secretary and the Child Support Registrar.

Items 27 to 32 make consequential amendments to sections 109A, 109D, 109E and 109G.

Items 33 and 34 make consequential amendments to section 111.

Item 35 inserts a new subsection 113(1A). New subsection 113(1A) provides that, if the SSAT has reviewed a care percentage decision under the child support provisions and this results in a variation of the determination or a new determination being made, a review of the care percentage decision under the family assistance provisions must be rejected by the SSAT. This is because a new care percentage decision due to the SSAT's child support review would also apply for FTB purposes and there is not to be more than one SSAT review for the care percentage decision.

Item 36 inserts a new subsection 142(5). It deals with when the AAT has reviewed a care percentage decision under the child support provisions. Subsection 142(5) provides that an application for review of the care percentage decision under the family assistance provisions must not result in the care percentage decision being varied or set aside and substituted with a new decision by the AAT. This is because any new care percentage decision due to the AAT's child support review would also apply for FTB purposes, and there is not to be more than one AAT review for the care percentage decision.

Item 37 inserts new sections 152C and 152D.

New section 152C sets out the date of effect rules where there has been an objection under the child support legislation to a care percentage decision and the decision on the objection applies for FTB purposes. If the person lodged the objection more than 52 weeks after notice of the original decision was given, then the date of effect for the review decision is the later of the date that would give full effect to the review decision or the first day of the income year before the income year in which the objection was lodged. For example, if a care percentage decision took effect on 1 September 2010, the notice of the decision was given on 1 October 2010, and the person lodged the objection on 1 December 2011, then the date of effect for the review decision would be 1 September 2010. However, if the person lodged the objection on 1 December 2012, then the date of effect for the review decision would be 1 July 2011.

New subsection 152C(3) allows the Secretary to extend the 52-week period if special circumstances prevented the objection from being lodged within that period, so as to enable the review decision to have full effect.

New section 152D sets out the date of effect rules for a care percentage decision made by the SSAT under the child support legislation that applies for FTB purposes. If a person applies to the SSAT more than 13 weeks after notice of the decision on the objection was given, then the date of effect for the SSAT review decision is the later of the date that would give full effect to the SSAT review decision or the first day of the income year before the income year in which the application to the SSAT was made.

New subsection 152D(3) allows the Secretary to extend the 13-week period if special circumstances prevented the application to the SSAT from being made within that period, so as to enable the SSAT review decision to have full effect.

Item 38 inserts new section 159A into the Family Assistance Administration Act. This allows the Secretary to request information or a document from a person to assist the Child Support Registrar to make a care percentage determination under the child support legislation. As this will be a request for information, rather than a requirement, the person will not be compelled to provide the information to the Secretary and therefore the notice and offence provisions in Division 1 of Part 6 will not apply to requests made under new section 159A. The intention of this provision is to streamline the process by which a person can provide information for the purpose of making care percentage decisions.

Amendments to the Child Support Assessment Act

Item 39 inserts a new definition into subsection 5(1) for application day, in relation to the days to which a percentage of care determination applies.

Item 40 inserts a new definition into subsection 5(1) for care arrangement, which has the same meaning as the new definition being inserted in subsection 3(1) of the Family Assistance Act by item 2.

Item 41 amends the definition of care period in subsection 5(1) to reflect the amendments to Division 4 of Part 5 of the Child Support Assessment Act.

Items 42 and 44 to 47 insert new definitions into subsection 5(1) for change of care day, Family Assistance Administration Act, family assistance care determination, Family Assistance Secretary and interim period, and item 43 repeals the definition of court order.

Item 48 repeals and substitutes the definition of percentage of care in subsection 5(1) to reflect the changes in Subdivision B of Division 4 of Part 5 of the Child Support Assessment Act.

Items 49 and 50 insert new definitions into subsection 5(1) for reduced care of a child and responsible person.

Item 51 repeals and substitutes the definitions of regular care and shared care of a child in subsections 5(2) and (3).

Items 52 to 54 make minor consequential amendments to step 4 of the method statement in section 35, step 2 of the method statements in subsections 39(1) and 40(1), and step 2 of the method statement in section 46 to reflect the amendments to Subdivision B of Division 4 of Part 5.

Item 55 repeals and substitutes Division 4 of Part 5 of the Child Support Assessment Act.

New section 48 sets out a simplified outline of Division 4 of Part 5 of the Child Support Assessment Act.

New Subdivision B of Division 4 of Part 5 sets out the rules that must be applied in determining a person's percentage of care where this is required under child support legislation.

Sections 49 and 50 require the Registrar to make a determination of care for parents and non-parent carers of children. These sections deal with situations both where a parent has had, or is likely to have, no pattern of care of a child, and where either a parent or a non-parent carer has had, or is likely to have, a pattern of care. These sections will cover situations where there has been no prior determination of care for a particular family and where a prior determination has been revoked.

New section 49 sets out the rules where the responsible parent has had, or is likely to have, no pattern of care of a child. There are two situations where new section 49 may be applied. The first situation is set out in new paragraph 49(1)(a) where an application is made for an administrative assessment of child support for a child by a parent under section 25 or a non-parent carer under section 25A or a parent is taken to have had a relevant dependent child from a day specified under section 73A. The second situation in which new section 49 may be applied is set out in new paragraph 49(1)(b) where a previous determination made under new section 49 or 50 has been revoked. In both situations, the Registrar must be satisfied that the responsible person has had, or is likely to have, no pattern of care of the child.

New subsection 49(2) provides that, if new subsection 49 applies, the Registrar must determine the responsible person's percentage of care for the child.

A responsible person can be a parent or non-parent carer of a child. However, the definition for a non-parent carer in subsection 5(1) requires that the person be an eligible carer. Eligible carer, defined in section 7B of the Child Support Assessment Act, requires that the person have at least shared care of the child, being at least 35 per cent. New subsection 49(3) requires the Registrar to determine that a responsible person's percentage of care is zero per cent, unless section 51 or 52 applies. Therefore, new section 49 will only apply to a non-parent carer if an exception in new section 51 or 52 applies which results in the non-parent carer having a percentage of care determined under new subsection 49(2) that is at least 35 per cent.

New section 50 sets out the rules where the responsible person has had, or is likely to have, a pattern of care for a child. There are two situations where new section 50 may be applied. The first situation is set out in new paragraph 50(1)(a) where an application is made for an administrative assessment of child support for a child by a parent under section 25 or a non-parent carer under section 25A or a parent is taken to have had a relevant dependant child from a day specified under section 73A. The second situation in which new section 50 may apply is set out in new paragraph 50(1)(b) where a previous determination made under new section 49 or 50 has been revoked.

In both situations, the Registrar must be satisfied that the responsible person has had, or is likely to have, a pattern of care for the child.

New subsection 50(2) provides that, if new subsection 50 applies, the Registrar must determine the responsible person's percentage of care for the child. New subsection 50(3) provides that the percentage determined under new subsection 50(2) must correspond with the responsible person's actual care of the child, unless an exception in new section 51 or 52 applies, as provided for in new subsection 50(4).

