Senate

Supplementary Explanatory Memorandum

(Circulated by the authority of the Treasurer the Hon John Dawkins MP)

General Outline and Financial Impact of the Amendments

The supplementary amendments will amend the Child Support Legislation Amendment Bill (No.2) 1992 to:

(1)

include a statutory tolerance before penalty is imposed in cases where an estimate of income is used in a child support assessment and the taxable income ultimately assessed is 10% or more greater than the estimate.

(2)

insert a new provision to ensure consistency of treatment at law of income amount orders made by courts and income amount determinations made by the Registrar which have the same effect.

(3)

correct 5 other minor matters in the Bill including 2 consequential amendments.

The supplementary amendments do not change the thrust or the intentions of the Bill and have no financial impact before 30 June 1994. Thereafter there may be some addition to revenue if penalty is imposed.

Summary and explanation of proposed amendments

Correction to Example 2 at Clause 11(d)

There is an inconsequential error in one figure in the example included in the Bill which needs to be corrected before final printing. The amount Mary should pay Peter in the calculation block is shown as $1600 but that amount is subsequently shown as $1831. The latter figure is incorrect and Amendment (1) replaces it with $1600.

Income amount determinations

Clients of the Child Support Agency may not elect to use an estimate of current year income in a child support assessment if there is an income amount order made by a court. This is to avoid the possibility of one party negating the outcome of a court order by simply electing to use an estimate of current income when the other party has taken the trouble to have a court review the assessment and an order changing an income amount in the assessment has been made.

Income amount determinations may also be made by Child Support Review Officers under Part 6A of the Act. They have the same effect as an income amount order made by a court and for consistency should be treated the same. Amendment (2) inserts a new Clause 12A in the Bill to include income amount determinations made under Part 6A in the definition of income amount orders.

Correction to Clause 18

The date in the new subsection 63A(1) inserted by Clause 18 is amended by Amendment (3) to read 30 June 1993 rather than 1 July 1993 as presently shown in the Bill.

Tolerance before imposition of penalty

Amendment (4) will ensure that a statutory tolerance will apply before the imposition of penalty in estimate cases as announced in the second reading speech. It is appropriate that a tolerance should apply when a person is, at law, allowed to estimate a figure of income in the assessment. To expect complete accuracy is perhaps an unreal expectation when the election made is only required to be an estimate.

The effect of the existing provision is to expose even the smallest discrepancy to a penalty and this is not the intention. To ensure that the spirit of an estimate is retained and to not deter people exercising this facility under the law, a tolerance of 10% will apply before penalty is imposed. Penalty remission provisions will always apply when a penalty is imposed.

Consequential amendment arising from Amendment 7

If the payee can object to a credit under section 71A a payer should be able to object if the credit is refused as is the case with section 71 credits. Amendment (5) consequentially amends the definition of appealable refusal decision in section 4 to include a decision to refuse to credit an amount under section 71A against a liability.

Consequential amendment arising from Clause 33

Clause 33 is amended to reflect both the repeal of subsection 23(4) and a consequential amendment to subsection 23(3) Amendment (6).

Omission from Clause 37

Clause 37 which inserts a new subsection 84A(1) provides a ground of objection if the payee is dissatisfied with a decision of the Registrar to credit an amount of maintenance to the payer's liability under section 71. Similar credits may be made under section 71A and the objection rights should also have included that section. Amendment (7) includes that section.

Clauses involved in the proposed amendments

Clause (11d) is amended by replacing the amount of $1831 with $1600 in Example 2; Amendment (1).

Clause 12A is inserted in the Bill to include income amount determinations made by a Review Officer under Part 6A in the definition of income amount orders for the purpose of Subdivision B of Division 3 of Part 5; Amendment (2).

Clause 18 is amended by correcting the date to read 30 June 1993 in the new subsection 63A(1); Amendment (3).

Clause 19 is amended by inserting a tolerance of 10% that will statutorily apply before the law operates to impose penalty in estimate cases at the time of reconciliation and reassessment; Amendment (4).

Clause 31 is amended to include in paragraph (c) of the definition of appealable refusal decision, a decision made under section 71A; (Amendment 5)

Clause 33 is amended to reflect both the original amendment to repeal subsection 23(4)and the consequential amendment to subsection 23(3); Amendment (6).

Clause 37 is amended extending the ground of objection to include payments credited under section 71A; Amendment (7).