House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Community Services, the Hon Larry Anthony MP)

Outline and financial impact statement

The Child Support Legislation Amendment Bill (No. 2) 2000 (the Bill) gives effect to four measures relating to child support announced as part of the Governments 2000-01 Budget. It also gives effect to several non-Budget measures.

Lower child support percentages for children with whom liable parent has 10% to 30% contact

There is currently no allowance in the child support formula for the costs of caring for a child for less than 30% of the time. Under this measure, if a non-resident parent has contact with his or her child or children for between 10% and 30% of the time, the child support formula percentages will be reduced. This is to recognise the additional costs of contact faced by non-resident parents and to encourage parents to maintain contact with their children. Contact of at least 10%, but less than 20%, will generally lead to a reduction in the child support percentage by two percentage points (eg, from 18% to 16% for one child). Contact of at least 20%, but less than 30%, will generally lead to a reduction by three percentage points (eg, from 18% to 15% for one child).

Lower cap on income subject to child support formula assessment

Under this measure, the Average Weekly Earnings (AWE) figure that sets the cap on payer taxable income that is subject to child support formula assessment will be aligned with that used for the payees disregarded income figure (the all employees average weekly total earnings figure instead of the full-time adult average weekly total earnings figure). This will result in a lower cap.

Income earned for the benefit of resident children

This measure will create a new ground for departure from the child support formula assessment for a parent who has income from a second job, regular overtime, or some similar source, that is earned for the benefit of a child (natural, adoptive or step-child) or children in the parents current family. For this to apply, the additional income must not be earned as part of the normal earning pattern established by the parent before the current family was established, and must not come from normally expected improvements in the parents earning pattern (eg, mandatory overtime or normal incremental increases). The amount of income to be excluded will be limited to a maximum of 30% of the parents total income.

Increase in deductible child maintenance expenditure for family tax benefit and child care benefit

This measure will increase the family tax benefit and child care benefit income test deductions for child support payers from 50% to 100%, by allowing a dollar for dollar deduction for any child support paid. This will mean that child support payers with children in a new family will have their family tax benefit and child care benefit assessed on income that reflects the actual income available to their new family.

Administrative arrangements

This measure will make changes in child support, taxation and social security legislation to reflect the fact that the child support function has moved from the Treasury portfolio to that of Family and Community Services. In particular, the Child Support Registrar will no longer be the Commissioner of Taxation. However, close links between the child support and taxation functions will be maintained so that the child support assessment, collection and enforcement activities continue undisrupted.

Departure prohibition orders

This measure will set up a system of departure prohibition orders so that, in certain cases of a child support payer having persistently failed to meet his or her child support commitments, the payer may be prevented from leaving Australia without either discharging all debts or making satisfactory arrangements to discharge them. The system will mirror closely the existing departure prohibition order system in place under the Taxation Administration Act 1953 .

Minimum rate of child support

This measure will set up a regulation making power to allow certain amounts to be excluded from income so that the current $260 minimum child support liability will not apply.

Supporting documents

Under this measure, it will no longer be a requirement that supporting documents , supplied with a partys application to depart from the child support formula assessment, be provided to the other party to the child support arrangement. Similarly, supporting documents supplied with the other partys reply to the first partys application for departure will not have to be given to the first party. However, the application or response form itself will continue to be made available to the other party, as required by natural justice.

Definition of eligible carer

Currently, an assessment may be made of child support payable to a non-parent who is providing care to a child who has left home, whether with or without parental consent, and whether with or without reasonable cause. The child support scheme should not be seen to condone or assist the breakdown of families. Accordingly, this measure will generally provide that carers who are not parents or legal guardians of a child cannot be eligible carers, and therefore cannot get child support, if a parent or legal guardian has not consented to the arrangement. However, if it is unreasonable for the child to live at home because of extreme family breakdown or because of a serious risk to the childs physical or mental wellbeing from violence or sexual abuse at home, the carer can be an eligible carer.

Technical amendments

Under this measure, a number of technical amendments will be made to correct and clarify minor matters in the child support legislation.

The measures in the Bill will impact on the following legislation:

•

the Child Support (Assessment) Act 1989 (referred to in this Explanatory Memorandum as the Assessment Act);

•

the Child Support (Registration and Collection) Act 1988 (referred to as the Registration and Collection Act);

•

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

•

the Income Tax Assessment Act 1936 ;

•

the Social Security (Administration) Act 1999 ; and

•

the Taxation Administration Act 1953 .

Preliminary

Clause 1 of the Bill sets out how the amending Act is to be cited.

Clause 2 specifies that the amending Act commences on Royal Assent, subject to certain exceptions specified.

Clause 3 provides that each Act that is specified in a Schedule to the amending Act is amended or repealed in accordance with the applicable items in those Schedules.