New section 51 is an exception rule that applies where there is a care arrangement in relation to the child and this care arrangement is no longer being complied with. Provided the person with reduced care has taken reasonable action to ensure the care arrangement is complied with, they will continue to have a care percentage based on the care arrangement rather than actual care, for an interim period. For example, a parent may be negotiating with the other parent to have the care arrangement complied with, or seeking advice and assistance from a family relationship centre, or taking action through other dispute resolution processes.

The note at the end of new subsection 51(1) provides that new section 51 will not apply in certain circumstances as set out in new section 53.

If new section 51 applies, subsection 51(2) provides that the Registrar must determine that, under new section 49 or 50, two percentages of care apply in relation to the responsible person. New subsections 51(3) and (4) set out what are these percentages. The first percentage of care is the extent of care the responsible person should have under the care arrangement. The second percentage is the actual care that the responsible person has. For new section 49 this will be zero per cent and for new section 50 this is the percentage of actual care that the responsible person would be likely to have during the care period if the action to have the care arrangement complied with were not to succeed.

Example

Jo and Nic share care of their five year old son, Stuart. They have a court order that provides who Stuart is to reside with and their actual care currently accords with the extent of care under the care arrangement. The Registrar determines that the percentage of care for Jo is 40 per cent and for Nic is 60 per cent. On 2 September, the actual care changes. Nic notifies that the actual care for Stuart now is that Jo has 20 per cent and Nic has 80 per cent. Jo does not agree with the change of actual care and is taking action to have the court order complied with. The Registrar is satisfied that the actual care does not comply with the care arrangement and that Jo is taking reasonable action in relation to this. Therefore, new section 51 applies in determining the percentage of care for Jo and for Nic. The two percentages that are determined for Jo are the extent of care under the care arrangement of 40 per cent and actual care of 20 per cent. The two percentages that are determined for Nic are the extent of care under the care arrangement of 60 per cent and actual care of 80 per cent.

New section 52 applies where the reasonable action being taken by the person with reduced care is to make a new care arrangement that would result in a percentage of care that is less than the current care arrangement but more than the actual care they currently have. For new section 52 to apply, there must be special circumstances that exist in relation to the person who has reduced care of the child. It would generally be inappropriate for an exception to the use of actual care to apply if the person with reduced care is not taking action to have the current care arrangement complied with. However, the ability to use the extent of care that is being sought under a new care arrangement if special circumstances exist is intended to enable some flexibility for unusual cases.

If new section 52 applies, new subsection 52(2) provides that the Registrar must determine, under new section 49 or 50, two percentages of care in relation to the responsible person. New subsection 52(3) provides that the first percentage is the extent of care that the responsible person would have under the new care arrangement if this were to apply. New subsection 52(4) provides that the second percentage is the actual care that the responsible person would be likely to have if the new care arrangement were not to be made.

Example

Jo and Nic's current care arrangement is used to determine the actual care for Stuart at 40 per cent for Jo and 60 per cent for Nic. The actual care then ceases to accord with the care arrangement and Jo now has actual care of 20 per cent and Nic has 80 per cent. Jo does not agree with the change of actual care and is taking action to make a new care arrangement so that Jo's extent of care would be 35 per cent and Nic's would be 65 per cent. The Registrar is satisfied that Jo is taking reasonable action in relation to this. Jo also provides information that satisfies the Registrar that special circumstances exist in relation to her case. Therefore the two percentages of care for Jo are the extent of care under the new care arrangement (if it were to be made) of 35 per cent and actual care of 20 per cent. The two percentages of care for Nic are the extent of care under the new care arrangement (if it were to be made) of 65 per cent and actual care of 80 per cent.

New section 53 provides that the exceptions in new sections 51 and 52 do not apply in certain circumstances when working out a responsible person's care percentage. This is due to the date of effect rules for child support purposes.

New paragraph 53(1)(a) provides that new sections 51 and 52 do not apply if a percentage of care determination is being made because the responsible person has made an application for an administrative assessment and the application is made 14 weeks or more after the change of care day.

Example

Jo and Nic have a care arrangement for Stuart, but neither has applied for a child support assessment. On 1 April, the actual care of Stuart no longer complies with the care arrangement and Jo takes action to have the care arrangement complied with. On 25 July, Nic makes an application for an administrative assessment under section 25. As this is 14 weeks or more after the actual care for Stuart changed from the agreed care arrangement, new section 51 does not apply. Therefore, in relation to the period from when the application was made on 25 July, the percentage of care must be determined based on the actual care of the child.

Similarly, new paragraph 53(1)(b) provides that new sections 51 and 52 do not apply if a percentage of care determination is being made because a parent is taken to have had a relevant dependant child from a day specified under section 73A and that day is 14 weeks or more after the change of care day.

New subsection 53(2) provides that new sections 51 and 52 do not apply if a determination of a person's percentage of care for the child has been revoked under new section 54F or 54H and the day on which the Registrar is notified, or otherwise becomes aware, of the change of care is 14 weeks or more after the change of care day.

New subsection 53(3) provides that, if there are special circumstances in relation to the person who has reduced care of the child, then the reference to 14 weeks in new subsections 53(1) or (2) may be a reference to a longer period. New subsection 53(4) provides that the 14 weeks cannot be extended beyond 26 weeks.

The discretion for special circumstances in new subsection 53(3) is the same as that in new subsection 54C(4). These two provisions are complementary, with the intention that the same longer period beyond 14 weeks would be determined under new subsection 53(3) and new subsection 54C(4), if it were appropriate to apply the discretion due to special circumstances existing. The exercise of the discretion for special circumstances is discussed further under new subsection 54C(4).

New section 54 provides that, if a care arrangement applies, and the Registrar is satisfied that the actual care that the person has is less than the extent of care the person should have under the care arrangement, then the responsible person has reduced care of a child.

New section 54A provides guidance for the Registrar in working out the actual care and extent of care that a person has of a child. New subsection 54A(1) provides that actual care may be worked out based on the number of nights that the child is likely to be in the care of the person during the care period. New subsection 54A(2) provides that the extent of care under a care arrangement may be worked out based on the number of nights that the child is to be in the care of the person during the care period under the care arrangement. Both of these requirements are for guidance and new subsection 54A(4) provides that they do not limit the application of new sections 50, 51, 52 and 54. New subsection 54A(3) provides that a child cannot be in the care of more than one person at the same time. Therefore, if the number of nights in care does not appropriately reflect the actual care or extent of care the person has, then the Registrar may use a different method to determine the percentage of care. An example of where nights in care may be shown not to be appropriate would be where a child does not stay overnight with a parent because the parent works night shifts but the parent does provide significant periods of daytime care.

New section 54B sets out when a decision under either new section 49 or 50 is to apply if one of the exceptions to the use of actual care under new section 51 or 52 did not apply. New subsection 54B(1) provides that the determination is to apply to each day in a child support period from the application day, unless the determination is revoked. New subsection 54B(2) sets out the application day.

