House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Families, Community Services and Indigenous Affairs, the Hon Mal Brough MP)

Schedule 5 - Amendments relating to child support agreements and court orders (commencing on 1 July 2008)

Summary

This Schedule will provide more flexible arrangements, with better legal protection, for parents who want to make agreements between themselves about the payment of child support, will detail how lump sum payments are treated, and will provide for the effect of agreements on family tax benefit payments. It will also provide a simplified process to allow parents to suspend child support payments for a period of six months if they reconcile, and then resume the payments should they separate again, without having to apply anew.

Background

AGREEMENTS

There will be two types of agreements: binding and limited child support agreements. Several matters apply to both sorts of agreements.

If the parents apply to the Registrar to have the child support agreement accepted within 28 days of the child support agreement's start date, then acceptance will be backdated to the start date of the agreement. However, if the parents apply for acceptance more than 28 days after the agreement's start date, then acceptance will only be backdated to the day the parents applied for acceptance.

The circumstances in which a court can set aside a child support agreement are set out in section 136.

BINDING AGREEMENTS

Each party to the agreement must have received legal advice before entering the agreement, and must also receive legal advice before terminating the agreement. This change brings the child support arrangements in relation to binding agreements into harmony with financial agreements concerning property division and spousal maintenance under the Family Law Act. Placing these amendments into the child support legislation means that separated parents who were not married, as well as those parents who were married, can make binding agreements about their child support arrangements. The amount agreed on by the parents may be more or less than the amount that the payer would be assessed as paying under the notional assessment.

LIMITED AGREEMENTS

Parents who have not had legal advice about the effect of a child support agreement can enter a limited child support agreement. In order to provide safeguards on parents' interests, in the absence of legal advice, limited agreements are of limited duration and can be terminated or set aside by the courts, in certain circumstances. Limited agreements can also be terminated by either parent if the notional amount of child support payable changes by more than 15%, or after three years.

An administrative assessment must be in place before a limited child support agreement can be accepted by the Registrar. The annual rate of child support payable under the agreement must be at least the annual rate of child support payable under Part 5, or otherwise payable as a result of a change of assessment, court order or prior agreement.

LUMP SUM CHILD SUPPORT

This Schedule includes amendments giving effect to the recommendations in the Taskforce Report on lump sum payments of child support. The child support legislation already recognises that parents may make private agreements for the payment of child support in the form of periodic payments or otherwise. A lump sum may be paid under one of those agreements and these amendments do not essentially alter those arrangements, apart from clarifying them as distinct from the new lump sum arrangements being inserted.

This Schedule clarifies that the type of lump sum already recognised in the child support legislation is made under provisions of an agreement characterised as non-periodic payment provisions . These provisions must provide for the annual child support payable under any administrative assessment by the liable parent who is a party to the agreement to be reduced in whole or part, either as a dollar reduction in the annual rate payable or a percentage reduction. These provisions generally operate for a period specified in the agreement or, if not specified, until the child support case ends. Lump sums recognised in this way may be paid under either a binding or a limited child support agreement.

The new lump sum arrangements recommended by the Taskforce Report must arise from a binding child support agreement and the lump sum must at least equal the value of the total annual child support payable under an administrative assessment. This type of lump sum (made under provisions of an agreement characterised as lump sum payment provisions ) will not reduce the annual child support payable under the administrative assessment, but will instead be credited against the payer's liability annually until the full value of the lump sum (indexed annually according to the Consumer Price Index to protect the value of the lump sum over time) has been credited. At this point, ongoing child support payments will resume. This type of lump sum will generally be credited in this way for 100% of the annual child support payable, but may, if the agreement so provides, be credited at a specified percentage below 100%, in which case the payer would continue to make reduced ongoing child support payments, although the child support technically payable under the assessment would still be the full amount (that is, disregarding the lump sum).

Further amendments make sure that an order made by a court that provides for a lump sum payment is also characterised as one of these two types of lump sum, so that there is consistent treatment under the legislation, whether the lump sum is paid under an agreement or a court order.

Amendments that reflect the effect of the new lump sum arrangements for family tax benefit are discussed elsewhere.

NOTIONAL ASSESSMENTS

Presently, entitlement to Family Tax Benefit (FTB) Part A is worked out on the basis of the agreement the parents make between themselves. In order to protect government revenue, Centrelink will, in practice, only approve agreements if the amount or value of the agreement is equal to, or more than, the amount of the liability that would result if there had been an administrative assessment. This discourages many parents from making agreements, where one parent may accept a lesser amount of child support in return for other concessions, for example, possession of the family home.

In order to remove this block on agreements, the Child Support Assessment Act and the Family Assistance Act will be amended to provide that, once a child support agreement has been accepted, FTB Part A will be assessed on the notional assessed amount of child support. The notional assessed amount of child support is the amount that would have been paid but for the existence of the agreement between the parents.

Notional amounts will be reviewed on request by either parent if the parents are party to a limited child support agreement, , or every three years if no review has been done within that three year period, or in any case, if the amount of child support that is payable under the child support agreement or court order for a day in the child support agreement changes by more than 15% from the previous day. For example, if the child support agreement contains a clause dealing with the situation where the payer loses his or her job and, as a result, pays more than 15% less child support, the Registrar must make a new provisional notional assessment (see section 146F). At these times, the CSA will calculate a provisional notional assessment based on incomes for the last relevant year of income (that is, the financial year that last ended prior to the day on which the three year period ends, or the review is requested by either parent) and the most recent information available to the CSA about the level of care of each parent. The notional assessment will be determined in the same manner as an administrative assessment of child support under Part 5 of the Child Support Assessment Act.

Parents will be advised by the Registrar of this provisional notional assessment and will then have 14 days to alter the information used in calculating that amount. For the purposes of the notional amount, parents can use the normal estimate provisions set out in section 60 of the Child Support Assessment Act to estimate their current income for the 12 months from the date of review. That is, the parents may use the estimate provisions if their income is 15% less than the income used in the provisional notional amount. Such estimates will be able to be reviewed but will not be required to be reconciled, under the reconciliation process in section 60.

Parents can also advise of a change to the level of care on the basis of care for the 12 months from the date of review. This ensures that the notional assessment accurately reflects the current situation of care between the parents. This will have consequences for the parents' entitlement to FTB Part A. Parents will be able to access the full change of assessment process in relation to notional assessments.

After 14 days or when such elections have been finalised, whichever is the later, the provisional notional assessment will then be confirmed. The parents will have a right to object to the calculation of the notional assessment. That is, the parents can provide further information about the provisional notional assessment and then object, using the internal objections process, to the final notional assessment.

For example:

Henry and Chan make a binding child support agreement in relation to their two children. Henry's income at the time when he and Chan separate is $70,000. Their child support agreement provides that he will pay $1,000 per month. However, the notional assessment is that he should pay $2,000 per month. Henry loses his job and he starts receiving income support payments from Centrelink. The agreement contains a clause that Henry's payments under the agreement are to reduce to $30 per month while he is on income support payments. The Registrar acts on this clause and reduces the amount payable by the payer under the agreement to $30 per month. This is a change which is greater than 15%, therefore, the Registrar also reassesses the notional amount. The notional amount is recalculated so that it is based on Henry's current income, leading to a new notional amount of the minimum rate of child support per month. The notional assessment would be based on Henry's last relevant year of income which would still be a higher amount. However, as Henry is receiving income support payments, Part 5 provides that the assessment would be the minimum annual rate of child support. In any case, Henry could provide an estimate of income once he received his provisional notional amount. Centrelink will assess Chan's entitlement to FTB on the basis of the new notional amount.

NOTIONAL ASSESSMENTS AND FAMILY TAX BENEFIT

The maintenance income test (MIT) is relevant for the purposes of working out an individual's rate of FTB Part A under the Family Assistance Act. The MIT is set out in Division 5 of Part 2 of Schedule 1 and is supported by a number of definitions in subsection 3(1) of the Family Assistance Act. It is an annual means test that has regard to maintenance income actually received in a relevant income (financial) year.