The application day, as set out in new subsection 54B(2), depends on which provision in new section 49 or 50 applies. New paragraph 54B(2)(a) provides that, if the determination relates to a new application under section 25 or 25A, the application day is the day the section 25 or 25A application is made. New paragraph 54B(2)(b) provides that, if the determination relates to a parent being taken to have had a relevant dependant child from a day specified under section 73A, the application day is the day specified in section 73A. Finally, new paragraph 54B(2)(c) deals with when a previous care percentage determination has been revoked and a new determination is being made. The application day is the day immediately after the revocation, unless new paragraph 54G(2)(a) applies, in which case the application day is the beginning of the application day for the previous care percentage determination.

Where there are two percentages determined because of the application of new section 51 or 52, new section 54C sets out to what period each of the percentages applies.

New paragraph 54C(1)(c) provides that the percentage of care that the person is to have under a care arrangement as determined under new subsection 51(3) or 52(3), applies to the interim period. New paragraph 54C(1)(d) provides that the percentage determined under new subsection 51(4) or 52(4) based on actual care applies to each day in a child support period after the end of the interim period unless it is revoked.

New subsection 54C(2) sets out that the interim period starts on the application day and ends at the end of the earliest of: the day specified by the Registrar; the day before the day reasonable action ends (to have a care arrangement complied with, or to make a new care arrangement); or, if a new care arrangement begins, the day before the day that the new arrangement begins to apply.

New subsection 54C(3) limits the interim period determined by the Registrar to be generally no longer than 14 weeks starting from the day that the care changed for the responsible person. New subsection 54C(4) gives the Registrar the discretion to extend the 14 weeks to up to 26 weeks if there are special circumstances that warrant this occurring. The discretion to extend the period beyond 14 weeks in special circumstances is intended to enable some flexibility for unusual cases. For example, a period longer than 14 weeks may be appropriate if the actions of one person unfairly disadvantage the other person by delaying resolution of the disagreement between the parties about the care arrangements for the child and there are other circumstances that make the case unusual.

While 'special circumstances' is not defined, it is a concept that is well understood due to its use in various provisions in family assistance, social security and child support legislation and decisions by courts and tribunals on its meaning. In Re Beadle and Director-General of Social Security (1984), the AAT (Toohey J presiding) said:

An expression such as 'special circumstances' is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.

New section 54D sets out the rounding provisions where the percentage of care determined is not a whole percentage.

New section 54E provides that, in making a care percentage determination, the Registrar must have regard to any guidelines in force under the new subsection 35N(1) of the Family Assistance Act. It is intended that guidelines would be made by the Family Assistance Secretary in relation to the existence of special circumstances if action is being taken to make a new care arrangement, or for exercising the discretion to set a longer period than 14 weeks for an interim period. The Family Assistance Secretary must also have regard to these guidelines in making determinations (see new subsection 35N(2) of the Family Assistance Act). This helps to ensure consistency of decision-making under the family assistance law and child support legislation.

New Subdivision C of Division 4 of Part 5 of the Child Support Assessment Act sets out the rules for revoking a determination of a percentage of care made under new section 49 or 50 for a responsible person.

New section 54F sets out the general rules for mandatory revocation of a determination. New subsection 54F(1) provides that the Registrar must revoke the determination if a number of conditions are met. These conditions are that: there has been a determination under new section 49 or 50; if an exception to the use of actual care in section 51 or 52 applied, the interim period has ended; the Registrar is notified or becomes aware that the actual care does not correspond with the person's percentage of care for the child under the determination; if a new percentage were determined, it would change the person's cost percentage; and new section 54G does not apply.

For a person with a transitional new care determination (see item 94 below), the day on which a person requests a care determination under the new law would be regarded for the purpose of new paragraph 54F(1)(c) as the day the Registrar is notified, or otherwise becomes aware, that the care of the child that is actually taking place does not correspond with the person's percentage of care for the child under the determination (if that were found to be so).

The note following this subsection provides that the Registrar must make a new determination under new section 49 or 50 to replace the revoked determination.

New subsection 54F(2) sets out when the revocation takes effect. New paragraph 54F(2)(a) provides that, if the Registrar or Family Assistance Secretary is notified or becomes aware of the person's change of care within 28 days of the change, the determination is revoked from the end of the day before the care changed, unless the change of care occurs during an interim period. If the change occurs during an interim period and the Registrar or Family Assistance Secretary becomes aware or is notified within 28 days, the revocation takes effect at the end of the day on which the interim period ends.

Example

An interim period for Mary ends on 31 August. Mary notifies on 20 August that there has been a change of care. Mary's section 49 or 50 determination will be revoked at the end of 31 August following the end of the interim period.

New paragraph 54F(2)(b) provides that, if the Registrar or Family Assistance Secretary is notified or becomes aware of the person's change of care more than 28 days after the change but before the interim period ends, the revocation takes effect at the end of the day on which the interim period ends. New paragraph 54F(2)(c) provides that, in all other situations, the revocation takes effect at the end of the day before the Registrar or Family Assistance Secretary is notified or becomes aware of the change of care.

New section 54G sets out when revocation of determinations occur if there is less than regular care for a responsible person.

New subsection 54G(1) applies if the first responsible person for a child was to have at least regular care of the child based on the first care determination under new section 50, but they have had no actual care or less than regular care of the child, despite the other responsible person making the child available. Provided that the other responsible person has a determination for a percentage of care under new section 50 and they notify the Registrar or Family Assistance Secretary within a reasonable time that the first responsible person has no care or less than regular care, the Registrar must revoke both determinations. What is considered a reasonable time must be determined by the Registrar based on the circumstances. Generally, a reasonable period will be if the Registrar or Family Assistance Secretary is notified within 28 days of the other responsible person becoming aware that the first responsible person never established the pattern of at least regular care, or that that person ceased their the previously established pattern of care.

The note following this subsection provides that the Registrar must make new determinations under new section 49 or 50 to replace the revoked determinations.

New subsection 54G(2) sets out when the revocations under new section 54G take effect. New paragraph 54G(2)(a) provides that, if the first responsible person never established a pattern of care in accordance with the first care determination, then the revocation takes effect at the beginning of the application day for the first care determination. For example, this may occur if the parent with at least regular care for the child under the care arrangement never has care of the child. New paragraph 54G(2)(b) provides that, if a pattern of care was established but it ceased to apply, then the revocation takes effect at the end of the day before the day the pattern of care ceased.

New subsection 54G(3) clarifies that a pattern of care is not established for a later period in a child support period until that later period occurs and the responsible person does not establish the pattern. For example, if a person is to have care for a child during school holidays the pattern of care cannot be established until the school holidays. If they do not have the intended care during the holidays, they are taken to have never established the pattern of care.

New section 54H provides that the Registrar has the discretion to revoke the determination if the same circumstances as in paragraphs (a) to (c) of new subsection 54F(1) apply, and, if a new percentage were determined, it would be different from the existing percentage, and sections 54F and 54G do not apply. This discretion allows the Registrar to maintain accurate records of changes in care and, because of the alignment provisions, this assists in keeping accurate records for FTB and child support. The note following subsection 54H(1) provides that the Registrar must make a new determination under new section 49 or 50 to replace the revoked determination.

New subsection 54H(2) sets out when the revocation takes effect, which is the same as for mandatory revocations under new section 54F.

New section 54J provides that, in revoking a determination under this Subdivision, the Registrar must have regard to any guidelines in force under subsection 35S(1) of the Family Assistance Act. It is intended that guidelines would be made by the Family Assistance Secretary in relation to exercising the discretionary revocation power. The Family Assistance Secretary must also have regard to these guidelines in revoking determinations (see new subsection 35S(2) of the Family Assistance Act). This helps to ensures consistency of decision-making under the family assistance and child support law.

New Subdivision D of Division 4 of Part 5 of the Child Support Assessment Act sets out how decisions under the Family Assistance Act are to apply under the Child Support Assessment Act so as to align percentage of care decisions for FTB and child support.

New section 54K provides for the alignment of care decisions made under the Family Assistance Act. New subsection 54K(1) sets out when new section 54K applies. The requirements are that: the Registrar is required to determine a percentage of care for a responsible person for child support purposes; the Family Assistance Secretary has already determined a percentage of care under the Family Assistance Act; and the family assistance care determination has not ceased to apply or been revoked.

If new paragraphs 54K(1)(a), (b), (c) and (d) are satisfied, paragraphs 54K(1)(e), (f) and (g) apply. Paragraphs 54K(1)(e), (f) and (g) provide that the family assistance care determination has effect for the purpose of child support: as if it is a decision under the Child Support Assessment Act; the percentage of care applies in the same way it would apply if it were made under the Child Support Assessment Act; and the family assistance care determination can cease to apply or be revoked under the Child Support Assessment Act in the same way that a decision under that Act could be revoked or cease to apply.

New subsection 54K(2) provides that, if the family assistance care determination ceases to apply or is revoked under the Family Assistance Act, then new section 54K ceases to apply to the family assistance care determination.

New section 54L sets out how reviews of a care percentage determination that occur under the family assistance law will apply for child support purposes. The intention is that a person can seek review of a care percentage decision under the family assistance or child support provisions, but that, at each level of review, only one decision can be made, and the decision applies for both the family assistance and the child support law. This will be the same for review of decisions internally and by the SSAT and the AAT.

New subsection 54L(1) provides that, if a decision as to a person's care percentage is reviewed by the Family Assistance Secretary under the internal review provisions of the Family Assistance Administration Act and this results in a varied decision or a new determination being made, then new section 54K applies as if the review decision is the family assistance care determination that will apply for child support purposes.

New subsection 54L(2) provides that, if the SSAT reviews a care percentage decision under the Family Assistance Administration Act and the result is that the decision is varied or a new determination is substituted, then the family assistance care determination in new section 54K that will apply for child support purposes is taken to be the varied or substituted decision by the SSAT.

New subsection 54L(3) applies if the AAT reviews a decision under the AAT Act and the review includes consideration of a care percentage determination made under the Family Assistance Act or a care percentage determination that has been applied under new section 35T of the Family Assistance Act. If the result of the AAT review is that the decision is varied or a new determination is substituted, then the family assistance care determination in new section 54K that will apply for child support purposes is taken to be the varied or substituted decision by the AAT.

Item 56 repeals and substitutes paragraph 74A(b) to reflect the changes being made to the care provisions in Division 4 of Part 5 of the Child Support Assessment Act.

Item 57 makes a minor consequential amendment to paragraph 74A(c).

Item 58 repeals paragraph 74A(d) as a result of the amendment being made by item 53.

Item 59 makes a consequential amendment to section 74A to reflect the changes being made to the care provisions in Division 4 of Part 5 of the Child Support Assessment Act.

Items 60 and 61 repeal paragraphs 74A(e) and (f) and note 1 at the end of section 74A as a result of the amendment being made by item 56 and the amendments to Division 4 of Part 5.

Item 62 amends note 2 at the end of section 74A to reflect that it is the only note following the changes to this provision.

Items 63 and 65 make minor consequential amendments to subsection 75(2) of the Child Support Assessment Act, and item 64 reflects the changes being made to the care provisions in Division 4 of Part 5 of the Child Support Assessment Act.

Items 66 to 67 make minor consequential amendments to paragraph 146BA(1)(c).

Item 68 makes a minor amendment to change the reference in paragraph 146C(4)(a) from section 80 to section 89.

Item 69 makes a consequential amendment to the note at the end of subsection 146C(4).

Item 70 insets new section 162C into the Child Support Assessment Act. This allows the Registrar to request information or a document from a person to assist the Family Assistance Secretary to make a care percentage determination under the family assistance law. As this will be a request for information rather than a requirement, the person will not be compelled to provide the information to the Registrar. The intention of this provision is to streamline the process by which a person can provide information for the purpose of making care percentage decisions.

Amendments to the Child Support Registration and Collection Act

Item 71 inserts a new definition into subsection 4(1) of the Registration and Collection Act for care percentage decision.

Item 72 inserts a new subsection 80(6) that provides that section 80 does not apply to a care percentage decision. This aligns the objection process with the family assistance review process to remove the requirement for objections to care percentage decisions to be made in writing.

Item 73 inserts new section 80A. This new subsection allows a person to lodge an objection with the Registrar or the Family Assistance Secretary for review of a care percentage decision made under the Child Support Assessment Act.

Item 74 amends subsection 81(1) such that the time restrictions in this subsection for lodging an objection to a care percentage decision do not apply.

Item 75 amends section 84 to allow for the grounds of objection to a care percentage decision to be given orally as well as in writing.

Items 76 inserts new subsection 85(3) such that the table in subsection 85(1) does not apply to care percentage decisions. As a consequence, if a person objects, there is no requirement to serve written copies of the objection on the other party.

Item 77 introduces new section 85A, which provides that, if a person objects to a care percentage decision under the objection provisions and there is another party who could also have objected to the decision, the Registrar must notify each other person who could have objected to the decision. For all other child support objections, the Registrar is required to serve copies of the objection and accompanying documents on other parties. However, for care percentage decisions the Registrar only has to notify the other party of the objection.

Item 78 introduces new section 86A, which allows a person who is notified of an objection of a care percentage decision under new section 85A to oppose or support the objection and requires them to inform the Registrar of the grounds they are relying on. This allows for a person to oppose an objection by means including by telephone, in writing, in person or by computer.

Item 79 omits the reference in subsection 87(1) to the objection having to be lodged with the Registrar and, therefore, the Registrar can consider an objection where the person has lodged the objection with the Family Assistance Secretary.

Item 80 repeals and substitutes paragraph 87(1)(a). New paragraph 87(1)(a) provides that the Registrar must consider the grounds provided under paragraph 86A(1)(b) to a care percentage decision, or any notice lodged with the Registrar under section 86 or paragraph 86A(1)(a) in relation to the objection.