The first step in the MIT is to work out the annualised amount of the individual's maintenance income, disregarding specified amounts. Clause 20A of Schedule 1 sets out a process for annualising an individual's maintenance income except for capitalised maintenance income which is dealt with under the apportionment rules in clause 24 of Schedule 1. If an individual is a member of a couple, the individual's maintenance income is the sum of the annualised maintenance income of the individual and the annualised maintenance income of their partner (clause 21 of Schedule 1 to the Family Assistance Act refers).

The concept of maintenance income is defined in subsection 3(1) as including child maintenance, partner maintenance and direct child maintenance received by the individual. For individuals who choose to receive their FTB payments on a fortnightly basis by instalments, the MIT is initially applied on the basis of an estimate of maintenance income as determined by the Secretary (on the basis of information provided by the customer and the Child Support Agency) and under authority of subsection 20(3) of the Family Assistance Administration Act. After the end of the income year, a process of reconciliation occurs whereby an individual's rate of FTB is reassessed as appropriate on the basis of actual maintenance income received in the relevant income year (and actual ATI as assessed by the Commissioner for Taxation and any other relevant facts).

Consistent with recommendation 17.1 and 18.2 of the Taskforce Report, the provisions and definitions relating to maintenance income as they apply in child support agreement and lump sum cases are being modified so that an individual's child maintenance in these cases is not determined on the basis of the amount actually received in the relevant income year (as is currently the case). Rather, where child maintenance is payable for an FTB child under a child support agreement (which can include provision for the payment of a lump sum as well as periodic and non-periodic payments), the payee's entitlement to FTB Part A will be determined on the basis of the amount of child support that would be transferred under an administrative assessment if the child support agreement had not been made (that is, the individual's notional assessment). Where a child support agreement includes provision for the payment of a lump sum only and in the case of a court order for a lump sum, the amount of the lump sum that is credited against the amount of the child support liability will be taken to be the individual's child maintenance for FTB Part A purposes.

Explanation of the changes

Part 1 - Main amendments

Division 1 - Binding and limited child support agreements

Child Support Assessment Act

Item 1 inserts into section 5 a definition of binding child support agreement , and provides that it has the meaning given by section 80C.

Item 2 inserts into section 5 a definition of limited child support agreement , and provides that it has the meaning given by section 80E.

Item 3 inserts into section 5 a definition of termination agreement and provides that it has the meaning given by section 80D.

Item 4 repeals and substitutes section 34B. Section 34B deals with the situation where child support is already payable for a child (that is, the Registrar has already made an administrative assessment of child support), but an agreement to pay child support is made in relation to the child and will affect the annual rate of child support payable. Section 34B, therefore, applies to all limited child support agreements (see Subdivision B below) and applies to some binding child support agreements (see Subdivision A below). However, new subsection 34B(2) deals with when the child support agreement will start, when child support is already payable. The period of time for which a child support assessment can be backdated is being limited to provide parents with certainty about their child support assessment. The change also more clearly sets out when a child support agreement takes effect. Item 14 below deals with when a child support agreement will start when child support is not already payable. Subsection 34B(2) provides that the child support period starts:

(a)

if the application for acceptance was made to the Registrar within 28 days after the day on which the agreement was signed, the agreement states that child support is to be payable from a specified day and that day is not earlier than the day on which child support first became payable, on the specified day. For example, Prashant and Jenny sign a child support agreement on 20 August 2008. Prashant applies to the Registrar for acceptance of the agreement on 23 August 2008. It is stated to come into effect on 5 July 2008. Child support first became payable on 1 July 2008. The child support period starts on 5 July 2008.

(b)

if the application for acceptance of the agreement was made to the Registrar within 28 days after the day on which the agreement was signed, and the agreement states that child support is to be payable from a specified day, and the day specified is earlier than the day on which child support first became payable, on the day child support first became payable. For example, Danielle and Giles sign a child support agreement on 20 August 2008. Danielle applies to the Registrar for acceptance of the agreement on 23 August 2008. The agreement is stated to come into effect on 25 June 2007. However, child support was not payable under the administrative assessment until 14 July 2007. The child support period starts on 14 July 2007.

(c)

if the application for acceptance of the agreement was made to the Registrar within 28 days after the day on which the agreement was signed and the agreement does not specify a day from which child support is to be payable, the day on which the agreement was signed.

(d)

Otherwise (that is, if application for acceptance of the agreement was not made within 28 days after the day on which the agreement was signed), on the day on which application was made to the Registrar for acceptance of the agreement.

Item 5 repeals Division 1 of Part 6 and substitutes the following sections.

Division 1 - Preliminary

New section 80A sets out a simplified outline of Part 6.

New section 80B provides that Part 6 applies to cases where the parents of an eligible child, or a parent or the parents of an eligible child and a non-parent carer of the child, want to give effect to an agreement between themselves in relation to child support payable for the child.

Division 1A - Binding and limited child support agreements

Subdivision A - Binding child support agreements

Section 80C sets out the requirements which must be met in order for a child support agreement to be a binding child support agreement. Subsection 80C(1) provides that the agreement is binding if it is in accordance with the requirements in subsection 80C(2), and also provides that the agreement must comply with subsection 81(2). The requirements in subsection 80C(2) are:

(a)

the agreement must be in writing;

(b)

the agreement be signed by the parties to the agreement;

(c)

the agreement must contain a statement, in relation to each of the parties to the agreement, that they have had legal advice about the agreement's effect and its advantages and disadvantages;

(d)

the agreement must include an annexure containing a signed certificate signed by the person providing the legal advice stating that the advice was provided;

(e)

the agreement must not have been terminated under section 80D; and

(f)

after the agreement is signed, each of the parties is given either the original or a copy of the original.

Section 80CA provides that a binding child support agreement must not be varied. A note explains, however, that a new binding child support agreement can incorporate by reference the terms of a previous agreement. This means that the process of making a new child support agreement can be simpler and easier than drafting a new agreement to cover all of the matters of the original agreement.

Section 80D deals with terminating binding child support agreements. Subsection 80D(1) provides that a binding child support agreement may only be terminated by:

(a)

a provision in a new binding child support agreement to the effect that the previous agreement is terminated;

(b)

the parties make a termination agreement (the requirements of which are set out in subsection 80D(2)); or

(c)

a court order setting aside the agreement under section 136.

The requirements of subsection 80D(2) are that:

(a)

the agreement must be in writing;

(b)

the agreement be signed by the parties to the agreement;

(c)

the agreement must contain a statement, in relation to each of the parties to the agreement, that they have had legal advice about the agreement's effect and its advantages and disadvantages;

(d)

the agreement must include an annexure containing a signed certificate signed by the person providing the legal advice stating that the advice was provided;

(e)

the agreement has not been set aside by a court under section 136;

(f)

after the agreement is signed, each of the parties is given either the original or a copy of the original.

A note following subsection 80D(2) explains that the manner in which the contents of a termination agreement may be proved is set out in section 48 of the Evidence Act 1995 .

Subsection 80D(3) sets out that a binding child support agreement is terminated on:

(a)

if the parties have made a new binding child support agreement which specifies a day on which it is to take effect, that day. Otherwise (that is, if the new agreement does not specify a date of effect), the day the new agreement is signed;

(b)

if the parties make a termination agreement which specifies a day on which it is to take effect, that day. Otherwise, (that is, if the termination agreement does not specify a date of effect), the day the new termination agreement is signed;

(c)

if a court sets aside the agreement under section 135, the day on which the court order takes effect.