Item 81 makes a minor amendment to paragraph 87(1)(b) to allow the Registrar to consider an objection where the person objecting has lodged with the Family Assistance Secretary.

Item 82 repeals and substitutes subsection 87(1A). New subsection 87(1A) provides the same timeframes for the Registrar to act on an objection of a care percentage decision that was notified under new section 85A as is available for an objection that was notified under section 85.

Item 83 inserts new subsection 87(1B) that an objection to a care percentage decision must not be allowed by the Registrar if there has already been review of the care percentage decision under the internal review provisions in the Family Assistance Administration Act.

Item 84 repeals and substitutes paragraph 87(2)(b) to require the Registrar also to serve notice in writing of a decision on a person who was entitled to be notified of the objection under new section 85A.

Item 85 inserts a new Division 6 into Part VII that sets out the date of effect of objections relating to care percentage decisions. To align the child support decisions with FTB decisions, there must be an indefinite period in which a person can seek an objection to a decision as to their percentage of care. Although the person can object to the decision, if the Registrar allows the objection there is a limit to the application of the decision.

New section 87AA sets out the date of effect rules. New subsection 87AA(1) provides that, if the objection is lodged more than 28 days after notice of the care decision was served (or more than 90 days if the person is a resident of a reciprocating jurisdiction), the date of effect is the day the person lodged the objection. New subsection 87AA(2) provides that the 28 (or 90) days can be extended if there are special circumstances. The discretion to extend the period beyond 28 (or 90) days in special circumstances is intended to enable some flexibility for unusual cases. If the 28 (or 90) days are extended under subsection 87AA(2), the effect is that, if the objection occurs before the end of the extended period, the person will receive the benefit of the objection from when the care percentage decision took effect.

New subsection 87AA(3) requires the Registrar to give written notice of the decision to apply or not apply special circumstances under new subsection 87AA(2). New subsection 87AA(4) sets out what must be included in the notice, including that the person may apply to the SSAT for review of the decision under new subsection 87AA(2). New subsection 87AA(5) provides that a contravention of subsection 87AA(4) does not affect the validity of the decision.

Item 86 amends the table in subsection 89(1) to reflect the changes made by item 73.

Item 87 adds items to the table in subsection 89(1). These items allow for decisions under new subsections 87AA(2), 110Y(3) or 110Z(3) to be reviewable by the SSAT.

Item 88 amends subsection 90(1) such that the time restrictions in this subsection for making an application for review by the SSAT of a care percentage decision do not apply. This amendment also provides that, for a decision under new subsection 87AA(2), 110Y(3) or 110Z(3), an application for review by the SSAT must be made within 28 days from the day the notice of the decision was given to the person.

Item 89 amends subsection 90(2) to reflect changes made by item 88.

Item 90 makes a minor consequential amendment to section 103S.

Item 91 adds new subsection 103S(2). New subsection 103S(2) provides that, if the SSAT has reviewed a care percentage decision under the family assistance provisions and this results in a variation of the determination or a new determination being made, a review of the care percentage decision under the child support provisions must be rejected by the SSAT. This is because a new care percentage decision due to the SSAT's family assistance review would also apply for child support purposes and there is not to be more than one SSAT review for the care percentage decision.

Item 92 makes a consequential amendment to subsection 103V(2) to reflect the change being made by item 87.

Item 93 inserts new subsections 103V(3), (4), (5), (6) and (7) into the Child Support Registration and Collection Act. New subsections 103V(3) and (4) set out the date of effect rules where a person seeks review of a decision by the SSAT outside of 28 days (or 90 days if the person is in a reciprocating jurisdiction). To align care percentage decisions with the family assistance law, there has been an alignment of time that a person has to seek review. However, there are limits on the ability to backdate a decision by the SSAT. For child support, if the person makes the application for review outside of 28 days from the date the original notice was served, then the decision will only apply from the date that the application for review was made.

New subsection 103V(4) provides that the date of effect rule in new subsection 103V(3) can be extended beyond the 28 days (or 90 days if the person is in a reciprocating jurisdiction) if there are special circumstances that prevented the application from being made within the relevant period.

New subsection 103V(5) requires the SSAT to give written notice of the decision to apply or not apply special circumstances under new subsection 103V(4). New subsection 103V(6) sets out what must be included in the notice, including that the person may apply to the AAT for review of the decision under new subsection 103V(4). New subsection 103V(7) provides that a contravention of subsection 103V(6) does not affect the validity of the decision.

Item 94 inserts new subsections 103VA(1A) and (1B). New subsection 103VA(1A) provides that, if the AAT has reviewed a care percentage decision under the family assistance provisions, an application for review of the care percentage decision under the child support provisions must not result in the care percentage decision being varied or set aside and substituted with a new decision by the AAT. This is because any new care percentage decision due to the AAT's family assistance review would also apply for child support purposes, and there is not to be more than one AAT review for the care percentage decision.

New subsection 103VA(1B) provides that a decision under new subsection 103V(4) can be reviewed by the AAT.

Item 95 makes a minor consequential amendment to subsection 103VA(2).

Item 96 extends the simplified outline for Division 1A of Part VIIIA to reflect the changes being made by the alignment of care provisions in new Division 5 of this Part.

Item 97 inserts a new Division 6 in to Part VIIIA. This new division sets out the date of effect rules for child support review decisions made because of the alignment with the family assistance law.

New section 110Y provides that, where there has been an internal review of a care percentage decision under Division 1 of Part 5 of the Family Assistance Administration Act and this is a review decision that applies for child support purposes, different date of effect rules apply. If the person made the application more than 28 days (or 90 days if the person is in a reciprocating jurisdiction) after the notice of the original decision, then the date of effect is from the date of the application for review. For reviews initiated by the Secretary under the family assistance law, as the person had not sought review, the decision will apply from the day the review decision is made. New subsection 110Y(3) allows the Registrar to extend the 28 (or 90) days if special circumstances prevented the application from being made within the relevant period.

New subsection 110Y(4) requires the Registrar to give written notice of the decision to apply or not apply special circumstances under new subsection 110Y(3). New subsection 110Y(5) sets out what must be included in the notice, including that the person may apply to the SSAT for review of the decision under new subsection 110Y(3). New subsection 110Y(6) provides that a contravention of subsection 110Y(5) does not affect the validity of the decision.

New section 110Z sets out the date of effect rules for a care percentage decision made by the SSAT under the family assistance law that applies for child support purposes. As with internal review decisions, if a person made the application to the SSAT more than the 28 days (or 90 days if the person is in a reciprocating jurisdiction) after notice of the internal review decision was given, then the SSAT's decision only applies from the day the application for review was made. New subsection 110Z(3) allows the Registrar to extend the 28 (or 90) days if special circumstances prevented the application from being made within the relevant period.

New subsection 110Z(4) requires the Registrar to give written notice of the decision to apply or not apply special circumstances under new subsection 110Z(3). New subsection 110Z(5) sets out what must be included in the notice, including that the person may apply to the SSAT for review of the decision under new subsection 110Z(3). New subsection 110Z(6) provides that a contravention of subsection 110Z(5) does not affect the validity of the decision.