Subdivision B - Limited child support agreements

Section 80E deals with matters related to the making of limited child support agreements. Subsection 80E(1) provides that an agreement is a limited child support agreement if it is in writing, is signed by the parties to the agreement, if it complies with subsection 81(2) (see comments below) and it meets the conditions in subsection 80E(2), (3) or (4) as the case requires, and assuming that the agreement is accepted by the Registrar. A note following the subsection states that there must be an administrative assessment in force in relation to the child in relation to whom the agreement is made (see item 11 below). Another fundamental requirement of limited child support agreements is that the amount of child support payable under the agreement must be more than the amount of child support which would be assessed as being payable under Part 5. As Centrelink will no longer be approving child support agreements, one safeguard which prevented agreements which were unfair for the carer, liable parent or children, from being entered has been removed. Binding child support agreements have the safeguard of the parties having received legal advice. For limited child support agreements, this safeguard is provided by the agreed amount having to exceed the assessment amount,

Subsection 80E(2) provides that if child support is payable from one party to the agreement to another party to the agreement, on the day on which application is made to the Registrar for acceptance of the agreement, the annual rate of child support that is so payable on that day must be at least the annual rate of child support that would be so payable on the day if that rate were calculated under Part 5, or otherwise payable as a result of a change of assessment, court order of prior agreement.

For example:

Prashant and Jenny sign a document . They sign the document on 18 August 2008, and apply to the Registrar for acceptance of that agreement on 20 August 2008. The agreement states that child support in accordance with its terms is payable from the date of acceptance. The agreement states that Jenny is to pay Prashant $65 per week. However, under the administrative assessment, Jenny should pay Prashant $135 per week. The document does not meet the condition under subsection 80E(2) that the child support under the agreement must be more than the assessed amount, and would not be accepted.

Subsection 80E(3) provides that if child support is not to be payable from one party to the agreement to another party to the agreement, on the day on which application is made to the Registrar for acceptance of the agreement, the annual rate of child support that is so payable on the day on which the agreement commences is at least the annual rate of child support that would be so payable on that day if the rate were calculated under Part 5, or otherwise payable as a result of a change of assessment, court order or prior agreement.

For example:

Danielle and Giles sign a limited child support agreement on 18 July 2008. It is not expressed to come into effect until 1 September 2008. They apply to the Registrar for acceptance of the agreement on 21 July 2008. The agreement states that on 01 September 2008, the amount of child support that Giles is to pay to Danielle is $300 per week. Under the administrative assessment that would be in force on 1 September 2008, Giles should pay Danielle $260 per week. Consequently, the agreement meets the condition under subsection 80E(3).

Subsection 80E(4) provides that if child support is payable from one party to the agreement to another party, for a period before the day on which application is made to the Registrar for acceptance of the agreement, the amount of child support that is so payable for that period must be at least the amount of child support that would be so payable for that period if the annual rate of child support were calculated under Part 5 or otherwise payable as a result of a change of assessment, court order or prior agreement. An agreement may cover one or more past periods. The amount of child support payable in relation to a past period does not need to be more than the rate calculated for each individual period, so long as it is more than the cumulative amount for all of the periods.

Subsection 80E(5) provides that the regulations may, for the purposes of subsections 80E(2), (3) and (4), provide a method of converting an amount of child support that is payable under an agreement otherwise than in the form of periodic amounts into an annual rate of child support. Such details have tended to be addressed by regulations, rather than primary legislation, under the child support scheme.

Section 80F provides that a limited child support agreement cannot be varied. However, a new limited child support agreement can incorporate by reference the terms of a previous child support agreement. This means that the process of making a new child support agreement can be simpler and easier than drafting a new agreement to cover all of the matters of the original agreement.

Section 80G deals with terminating limited child support agreements. Subsection 80G(1) provides that a limited child agreement may only be terminated by:

(a)

a provision being included in a new limited or binding child support agreement to the effect that the previous agreement is terminated;

(b)

the parties to the previous agreement making a written agreement that is signed by those parties to the effect that the agreement is terminated;

(c)

a court order setting aside the previous agreement under section 136;

(d)

if the notional assessment (see Division 3 of this Schedule) of the amount of child support that would have been payable from one party to the agreement to another party is varied by more than 15% from the previous notional assessment in circumstances not contemplated by the agreement, for example, one party loses his or her job and starts receiving a social security payment. In that case, the agreement is terminated if a party to the agreement gives the Registrar written notice of the termination of the agreement; or

(e)

if the previous agreement was made three or more years earlier - a party to the previous agreement giving the Registrar written notice of the termination of the previous agreement.

Subsection 80G(2) sets out that a limited child support agreement is terminated on:

(a)

if the parties have made a new binding child support agreement which specifies a day on which it is to take effect, that day. Otherwise (that is, if the new agreement does not specify a date of effect), the day the new agreement is signed;

(b)

if the parties make a termination agreement which specifies a day on which it is to take effect, that day. Otherwise, (that is, if the termination does not specify a date of effect), the day the new agreement is signed;

(c)

if a court sets aside the agreement under section 135, the day on which the court order takes effect.

Subsection 80G(3) provides that if a limited child support agreement is terminated because the notional assessment of the child support payable by one party changes by more than 15% from the previous notional assessment, or more than three years has passed since the agreement was made, and a party gives the Registrar written notice of the termination, the Registrar must notify the other parties in writing of the termination.

Subsection 80G(4) provides that the notice must include, or be accompanied by, a statement to the effect that the party may, subject to the Child Support Registration and Collection Act, object to the decision to terminate the agreement. Paragraph 80G(4)(b) provides that if the person is aggrieved by a later decision on an objection (no matter who lodged the objection), that person may apply to the SSAT. This ensures that if the other party lodged the objection, and the matter is resolved to that person's satisfaction, the person referred to in paragraph 80G(4)(b) does not lose his or her right to apply to the SSAT for review of the decision.

Item 6 repeals and substitutes section 81. New subsection 81(1) provides that an agreement is a child support agreement if it is a binding child support agreement or a limited child support agreement. Subsection 81(2) provides that a child support agreement is a limited or binding child support agreement if it complies with sections 82, 83 and 84. A note following section 81 explains that a parenting plan under the Family Law Act may, subject to the requirements of this Division, be a child support agreement.

Item 7 repeals section 85. This section is no longer required because the formal requirements for agreements are set out in Subdivisions A and B (see above).

Item 8 repeals and substitutes paragraph 88(a). New paragraph 88(a) provides that an application for acceptance by the Registrar of an agreement made in relation to child support is properly made if the agreement is a child support agreement, or a termination agreement or written agreement referred to in paragraph 80G(1)(b). Item 11 omits from section 91 'a child support agreement' and inserts 'an agreement referred to in paragraph 88(a)'. These changes are required because parties to a child support agreement will be required to lodge a termination agreement or a written agreement providing that a child support agreement is terminated with the Registrar for acceptance.

Item 9 omits '(1)' from subsection 89(1). Item 10 repeals subsection 89(4). Item 12 repeals section 91A, which sets out the procedure where the payee is in receipt of, or a claimant for, FTB. These changes are being made because the effect of child support agreements on FTB will now be dealt with by notional assessments (see Division 3 of this Schedule).

Item 13 repeals subsections 92(3) and (4) and substitutes a new subsection 92(3). New subsection 92(3) provides that the Registrar must refuse to accept a limited child support agreement if, immediately before the application for acceptance of the agreement is made, no administrative assessment is in force in relation to the child.

Item 14 repeals and substitutes paragraph 93(1)(g). New paragraph 93(1)(g) provides that child support is payable from the day on which the application was made to the Registrar for acceptance of the agreement. Paragraph 93(1)(h) provides that child support is payable until the earlier of the day immediately before the day on which a child support terminating event happens in relation to the child, the carer entitled to child support, the liable parent or all three of them; or, the day on which the agreement is terminated under section 80D or 80G.

Item 15 omits from subsection 93(2) the words 'the period mentioned in paragraph (1)(g) starts' and substitutes 'on which the application was made to the Registrar for acceptance of the agreement'. This is in order to be consistent with new paragraph 93(1)(g).

Item 16 repeals and substitutes the note at the end of subsection 93(2). The new note refers to the fact that the Registrar must assess, under section 34B, the annual rate of child support payable under an agreement if an annual rate of child support is already payable and the agreement is to affect that annual rate.