Item 98 and 99 make consequential amendments to subsection 251R(5) of the Income Tax Assessment Act 1936.

Part 2 - Application and Transitional Provisions

Division 1 - Definitions

Item 100 sets out definitions that are used in Part 2 of Schedule 2 to this bill.

Division 2 - Amendments of the child support law

Item 101 provides for transitional arrangements where there is a percentage of care determination under Division 4 of Part 5 of the Child Support Assessment Act that applies immediately before 1 July 2010, being the day on which this Schedule commences. This determination is taken to be revoked immediately before commencement and the Registrar is taken to have determined a new care determination under new section 49 or 50, as inserted by this Act, which is the same as the percentage previously determined. The exceptions in new sections 51 and 52 are taken not to apply to the new care determination.

The care percentage determined under this item applies from 1 July 2010 unless revoked under the new rules in new Subdivisions C of Division 4 of Part 5. The new care determination can be revoked in the same way that a determination under new Subdivision B can be revoked. If the determination made under item 101 is revoked, and, under the new rules, the revocation would otherwise occur before 1 July 2010, the revocation is taken to have effect at the beginning of 1 July 2010. In all other circumstances, the revocation will occur according to the rules in Subdivision C of Division 4 of Part 5.

The alignment provisions in new sections 35T and 35U of the Family Assistance Act do not apply in relation to the new care determination. Therefore, the determination made under item 101 is only for the purpose of the child support provisions.

For review purposes, the Registrar is taken, on the commencement day, to have notified the person of the effect of this item. This reflects that the new care determination is not changing the existing percentage of care and the person would previously have been served notice of an assessment that took into account that percentage of care.

Item 102 provides for transitional arrangements where a parent or non-parent carer has applied to the Registrar for an administrative assessment of child support, and the application has not been determined, before 1 July 2010 (the commencement day). In these circumstances, the rules in force immediately before 1 July 2010 would continue to apply in relation to the application. If the person's percentage of care is determined under the pre-1 July rules, then the determination would be taken to have been made before 1 July 2010 and would be subject to the transitional rules in item 101 ( as described above).

Item 103 provides for transitional arrangements where there is a change of care event (as set out in paragraph 48(1)(b) of the Child Support Assessment Act) before 1 July 2010, the Registrar is notified or becomes aware of the event within 28 days after the event occurred and this happens on or after 1 July 2010. In these circumstances, the rules in force immediately before 1 July 2010 would continue to apply in relation to the person. If the person's percentage of care is determined under the pre-1 July rules, then the determination would be taken to have been made before 1 July 2010 and would be subject to the transitional rules in item 101 ( as described above).

Item 104 provides for transitional arrangements where a person is taken to have a relevant dependent child from a day that is before 1 July 2010 and the person's percentage of care has not been determined before 1 July 2010. In these circumstances, the rules in force immediately before 1 July 2010 would continue to apply in relation to the person. If the person's percentage of care is determined under the pre-1 July rules, then the determination would be taken to have been made before 1 July 2010 and would be subject to the transitional rules in item 101 ( as described above).

Item 105 is an application provision for new sections 49 and 50 of the Child Support Assessment Act. These new provisions apply in relation to an application for a parent to be assessed in respect of the cost of a child (under sections 25 or 25A of the Child Support Assessment Act) that is made on or after 1 July 2010. Similarly, the provisions apply in relation to a parent who is taken under section 73A of the Child Support Assessment Act to have a relevant dependent child from a day that is on or after 1 July 2010.

Item 106 provides that the alignment provisions in new section 54K apply in relation to a family assistance care determination made on or after 1 July 2010 (the commencement day).

Division 3 - Amendments of the family assistance law

Item 107 provides for transitional arrangements where there is a percentage of care determination under subsection 22(6A) of the Family Assistance Act, as it applied immediately before 1 July 2010 (the commencement day). This determination is taken to be revoked immediately before 1 July 2010 and the Secretary is taken to have determined a new care determination under new section 35B which is the same percentage as previously determined. The exceptions in new sections 35C and 35D are taken not to apply to the new care determination.

The care percentage determined under this item applies from 1 July 2010 unless revoked under the new rules in new Subdivision E of Division 1 of Part 3. The new care determination can be revoked in the same way that a determination under new Subdivision D can be revoked. If the determination made under item 107 is revoked, and, under the new rules, the revocation would otherwise occur before 1 July 2010, the revocation is taken to have effect at the beginning of 1 July 2010. In all other circumstances the revocation will occur according to the rules in Subdivision E of Division 1 of Part 3.

The alignment provisions in new section 54K and 54L of the Child Support Assessment Act do not apply in relation to the new care determination. Therefore, the determination made under item 107 is only for the purpose of the family assistance provisions.

For review purposes, the Secretary is taken, on the commencement day, to have notified the person of the effect of this item. This reflects that the new care determination is not changing the existing percentage of care and the person would previously have been served notice of their FTB entitlement that took into account that percentage of care.

Item 108 provides for transitional arrangements where a claim for FTB for a past period is made and the past period occurs before 1 July 2010. In these circumstances, the rules in force immediately before 1 July 2010 would continue to apply in relation to the claim.

Item 109 provides for transitional arrangements where a claim for FTB (other than for a past period) was made before 1 July 2010 but not determined before that day. In these circumstances, the rules in force immediately before 1 July 2010 would continue to apply in relation to the claim. However, if the Secretary determines a percentage of care under the pre 1 July rules, then the determination would be taken to have been made before 1 July 2010 and would be subject to the transitional rules in item 107 ( as described above).

Item 110 provides that the new percentage of care rules in new sections 35A and 35B apply in relation to claims for FTB made on or after 1 July 2010. The exception (in subitem 110(2)) is a claim for a past period made on or after 1 July 2010 but in relation to a period before 1 July 2010. This situation is dealt with by item 108.

Item 111 provides that the alignment provisions in new section 35T apply in relation to a child support care determination made on or after 1 July 2010 (the commencement day).

Division 4 - Application of amendments in relation to Western Australian exnuptial children

Item 112 deals with the application of the child support amendments made by this new Act in relation to Western Australian exnuptual children. As Western Australia has not referred to the Parliament of the Commonwealth the matter of the maintenance of exnuptial children, until the relevant child support amendments are adopted by the Western Australian Parliament, they will not apply to Western Australia. Therefore the amendments made by items 101 to 111 will only apply in Western Australia when the provisions are adopted by the Western Australian Parliament.

Schedule 3 - Non-payment of family tax benefit for non-lodgment of tax returns

Summary

This Schedule makes minor amendments to the family assistance law so as to exclude two circumstances from the provisions that prevent payment of FTB on the basis of an income estimate if relevant tax returns have not been lodged. Firstly, the amendments limit the non-payment of FTB to a claimant, or the non-entitlement of the claimant to FTB, so that it applies only if the claimant or his or her partner has an outstanding FTB debt as a result of relevant tax returns not being lodged. Secondly, the amendments allow the Secretary to determine that non-entitlement to FTB on the basis of an income estimate does not apply for a specified period in special circumstances.

Background

FTB can be paid based on an estimate of an individual's adjusted taxable income. The most commonly used payment mechanism that uses income estimates is fortnightly instalments of FTB, but this also applies to a claim for a past period in the current income year. To ensure that claimants are paid their correct entitlement, the amount of FTB paid based on the estimate is compared with the FTB entitlement based on actual adjusted taxable income when this is known. This process is known as reconciliation. Where a claimant or partner (if any) is required to lodge an income tax return, the Commissioner of Taxation can provide details about their adjusted taxable income (Schedule 3 to the Family Assistance Act refers) after making an assessment of taxable income.

A non-lodger debt can occur where a claimant or their partner has not lodged an income tax return within the prescribed time. Subsection 28(2) of the Family Assistance Administration Act provides for a variation of a claimant's entitlement determination under section 16 or 17 where relevant income tax returns are required to be lodged and this has not occurred within a specific timeframe. Where these conditions are met, the Secretary must vary the claimant's entitlement determination such that the claimant is not, and never was, entitled to FTB for the entitlement year.

A variation under subsection 28(2) may result in a debt being owed to the Commonwealth, which arises under section 71 of the Family Assistance Administration Act. The debt raised, known as a non-lodger debt, is for the entire amount of FTB that the claimant received for the entitlement year in respect of which they or their partner have not lodged a tax return.

Currently, section 32AA provides that, if a claimant's FTB entitlement determination is varied under subsection 28(2), the claimant and a relevant partner of the claimant are prohibited from being paid FTB based on an estimate of income during a prohibited period. Sections 32AB and 32AC set out that a prohibited period applies where the claimant or the relevant partner was required to lodge a tax return for the relevant 'cancellation income year' but has not done so by the end of the 'grace period'. Also, section 32AD provides that a new partner is prohibited from being paid FTB based on an estimate of income during a prohibited period for the claimant while the claimant and the new partner are members of the same couple.

The prohibition alters the way in which FTB can be paid to the claimant, or to the relevant partner or a new partner of the claimant. As payment of FTB based on an estimate of income is prevented during a prohibited period in an income year, the payment of FTB for that period in an income year cannot occur until the end of the income year and then would be paid as a lump sum having regard to his or her actual income. The rate of FTB to which the claimant or partner is entitled continues to be governed by the existing rules.

The claimant or partner is able to be paid his or her entitlement based on an estimate of income if the prohibited period has ended. Sections 32AA and 32AD prohibit the payment of FTB on the basis of an estimate during a prohibited period.

Section 32AE will apply from 1 July 2010 if three variations under subsection 28(2) have been made for a claimant. If this occurs, the claimant or his or her partner will not be entitled to be paid FTB based on an estimate for a period in which the claimant and relevant partner has not lodged each required tax return for the relevant cancellation income years.

Section 32AE will cease to apply to a claimant or partner if the claimant and relevant partner lodge each required tax return for the relevant cancellation income years, or if a couple separate and the claimant has lodged each required tax return.

Under this measure, the prohibition will not apply in relation to a relevant subsection 28(2) decision if that decision did not result in a debt because the claimant did not receive any payment of FTB for the relevant cancellation income year (for example, the claimant had chosen to defer the receipt of his or her FTB entitlement for that year until his or her actual income was known) or that decision did result in a debt but the debt has subsequently been fully repaid.

Where there is no outstanding debt in relation to a subsection 28(2) decision, sections 32AA and 32AD will not result in non-payment of FTB due to that decision. Furthermore, if there is no outstanding debt in relation to subsection 28(2) decisions, section 32AE will not result in non-entitlement to FTB due to those decisions.

This measure also gives the Secretary the discretion to determine that non-entitlement to FTB on the basis of an estimate under section 32AE does not apply for a specified period where there are special circumstances.

Explanation of the changes

Amendments to the Family Assistance Administration Act

Item 1 inserts a new subsection 32AB(1A) that qualifies the application of section 32AA and 32AD in that there is no prohibited period for a claimant if: no debt arose under section 71 as a result of that variation under subsection 28(2); or a debt arose under section 71 as a result of that variation under subsection 28(2), but no amount of that debt is outstanding at the end of the grace period.

Item 2 provides that a prohibited period for the claimant also ends when new subsection 32AB(4A) applies.

Item 3 inserts a new subsection 32AB(4A), which applies if: a debt arose under section 71 as a result of a variation under subsection 28(2); an amount of that debt was outstanding at the end of the grace period; and, at a time after the end of the grace period, no amount of that debt is outstanding.

New subsection 32AB(5A) is inserted by item 4. This new subsection qualifies the application of section 32AA in circumstances where a claimant and the relevant partner separate on or after the day of the subsection 28(2) variation, they are still separated at the end of the grace period but become members of the same couple again on a day after the end of the grace period, and the partner was required to lodge an income tax return and has not done so. Under new subsection 32AB(5A), there is not a prohibited period for the claimant if no debt arose under section 71 as a result of that variation under subsection 28(2); or a debt arose under section 71 as a result of that variation under subsection 28(2), but no amount of that debt is outstanding immediately before the day that would otherwise be determined by the Secretary as the day, on or after the couple re-partner, that the prohibited period begins.

Item 5 provides that a prohibited period also ends when new subsection 32AB(6A) applies.

Item 6 inserts a new subsection 32AB(6A), which applies if a debt arose under section 71 as a result of a variation under subsection 28(2); an amount of that debt was outstanding immediately before the day determined by the Secretary as the day, on or after the couple re-partner, that the prohibited period begins; and at a time on or after that day, no amount of that debt is outstanding.

Item 7 inserts a new subsection 32AC(1A) that qualifies the application of section 32AA in that there is no prohibited period for the relevant partner of the claimant if: no debt arose under section 71 as a result of that variation under subsection 28(2); or a debt arose under section 71 as a result of that variation under subsection 28(2), but no amount of that debt is outstanding at the end of the grace period.

Item 8 provides that a prohibited period for the relevant partner also ends when new subsection 32AC(4A) applies.

Item 9 inserts a new subsection 32AC(4A), which applies if: a debt arose under section 71 as a result of a variation under subsection 28(2); an amount of that debt was outstanding at the end of the grace period; and, at a time after the end of the grace period, no amount of that debt is outstanding.

New subsection 32AC(5A) is inserted by item 10. This new subsection qualifies the application of section 32AA to the relevant partner of the claimant in circumstances where: the claimant and the relevant partner separate on or after the day of the subsection 28(2) variation; they are still separated at the end of the grace period but become members of the same couple again on a day after the end of the grace period; the partner or the claimant was required to lodge an income tax return for the cancellation income year; and either or both has not done so by the day on which they become members of the same couple again. Under new subsection 32AC(5A), there is not a prohibited period for the relevant partner if no debt arose under section 71 as a result of that variation under subsection 28(2); or a debt arose under section 71 as a result of that variation under subsection 28(2), but no amount of that debt is outstanding immediately before the day that would otherwise be determined by the Secretary as the day, on or after the couple re-partner, that the prohibited period begins.