Item 17 repeals and substitutes section 94. Subsection 94(1) provides that after the Registrar accepts a child support agreement made in relation to a child, the Registrar must immediately take such further action (if any) as is necessary to give effect to the agreement. A note states that this means the Registrar may assess, under section 34B or 93 or Part 5, the annual rate of child support payable under an agreement if an annual rate of child support already payable and the agreement is to affect that annual rate. Subsection 94(2) provides that in making any administrative assessment in relation to the child, the Registrar must act in accordance with section 95, which sets out the effect of certain provisions of accepted child support agreements. Subsection 94(3) provides that after the Registrar accepts a termination agreement or a written agreement providing that a child support agreement is terminated, the Registrar must immediately take such further action as is necessary to give effect to the agreement.

Item 18 repeals Division 6 of Part 6. This is because child support agreements are not permitted to be varied under the new provisions (see sections 80CA and 80F).

Item 19 omits from paragraph 94U(4)(a) '94' and substitutes '93'. This change is required because now section 93, rather than section 94, deals with when a child support agreement begins.

Item 20 omits from the simplified outline in section 98W (which is inserted by Schedule 3, and which will commence on 1 January 2007) the dot point which deals with the court's powers in relation to child support agreements. Item 20 then inserts dot points which set out a court's power in relation to child support agreements under this Schedule (that is, after 1 July 2008).

Item 21 adds at the end of subsection 116(1) a third note, which provides that a court may make an order under Division 4 if the court sets aside a child support agreement under section 136.

Item 22 omits from paragraph 124(2)(c) 'benefit; and', and substitutes 'benefit'. Item 23 repeals paragraph 124(2)(d), which refers to the effect of making an application under section 128. These changes are required because section 128 itself if being repealed.

Item 24 repeals section 128. Section 128 of the Child Support Assessment Act has been one of the most significant obstacles standing in the way of payment of child support as a lump sum. It provides that if a court orders that a liable parent pay child support in a manner other than by periodic payments, and if the carer is receiving an income tested pension, allowance or benefit, the carer may apply to have the assessed child support reduced. This was intended to ensure that a carer who is receiving a pension, allowance or benefit is always entitled to receive at least 75% of his or her assessed child support by way of periodic amounts, without losing entitlement to the pension, allowance or benefit. However, amendments to the social security legislation introduced after the commencement of the Child Support Assessment Act changed the way in which maintenance income is considered, and special maintenance income alone could not reduce the carer's benefit or pension below 75% of the maximum rate of the pension or benefit. Parents may want to make a lump sum payment, for example, to allow the carer to keep the matrimonial home. However, section 128 could mean that only 25% of the value of the lump sum paid can be credited against the periodic assessment.

For example:

A lump sum agreement provides that a payment of $10,000 by the payer is to reduce his assessment by $5,000 for two years. The payer's current assessment is $7,500 thus payment in addition to the amount from the lump sum is $2,500 per year. The payee is in receipt of Centrelink benefits. If an application under section 128 is accepted, under this agreement the payer pays $5,625 per month, and only $1,875 is credited from the lump sum because the amount which the payer is liable to pay cannot be reduced by more than 25%.

This situation discourages parents from making lump sum agreements, and gives parents less flexibility in their child support arrangements.

Item 25 repeals paragraph 129(3)(b), which refers to an application under section 128. Item 26 omits from subsection 129(8) '3(b) or (d)' and substitutes '(3)(d)'. These changes are required because section 128 itself is being repealed ( item 24 ).

Item 27 repeals and substitutes section 135. New section 135 sets out a simplified outline of Division 6.

Item 28 repeals and substitutes section 136. Subsection 136(1) provides that section 136 deals with the power of a court to set aside child support agreements or termination agreements. Subsection 136(2) provides that the court may set aside an agreement if the court is satisfied that:

(a)

the agreement of a party or parties was obtained by fraud or a failure to disclose material information;

(b)

another party to the agreement, or someone acting for another party, exerted undue influence or duress in obtaining that agreement, or engaged in unconscionable or other conduct;

(c)

because of a significant change of circumstances of one of the parties to the agreement, or a child in respect of whom the agreement is made, it would be unjust not to set aside the agreement; or

(d)

the agreement provides for an annual rate of child support that is not proper or adequate, taking into account all the circumstances of the case, including the financial circumstances of the parties to the agreement.

Subsection 136(3) provides that, subject to the Registrar's right to intervene in proceedings, the parties to the proceedings under subsection 134(1) are the parties to the agreement.

Subsection 136(4) provides that if the court sets aside a child support agreement, and the court is satisfied that one or more of the grounds for departure exists (see paragraph 117(1)(b)), the court may make an order under Division 4 of Part 7 without an application having been made under section 116.

Item 29 omits from subsection 137(1) the words 'a child support agreement' and substitutes 'an agreement,'

Division 2 - Lump sum payments

Family Assistance Act

Item 30 repeals and substitutes subparagraphs 8(5)(b)(i) and (ii) of the Family Assistance Act in a consequential amendment to the FTB maintenance income test provision identifying the value of an individual's benefit from a child support agreement. The amendment clarifies that the benefit is the amount, specified in non-periodic payment provisions of an agreement, by which the annual rate of child support payable under any relevant administrative assessment is to be reduced.

Child Support Assessment Act

Items 31, 32 and 33 insert new definitions into section 5 of the Child Support Assessment Act. The new definitions of lump sum payment provisions (that is, the new type of lump sum arrangement) and non-periodic payment provisions (that is, the current type of lump sum arrangement) signpost the new and amended rules in paragraphs 84(1)(e) and (d) respectively. The new definition of otherwise than in the form of periodic amounts is relevant for the current type of lump sum arrangement and for arrangements under other agreements that do not involve periodic payments. The latter definition makes clear that child support paid either in the form of a lump sum, or as a transfer or settlement of property, is covered within this description.

Item 34 inserts a new paragraph (ga) into subsection 76(2) of the Child Support Assessment Act in relation to the new type of lump sum arrangement, to complement current paragraph (f) in relation to the current type of lump sum arrangement. Subsection 76(2) sets out matters that must be specified in a notice to each party when the Registrar makes an administrative assessment (including an amended assessment). The amendment will make sure that, when the parties to a new type of lump sum agreement (or court order) are notified about their administrative assessment, the notice includes relevant details about the lump sum, including the remaining lump sum payment after crediting has been applied under the Child Support Registration and Collection Act, and whether any amounts of child support are still payable despite the crediting arrangement that will take place at the end of the year of income (that is, if the lump sum is being credited at less than 100% of the annual rate of child support payable).

Item 35 inserts new paragraph 76(3)(ca), to add to the current list of statements that must be included in a notice under section 76. New paragraph (ca) will require the notice to include a statement drawing to attention the right of the parties to apply for an order under new section 123A that child support be provided in one of the new type of lump sum arrangements.

Items 36 and 37 insert new subsection 78(2). This will ensure that an amount of child support payable under an administrative assessment is taken to be paid when due, to the extent that some or all of that amount will be credited (at the end of the year of income) under new section 69A of the Child Support Registration and Collection Act, inserted by item 58 , against the payer's liability. This avoids any implication, just because the amount is not actually credited until the end of the year of income, that the amount is not paid when due.

Item 38 makes a key amendment to the Child Support Assessment Act in repealing and substituting section 84, which specifies the provisions that may be included in agreements - if an agreement does not meet section 84, it cannot be a child support agreement and cannot be accepted by the Registrar. The new section clarifies certain aspects of the descriptions of the currently recognised agreement provisions, including lump sums under non-periodic payment provisions, as defined. It also introduces the new concept of lump sum payment provisions.

In clarifying the lump sums under non-periodic payment provisions (new paragraph 84(1)(d) and subsection 84(6)), the amendment removes a misleading reference to the lump sum amount being credited against the liability (because the concept of crediting is to apply strictly to the new type of lump sum arrangements). It stipulates instead that the effect is for the annual rate of child support payable under any administrative assessment to be reduced in whole or part, either by a specified annual dollar amount or by a specified percentage. This makes the current arrangement clearer and is not a substantive change.

In introducing the lump sums under lump sum payment provisions (new paragraph 84(1)(e) and subsections 84(7) and (8)), the amendment stipulates that the agreement must be a binding one, there must be an administrative assessment in force for the parties immediately before one or other of them applies for acceptance of the agreement, and the lump sum (which must be specified in the agreement) is for at least the annual rate of child support payable under the assessment in force at that time. The agreement may specify a rate of crediting of the lump sum that is less than 100%, in which case the payer would continue to make reduced ongoing child support payments, although the child support technically payable under the assessment would still be the full amount (that is, disregarding the lump sum). Otherwise, the assumption is that crediting is intended to apply at 100% of the administrative assessment.

New paragraph 84(1)(f) reproduces current paragraph 84(1)(d) in relation to other types of agreement provisions - those that provide for child support but not as periodic payments, non-periodic payments or a lump sum. This type of agreement is rare and amounts paid under it would neither reduce the annual child support payable under any relevant administrative assessment, nor be credited against the liability.

Otherwise, the substituted section 84 reproduces the unaffected provisions of the current section. For example, new subsection 84(2) effectively provides that an agreement may include provisions of more than one kind, applying at different times. It should also be noted, although not explicit, that an agreement could provide different provisions in relation to different children.

Item 39 repeals subsections 95(3) and (4) of the Child Support Assessment Act and substitutes a new subsection (3). This section describes the effect under the Act of certain provisions of accepted child support agreements. New subsection 95(3) essentially allows the current lump sum arrangements to reduce the annual child support payable under the administrative assessment. The amendment therefore makes it clear that, in relation to lump sums, the subsection relates to what are now described as non-periodic payment provisions and not lump sum payment provisions (because the latter do not reduce the annual child support payable under the administrative assessment). The substituted subsection 95(3) also removes the misleading reference to the lump sum amount being credited against the liability. The remaining elements of the substituted subsections are now superfluous.

Item 40 adds a new subsection (4) to section 96 of the Child Support Assessment Act. Section 96 requires the Registrar to give notice of a decision to accept or refuse to accept an agreement made in relation to a child. If the agreement is one that includes lump sum payment provisions, the new subsection requires the notice to include details of the lump sum amount and any annual and daily rate of child support still payable despite the crediting arrangement (that is, if the lump sum is being credited at less than 100% of the annual rate of child support payable under the administrative assessment). Such a notice would be sent only once, on acceptance of the agreement. Any revisions to the details would be dealt with in a notice under section 76, as amended (see item 34 above), should the administrative assessment be amended.

Items 41 to 54 make complementary amendments to the provisions of the Child Support Assessment Act dealing with orders that may be made by a court that child support be provided in a way other than periodic payments (Division 5 of Part 7). Insofar as those provisions currently relate to lump sum child support, a court is able to make an order only for the current type of lump sum, equating to the non-periodic payment provisions of the child support agreement regime as now amended. These further amendments add provisions equating to the new type of lump sum under lump sum payment provisions of a child support agreement, and clarify the distinction between the two types of order under Division 5.

Item 41 repeals and substitutes subsection 123(1) to clarify that a person may apply to court for an order either that child support be provided otherwise than in the form of periodic payments (which would encompass the current type of lump sum payment) or that child support be provided in the form of a lump sum payment to be credited against the liability (equating to the new type of lump sum payment).

Item 42 makes it clear that the rule in subsection 123(2), that application for an order may only be made if an administrative assessment is in force, applies to an application for both types of order.

Item 44 restricts the current provision about the order the court may make (section 124) to applying only to an application under new paragraph 123(1)(a), that is, for an order that child support be provided otherwise than in the form of periodic payments (which would encompass the current type of lump sum payment).

Item 43 inserts new section 123A, detailing the order the court may make in relation to an application under new paragraph 123(1)(b), that is, for an order that child support be provided in the form of a lump sum payment to be credited against the liability (equating to the new type of lump sum payment).

The new section is equivalent to the current section 124, including in relation to the merit criteria that must apply (that the court is satisfied that it would be just and equitable as regards the child, the carer and the liable parent, and otherwise proper, to make the order), but has been modified in relation to most details of the order to equate to the new type of lump sum payment under the child support agreement provisions. That is, the lump sum (which must be specified in the order) must be for at least the annual rate of child support payable and the order must specify a rate of crediting of the lump sum of 100% or less under the administrative assessment (or a default of 100% will apply under new section 69A of the Child Support Registration and Collection Act, inserted by item 58 ). If less than 100%, the payer would continue to make reduced ongoing child support payments, although the child support technically payable under the assessment would still be the full amount (that is, disregarding the lump sum), as a note makes clear.

Item 45 repeals and substitutes subsections 125(1), (2) and (3). Section 125 requires the court to state in the order certain details about the relationship between the order and the assessed child support. This amendment serves two purposes. Firstly, it restricts section 125 to applying only to an order made under section 124 as amended, that is, an order that child support be provided otherwise than in the form of periodic payments (which would encompass the current type of lump sum payment). This is appropriate because an order under new section 123A, that is, that child support be provided in the form of a lump sum payment to be credited against the liability (equating to the new type of lump sum payment), cannot reduce the assessed child support and so there are no details in the section 125 context for the court to state. Secondly, the amendment clarifies the language of these provisions, especially to remove the misleading reference to the lump sum amount being credited against the liability (because the concept of crediting is to apply strictly to the new type of lump sum arrangements now dealt with in new section 123A).

Items 46 and 47 make amendments to apply section 126 correctly to the new type of lump sum arrangements now dealt with in section 123A. Section 126 obliges a court to give reasons for an order under section 124. This will now extend to the new type of order, in which case, the court will need to specify relevant matters - that is, the amount of the lump sum payment and the percentage rate of crediting.

Items 48 to 54 make similar amendments to sections 127, 129, 130 and 131, to ensure that those provisions apply correctly to one or both of the two types of lump sum arrangements. Some of these items include related technical corrections to the language used in the relevant sections.

Child Support Registration and Collection Act

Item 55 inserts into the Child Support Registration and Collection a definition of regular care (linking to the definition in the Child Support Assessment Act).

Item 56 inserts into section 4 of the Child Support Registration and Collection Act a definition of remaining lump sum payment , reflecting the meaning of that term in new section 69A for the purposes of other provisions.

Item 57 inserts new subsection 66(3) of the Child Support Registration and Collection Act. This will ensure that no debt arises in respect of an amount of child support payable under an administrative assessment that will be credited (at the end of the year of income) under new section 69A, inserted by item 58 , against the payer's liability. This is done by taking the amount (of 100% or less of the amount payable under the liability for the relevant period) to be paid when due. This avoids any implication, just because the amount is not actually credited until the end of the year of income, that a debt arises.

Item 58 inserts into the Child Support Registration and Collection Act the key section 69A. This describes the process by which a new type of lump sum payment will be credited against the liability. Conceptually, because this type of lump sum payment does not reduce the child support payable under the administrative assessment, the crediting mechanism is a method of recovery of a child support debt, as it is in the existing provisions relating to non-Agency payments, sections 71, 71A and 71C, and the process is similar. That is, for each relevant period, an amount will be credited against the liability equal to the percentage of the liability specified in the agreement or order (or, if no percentage was specified, 100%), and the balance of the lump sum will be reduced to reflect the crediting.

As in section 71C, section 69A will apply crediting in relation to each initial period or payment period for the liability. An initial period is the period (if any) between the liability first becoming enforceable under the Child Support Registration and Collection Act and the beginning of the first regular payment period. A payment period is whichever regular period (whether a week, fortnight, four-week period, month or calendar month) is established for collection of amounts under the liability (whether by deduction from salary or wages or by voluntary payments).

The distinct features of the crediting under new section 69A, however, are that:

•

although the crediting will be in respect of each initial period and payment period, the crediting will actually occur only once per year, at the end of the year of income;

•

the crediting will relate to the past period since the agreement was accepted or since the last crediting; and

•

the balance of the lump sum, that is, the uncredited portion, will be indexed according to the Consumer Price Index each 1 January, to maintain the value of the lump sum closer to the level it would have had had it been invested over the period in question; the resulting amount will be known as the remaining lump sum payment .