Item 11 provides that a prohibited period also ends when new subsection 32AC(8A) applies.

Item 12 inserts a new subsection 32AC(8A), which applies if: a debt arose under section 71 as a result of a variation under subsection 28(2); an amount of that debt was outstanding immediately before the day determined by the Secretary as the day, on or after the couple re-partner, that the prohibited period begins; and, at a time on or after that day, no amount of that debt is outstanding.

Item 13 amends subsection 32AE(1) to clarify that section 32AE applies if there have been three 'or more' subsection 28(2) variations in relation to a claimant.

Item 14 repeals the existing subsections 32AE(2) and (3) and substitutes new subsections 32AE(2) to (11).

If section 32AE applies, new subsection 32AE(2) provides that the claimant is not entitled to be paid FTB based on an estimate of adjusted taxable income, an indexed estimate, an indexed actual income or an estimate of maintenance income, if both new subsections 32AE(3) and (4) apply in relation to one or more of the cancellation income years concerned.

Subsection 32AE(3) applies in relation to a cancellation income year if: the claimant was required to lodge an income tax return for that year but has not done so; or, if the claimant is a member of a couple and the partner is a relevant partner for that year, the partner was required to lodge an income tax return for that year but has not done so.

Subsection 32AE(4) applies in relation to a cancellation income year if a debt arose under section 71 as a result of a variation under subsection 28(2) and an amount of that debt is outstanding.

Example

If there have been three subsection 28(2) variations in relation to a claimant, with each having an outstanding debt at 1 July 2010, and subsequently there is no outstanding debt for all three variations, a non-entitlement period under subsection 32AE(2) will cease to apply. However, if there have been three subsection 28(2) variations, with each having an outstanding debt at 1 July 2010, and subsequently there is no outstanding debt for two of the variations but there remains an outstanding debt for one of the variations, a non-entitlement period under subsection 32AE(2) continues to apply. Subsection 32AE(2) will cease to apply if, in relation to each cancellation income year, the claimant and relevant partner have lodged required income tax returns or the outstanding debt is repaid.

New subsections 32AE(5), (6) and (7) provide similar rules to new subsections 32AE(2), (3) and (4) for the claimant's current partner.

Exceptions

New subsection 32AE(8) provides that the Secretary may determine that a non-entitlement period under subsection 32AE(2) does not apply for a specified period if there are special circumstances that justify this occurring.

New subsection 32AE(9) provides that the Secretary may determine that a non-entitlement period under subsection 32AE(5) does not apply for a specified period if there are special circumstances that justify this occurring.

New subsection 32AE(10) allows for the Secretary to determine that the specified period referred to in subsections 32AE(8) and (9) may begin before, on or after the day the determination is made.

New subsection 32AE(11) provides that a determination made under subsections 32AE(8) or (9) is not a legislative instrument. This provision is included to assist readers, as the instrument is not a legislative instrument within the meaning of section 5 of the Legislative Instruments Act 2003.

Application and transitional

Item 15 provides the application and transitional provisions. The amendments made under items 1 to 12 apply in relation to subsection 28(2) variations made before, on or after 1 July 2010 (subitem 15(1) refers).

Subitem 15(2) provides that new subsection 32AE(1) does not apply in relation to a variation under subsection 28(2) made before 1 July 2010 if: no debt arose under section 71 as a result of that variation; or a debt arose under section 71 as a result of that variation, but no amount of that debt is outstanding immediately before 1 July 2010.

Schedule 4 - Other amendments

Summary

This schedule deals with miscellaneous amendments to the Family Assistance Act and Child Support Registration and Collection Act.

Explanation of changes

Amendments to the Family Assistance Act

Item 1 amends the definition for FTB child under subsection 3(1) of the Family Assistance Act. An eligibility condition for baby bonus and for maternity immunisation allowance is that the individual has an FTB child. This amendment will clarify the meaning of FTB child in relation to baby bonus and maternity immunisation allowance. New paragraphs (c) and (d) provide that, for baby bonus and maternity immunisation allowance, the definition of FTB child has the meaning given in Subdivision A of Division 1 of Part 3. However, in applying new Subdivision D of that Division to baby bonus and maternity immunisation allowance, a reference to a claim for FTB is taken as a reference to a claim for baby bonus or maternity immunisation allowance. Therefore, an individual's percentage of care for a child for the purposes of baby bonus or maternity immunisation allowance will be determined using the same rules as apply for determining a percentage of care for FTB.

Amendments to the Child Support Registration and Collection Act

Item 2 amends section 110N to reflect the amendment made by item 3.

Item 3 inserts a new Division 5 into Part VIIIA of the Child Support Registration and Collection Act. Each of these provisions applies to application for reviews to the AAT that are made under new subsection 103VA(1) and ensures that the Registrar can be a party to a review by the AAT where he or she made the original decision.

New section 110XA modifies subsection 29(11) of the AAT Act for the purposes of an application under subsection 103VA(1) so that all parties to the SSAT review of the decision, except the party making the application to the AAT, receive notice that there has been an application to the AAT for review of the decision made by the SSAT.

New section 110XB modifies paragraph 30(1)(b) of the AAT Act so that the parties to a review by the AAT under new subsection 103VA(1) are the same as the parties to the review by the SSAT.

New subsection 110XC(1) modifies section 37 of the AAT Act for the purposes of an application under new subsection 103VA(1) so that the original decision maker will be responsible for providing the AAT with a statement of reasons and documents.

New subsection 110XC(2) provides that, for the purposes of the Registrar's obligations under paragraph 37(1)(a) of the AAT Act in respect of an application under new subsection 103VA(1), the Registrar is taken to have complied by giving the AAT the statement prepared by the SSAT under paragraph 103X(3)(b).

New subsection 110XC(3) clarifies that the AAT's powers, under section 38 of the AAT Act, to obtain an additional statement is not limited by the operation of new subsection 110XC(2).

New section 110XD modifies section 38 of the AAT Act so that the person who is required to provide any additional statements under that section to the AAT is the SSAT Principal Member.

New subsection 110XE(1) modifies subsection 41(4) of the AAT Act for the purposes of an application under new subsection 103VA(1). This provides that, where a party applies to the AAT for an order staying or otherwise affecting the operation or implementation of a decision made by the SSAT, each party to the review before the SSAT will be able to make submissions to the AAT.

New subsection 110XE(2) clarifies that the 'decision' referred to in section 41 of the AAT Act for the purposes of an application under new subsection 103VA(1) is to be taken to be the original decision and: the decision as varied by the SSAT if it was varied; or the new decision if the original one was set aside; or any decision made as a result of the matter being sent back to the Registrar with directions or recommendations.

New section 110XF modifies subsection 42A(2) of the AAT Act so that the AAT may not prevent the Registrar from being a party to proceedings before the AAT.