The fact that the crediting will actually occur only once per year, and retrospectively, will not alter the requirement for the Registrar to notify the parties (as required under new Child Support Assessment Act provisions, subsection 96(4) on acceptance of the agreement, and paragraph 76(2)(ga) on any revision of the child support assessment) of the balance of the lump sum payment and any child support remaining payable. Any notification under new paragraph 76(2)(ga) that occurs in between the actual crediting described by new section 69A of the Child Support Registration and Collection Act will essentially be describing a notional level of child support still payable (noting that the child support technically payable under the assessment would still be the full amount, that is, disregarding the lump sum). Technically, because of the amendments made by items 37 and 57 , the amounts to be credited will be taken to have been paid when due.

The crediting mechanism provided by new section 69A will apply to a lump sum arising under lump sum payment provisions of a child support agreement (as described in new paragraph 84(1)(e)) or under a court order under new section 123A, and when the Registrar has been notified that the lump sum has actually been paid as stipulated.

The indexation of the lump sum payment is built into new section 69A and will operate on 1 January each year, based on the preceding September quarter figure as referenced to the highest September quarter figure before that but after the agreement was accepted or order made. The indexation will never operate to reduce the lump sum payment. This indexation process is consistent with comparable social security law indexation provisions.

As the balance of the lump sum approaches zero, parents will be notified that they need to begin paying child support in cash or make other arrangements. This will normally occur prior to the end of the agreement term (the end being when the lump sum is completely depleted), when notice will be issued, advising of the new amount payable. The case will be closely monitored to ensure that the end date of the agreement can be adjusted if there is a variation to the underlying assessment.

Division 3 - Notional assessments

Family Assistance Act

The concept of maintenance income , as defined in subsection 3(1) of the Family Assistance Act, is currently based on actual receipt (directly or indirectly). Item 61 modifies the child maintenance component of the definition so that an individual's maintenance income from child maintenance is worked out under new clause 20B or 20C in specified circumstances. The existing focus on actual receipt would continue to be relevant in relation to any maintenance income of the individual (or their partner) not covered by new clauses 20B and 20C (for example, partner maintenance) and would also continue to be relevant for the purposes of determining an individual's FTB Part A rate where the individual's (or their partner's) child support liability is assessed under the child support formula and the payee has an administrative assessment under Part 5 of the Child Support Assessment Act in force.

Item 59 makes a consequential amendment to the definition of capitalised maintenance income so that it does not apply to maintenance income that is child maintenance to which new clause 20B or 20C applies.

Items 60 and 62 insert new definitions of child support agreement and notional assessment into subsection 3(1) of the Family Assistance Act. A child support agreement has the same meaning as given by section 81 of the Child Support Assessment Act while the concept of notional assessment has the same meaning as given by section 146E of that Act.

Item 63 inserts new clauses 20B and 20C into Schedule 1 to the Family Assistance Act. These new provisions outline the rules for working out an individual's maintenance income from child maintenance in prescribed circumstances. The individual's maintenance income as worked out under these new provisions, along with any other maintenance income of the individual, would then be subject to the application of the MIT, as set out in the method statement in clause 20 of Schedule 1 to the Family Assistance Act.

There are two conditions that trigger the application of new clause 20B of Schedule 1. The first is that child maintenance is payable to an individual under a child support agreement or a court order. Second, there must be, in relation to the agreement or order, a notional assessment of the annual rate of child support that would be payable to the individual for a child for a particular day in a child support period if the annual rate were worked out under Part 5 of the Child Support Assessment Act (instead of under the agreement or order).

Where these conditions are met, the amount of the individual's child maintenance under the agreement or order is worked out using new clause 20B.

The general rule is that the individual is deemed to have received the amount of child maintenance for a child for a period that the individual would have received if he or she had received the annual rate of child support for the child for the period under the individual's notional assessment. This rule is in new subclause 20B(2). The deemed amount is referred to as the notional assessed amount .

An exception (where the full notional assessed amount would not count as the individual's maintenance income from child maintenance for FTB purposes) would be where the amount received by the individual is less than the amount payable to the individual under the child support agreement or order (such that a debt arises for the period). Where this happens, the amount deemed to be the individual's child maintenance for the child for the period would be the proportion of the notional assessed amount commensurate with the proportion of the amount of child maintenance received. This exception is set out in new clause 20B(3).

For example, if the individual's notional assessment for the year would be $5,000 and the agreement amount for the year is $4,000, but the individual payee receives nil via CSA collection, 0% of $5,000 is counted as the individual's child maintenance for the year (that is, nil). Similarly, if only $2,000 is received via CSA collection, then 50% of $5,000 is counted (that is, $2,500). The outcome is similar where the individual's notional assessment is less than the child support agreement amount. If, for example, the individual's notional assessment for the year would be $5,000 and the agreement amount for the year is $8,000, but the payee receives nil via CSA collection, 0% of $5,000 is counted as the individual's child maintenance (that is, nil). If only $4,000 is received via CSA collection, then only 50% of $5,000 is counted (that is, $2,500).

The other exception is where more than the full amount payable under the child support agreement or court order is received in a given income year. In this situation, a similar apportionment principle would apply. However, the relevant rules are expressed in a different way as they also cover the situation where an individual's notional assessment changes from the time that a debt arises (due to underpayment of child support under an agreement or order) and when an arrears payment is made. The intention is that the factor derived from the notional and actual amounts in the income year the underpayment occurred is maintained when arrears are paid in a later income year. The relevant rules are in new subclauses 20B(4) to (7).

New subclause 20B(4) provides that where an individual received more than the amount payable under an agreement or order for the child for a period, then the amount of child maintenance that the individual is taken to have received is the sum of the notional assessed amount and the total of the notional arrears amounts in respect of each debt arising under the agreement or order.

New subclause 20B(5) specifies a formula under which the notional arrears amount for a particular debt is determined. The first element of the formula relates to the income year in which the debt arose and requires the notional amount paid for the child for the previous period (as referred to in new subclause 20B(3)) to be subtracted from the notional assessed amount for the child for that previous period and then divided by the amount of the debt from that previous period. The result is then multiplied by the amount of the debt that is paid off to arrive at the notional arrears amount for the particular debt. This calculation process occurs in relation to each debt covered by the arrears payment in the order, and with the effect, prescribed in new subclause 20B(6).

Under new subclause 20B(7), the rules in new subclause 20B(3) and (4) that apply where there is an underpayment or arrears payment of child support will only apply in relation to an enforceable maintenance liability under the Child Support Registration and Collection Act (that is, in CSA collection cases).

New clause 20C applies where an individual receives child maintenance for their FTB child under a lump sum child support agreement (to which new clause 20B does not apply) or under a court order made under section 123A of the Child Support Assessment Act and where the lump sum payment is credited against a liability under an administrative assessment under section 69A of the Child Support Registration and Collection Act. In this situation, the amount of child maintenance that the individual is taken to have received in an income year under the agreement or order for the child is the amount credited for that income year. Any additional child support payable to the individual under an administrative assessment under Part 5 of the Child Support Assessment Act would continue to be taken into account as the maintenance income is actually received, in accordance with existing rules. These rules are not changing for child maintenance that is payable under an administrative assessment.

These amendments to the Family Assistance Act apply in respect of child support agreements whose applications for acceptance are made after commencement and court orders made after commencement. Item 73 in Part 2 of this Schedule contains the relevant application provision.

The amendments commence on 1 July 2008 in accordance with the table in clause 2 of this bill.

Child Support Assessment Act

Item 64 inserts into subsection 5(1) a definition of notional assessment , and provides that it has the meaning given by section 146E.

Item 65 inserts into subsection 5(1) a definition of provisional notional assessment and provides that it means a provisional notional assessment made under section 146B.

Item 66 omits from the word 'Note' from the end of subsection 34B(1) and inserts 'Note 1,'

Item 67 adds at the end of subsection 34B(1) a further note which explains that if the Registrar makes an assessment under section 34B, the Registrar must make a provisional notional assessment under section 146B.

Item 68 omits from the word 'Note' from the end of subsection 93(2) and inserts 'Note 1,'

Item 69 adds at the end of subsection 93(2) a further note which explains that if the Registrar makes an assessment under section 93, the Registrar must make a provisional notional assessment under section 146B.

Item 70 adds a note at the end of subsection 125(1) which explains that if the court makes a statement under section 125 that the annual rate of child support is to be reduced, the Registrar must make a provisional notional assessment under section 146B.

Item 71 inserts after Part 7:

Part 7A - Notional assessments

Division 1 - Preliminary

Section 146A sets out a simplified outline of Part 7A.

Division 2 - Notional assessments

Section 146B sets out the requirements in relation to provisional notional assessments. Subsection 146B(1) provides that the Registrar must make a provisional notional assessment in accordance with this section if the Registrar makes an assessment under section 34B or section 93, or a court makes an order under section 125 , in an order under section 124 that an annual rate of child support payable is to be reduced. That is, the Registrar must make a provisional notional assessment in relation to a child support agreement, other than a lump sum agreement, or if the court orders child support to be paid other than periodically, and states the relationship between the order and the assessed child support.

Subsection 146B(2) provides that the Registrar must make a provisional notional assessment of the annual rate of child support that would be payable for a child for a day in a child support period by one party to the agreement to each other party to the agreement if that annual rate were payable under Part 5 (taking into account any departure determinations or court orders in relation to the administrative assessment) and not under the agreement. That is, the Registrar must work out how much child support would have been payable under an administrative assessment if the parties had not made a child support agreement.

Subsection 146B(3) provides that the Registrar must serve notice in writing on each party to the agreement of the provisional notional assessment.

Subsection 146B(4) provides that the notice specify the daily rate of the annual rate that is calculated in the provisional notional assessment, as well as the matters set out in subsection 76(2). These matters are things such as the names and dates of birth of the children taken into account in making the assessment, and the liable parent's income. Subsection 146B(5) provides that the notice must include, or be accompanied by, a statement to the effect that:

(a)

the liable parent or the carer entitled to child support can seek a variation of the provisional notional assessment in accordance with section 146C within 14 days of receiving the notice; and

(b)

once the notional assessment becomes a notional assessment under section 146E, the liable parent and the carer entitled to child support may, subject to the Child Support Registration and Collection Act, object to the particulars of the notional assessment; and

(c)

if aggrieved by a later decision on an objection to those particulars, the liable parent and the carer entitled to child support may, subject to the Child Support Registration and Collection Act, apply to the SSAT for review of the later decision.

Section 146C deals with variation of provisional notional assessments. Subsection 146C(1) provides that a party to a child support agreement may seek a variation of a provisional notional assessment within 14 days of the party receiving a notice under section 146B in respect of the provisional notional assessment:

(a)

by notifying the Registrar of a change to the percentage of care that the liable parent or the carer entitled to child support has for the child for the particular day in the child support period in respect of which the provisional notional assessment is made;

(b)

by making an application under section 146D for a determination under Part 6A (departure determinations);

(c)

if the applicant is a parent of the relevant child-by making an election under subsection 146G(1) (estimate of adjusted taxable income).

A note following subsection 146C(1) states that a person who does not receive a notice that is served on a person is taken to have received the notice 14 days after the notice was served (see subsection 146E(2)).

Subsection 146C(2) provides that the Registrar may vary the provisional notional assessment of the annual rate of child support that would be payable for a child for a day in the child support period. The Registrar may do this if:

(a)

an applicant seeks a variation in accordance with subsection (1); and

(b)

any of the following applies:

(i)

if there is a change to the percentage of care for the particular day in the child support period in respect of which the provisional notional assessment is made - the Registrar determines a different percentage of care for the parent or the carer for the child for the particular day under Division 4 of Part 5;

(ii)

if an applicant makes an application under section 146D for a determination under Part 6A (departure determinations) - the Registrar makes a determination in respect of the child under section 98S;

(iii)

if the applicant is a parent of the relevant child - by making an election under subsection 146G(1) (estimate of adjusted taxable income) - the Registrar does not refuse to accept the election under section 146H.

Subsection 146C(3) provides that the Registrar may refuse to vary the provisional notional assessment. The Registrar may refuse to vary the provisional notional assessment if:

(a)

the liable parent or the carer entitled to child support seeks a variation to the provisional notional assessment in accordance with subsection (1); and

(b)

any of the following applies:

(i)

if there is a change to the percentage of care for the particular day in the child support period in respect of which the provisional notional assessment is made - the Registrar determines a different percentage of care for the parent or the carer for the child for the particular day under Division 4 of Part 5;

(ii)

if an applicant makes an application under section 146D for a determination under Part 6A (departure determinations) - the Registrar makes a determination in respect of the child under section 98S;

(iii)

if the applicant is a parent of the relevant child - by making an election under subsection 146G(1) (estimate of adjusted taxable income) - the Registrar does not refuse to accept the election under section 146H; and

(c)

if the liable parent or carer entitled to child support seeks a variation by doing more than one of the things mentioned in subsection 146C(1) (that is, by informing the Registrar of a change in percentage of care, making an application for change of assessment, or making an election in relation to adjusted taxable income) - the Registrar has not already varied the provisional notional assessment under subsection146C (2).

Subsection 146C(4) provides that the liable parent and the carer entitled to child support are not entitled to make an application to the SSAT under section 80 of the Child Support Registration and Collection Act, or to make an application to a court under section 116, in respect of the making of, or refusal to make, a determination under Part 6A. A note following subsection 146C(4) states that instead, an objection can be made to the particulars of the notional assessment under section 80 of the Child Support Registration and Collection Act. There are no external review rights in relation to a provisional notional assessment because a provisional notional assessment does not have legal effect until it becomes a notional assessment. At that time, as explained in the note, external review rights are available.

Section 146D deals with departure determinations in respect of provisional notional assessments. Subsection 146D(1) provides that a person may, by written application, ask the Registrar to make a determination under Part 6A (departure determinations) if:

(a)

a provisional notional assessment not yet become a notional assessment under section 146E,

(b)

the person is of the view that, because of special circumstances that exist, the provisions of this Act relating to administrative assessment of child support should be departed from for the purposes of making the provisional notional assessment. For example, a parent may be paying significant private school fees, a child may have special needs which are being met by a parent or a parent may have special expenses which affect their capacity to pay child support; and

(c)

the person has not previously applied under this section in relation to the provisional notional assessment.

Subsection 146D(2) provides that if a person makes an application under subsection (1), Division 2 of Part 6A applies as if references in that Division to an administrative assessment were references to the provisional notional assessment, and section 98JA (notice to be given to unsuccessful applicant about Registrar's refusal to make a determination) did not apply.

Section 146E deals with when a provisional notional assessment becomes a notional assessment. Subsection 146E(1) provides that a provisional notional assessment becomes a notional assessment:

(a)

14 days after the notice of the provisional notional assessment is received by the parties under section 146B; or

(b)

if a party to the relevant child support agreement seeks a variation to the provisional notional assessment in accordance with section 146C - on the day on which the Registrar varies, or refuses to vary, the provisional notional assessment under that section.

Subsection 146E(2) is a deemed service provision and sets out that for the purposes of this section and section 146C, if a person does not receive a notice served under section 146B before 14 days after the day on which the notice was served on the person by post at the person's last known address, the person is taken to have received the notice on the fourteenth day. This is a deemed notice provision, rather than an actual notice provision because once the 14 day time period has passed, the person is sent a notice about the notional assessment (see subsection 146E(3)). Review rights flow in relation to the notional assessment. This means that a person will not lose the opportunity to apply for a review of a notional assessment, even if the notice in relation to the provisional notional assessment is not actually received.

Subsection 146E(3) provides that after a provisional notional assessment becomes a notional assessment, the Registrar must serve notice in writing of the notional assessment on the liable parent and the carer entitled to child support.

Subsection 146E(4) provides that the notice must specify in respect of the notional assessment the daily rate of the annual rate that is calculated in the notional assessment, as well as the matters set out in subsection 76(2). These matters are things such as the names and dates of birth of the children taken into account in making the assessment, and the liable parent's income.

Subsection 146E(5) provides that the notice must include, or be accompanied by, a statement to the effect that:

(a)

the party may, subject to the Child Support Registration and Collection Act, object to the particulars of the notional assessment; and

(b)

if aggrieved by a later decision on an objection to those particulars, may, subject to that Act, apply to the SSAT for review of the later decision.

Subsection 146E(6) provides that a contravention of subsection 146E(4) or (5), for example, if the notice does not include the daily rate, or does not include the name of one of the children, does not affect the validity of the decision.

Section 146F deals with later provisional notional assessments. The Registrar must make a new provisional notional assessment under section 146B:

(a)

if the relevant child support agreement continues in force for more than three years-at the end of the three year period after the most recent notional assessment relating to the agreement was made; or

(b)

if the relevant child support agreement was a limited child support agreement-on the request of a party to the agreement; or

(c)

in any case-if the amount of child support that is payable under the relevant child support agreement for a day in the child support period changes by more than 15% from the previous day.

Division 3 - Estimating adjusted taxable income for notional assessments

Section 146G deals with estimating adjusted taxable income for the purposes of notional assessments.

Subsection 146G(1) provides that before a provisional notional assessment relating to a child becomes a notional assessment under section 146E, a parent of the child may elect that, for the purposes of making the provisional notional assessment, the parent's adjusted taxable income for the 12 month period beginning on the particular day in the child support period in respect of which the provisional notional assessment is made is the amount estimated by the parent.

Subsection 146G(2) sets out a limitation on subsection 146G(1). A parent may not make an election under this section in relation to a child if an order or determination referred to in paragraph (a) of the definition of income amount order (see section 59) is in force in relation to the parent and the particular day in the child support period in respect of which the provisional notional assessment is made.

Subsection 146G(3) provides that the parent may make an election relating to a child only if the amount that he or she estimates under subsection (1) is not more than 85% of the total of the parent's adjusted taxable income for the last relevant year of income for the child support period. In other words, the election must be for an amount less than the adjusted taxable income for the last relevant year of income.

Subsection 146G(4) sets out how an election is made, and provides that the parent makes the election by giving notice of it to the Registrar in the manner specified by the Registrar. The notice must specify the amount the parent estimates to be his or her adjusted taxable income.

Section 146H provides that the Registrar may refuse to accept an election. Subsection 146H(1) provides that the Registrar may refuse to accept the parent's election if the Registrar is satisfied that the amount the parent estimated under subsection 146G(1) is likely to be less than the actual amount that would be the parent's adjusted taxable income for that 12 month period. A note following subsection 146H(1) states that if the Registrar refuses to accept the election, he or she may refuse to vary the provisional notional assessment under subsection 146C(3).

Subsection 146H(2) provides that in making the decision as to whether to refuse the election, the Registrar:

(a)

may act on the basis of information that the Registrar has received or obtained as to the financial circumstances of the parent; and

(b)

may, but is not required to, conduct an inquiry into the matter.

Subsection 146H(3) provides that except for the purposes of Parts VII, VIIA and VIII of the Child Support Registration and Collection Act (dealing with objections and appeals), if the Registrar refuses to accept an election, the election is taken never to have been made.

Section 146J sets out the effect of an election. Subsection 146J(1) provides that if a parent makes an election under subsection 146G(1) relating to a child, then, for the purposes of making the provisional notional assessment, the parent's adjusted taxable income is the amount the parent estimated.

Subsection 146J(2) provides that subsection 146J(1) has effect subject to any order or determination referred to in paragraph (a) of the definition of income amount order (see section 59 - that is, an order for a departure determination or a court-ordered departure from administrative assessment) that is made after the making of the election that applies in relation to the parent and the particular day in the child support period in respect of which the provisional notional assessment is made.

Subsection 146J(3) provides that the Registrar must take such action as is necessary to give effect to subsection 146J(1) in relation to the provisional notional assessment that has been made in relation to the parent and the child (whether by varying the provisional notional assessment or otherwise).

Section 146K deals with revocation of an election. Subsection 146K(1) provides that before a provisional notional assessment becomes a notional assessment under section 146E, a parent who has made an election under subsection 146G(1) in relation to a child may, by notice given to the Registrar, revoke the election. Subsection 146K(2) provides that a notice given to the Registrar must be given in the manner specified by the Registrar. A note following subsection 146K(2) explains that section 150A provides for the Registrar to specify the manner in which a notice may be given.

Section 146L sets out the effect of a revocation. Subsection 146L(1) provides that if a parent who made an election under section 146G relating to a child revokes the election and substitutes a new election before the provisional notional assessment becomes a notional assessment under section 146E, then, for the purposes of making the provisional notional assessment, the parent's adjusted taxable income is the amount the parent elected in the new election.

Subsection 146L(2) provides that subsection 146L(1) has effect subject to any order or determination referred to in paragraph (a) of the definition of income amount order (see section 59 - that is, an order for a departure determination or a court-ordered departure from administrative assessment) that is made after the making of the election that applies in relation to the parent and the particular day in the child support period in respect of which the provisional notional assessment is made.

Subsection 146L(3) provides that the Registrar must take such action as is necessary to give effect to subsection 146L(1) in relation to the provisional notional assessment that has been made in relation to the parent and the child (whether by amending the provisional notional assessment or otherwise).

Subsection 146L(4) provides that section 146L does not prevent:

(a)

the Registrar making a determination under Part 6A; or

(b)

a court making any order under Division 4 of Part 7; or

(c)

the making, and acceptance by the Registrar, of a child support agreement that includes provisions that have effect, for the purposes of Part 5, as if they were such an order made by consent.

Child Support Registration and Collection Act

Item 72 inserts into subsection 80(1) (after table item 14) an item 14A, which provides that a party to the relevant child support agreement may object to the particulars of a notional assessment. This ensures that a party may apply to the SSAT for review of the particulars of a notional assessment.

Part 2 - Application and transitional provisions

Item 73 sets out the application provisions for this Schedule. Subitem 73(1 ) provides that the amendments in this Schedule (other than item 58 , which is in relation to crediting of lump sums) apply in respect of a child support agreement if the application for acceptance of the agreement is made after Division 3 of Part 1 of this Schedule commences, that is, after the amendments relating to notional assessments commence. Subject to subitem 73(3 ), the amendments also apply to an application made to a court after this Division, that is 1 July 2008.

Subitem 73(2 ) provides that to avoid doubt, if an application for acceptance of an agreement is made before the provisions relating to notional assessments commence, and immediately before that Division commences, the agreement has neither been accepted nor refused by the Registrar, then the Child Support Assessment Act, the Family Assistance Administration Act and the Social Security Act as in force before 1 July 2008 apply in relation to the application for acceptance. In other words, entitlement to FTB will continued to be calculated on the basis of the present legislative arrangements.

Subitem 74(2 ) also has consequences for agreements covered by subitem 73(2 ).

Subitem 73(3 ) is also an avoidance of doubt item, and provides that if:

(a)

an application is made to a court before Division 3 of Part 1 of this Schedule commences; and

(b)

immediately before that Division commences, the application has not been finally dealt with by the court;

the Assessment Act and the Registration and Collection Act, as in force at that time, continue to apply after that time in respect of the application (including in respect of an appeal to another court in relation to any order made by the court).

Item 74 requires the Registrar to review all agreements.

Subitem 74(1 ) provides that before 1 July 2008, the Registrar must review every child support agreement that will be in force immediately before 1 July 2008 and determine in writing whether each agreement is to be a binding child support agreement or is to be terminated.

Subitem 74(2 ) provides that if, in accordance with subitem 28(2), the Registrar accepts a child support agreement on or after 1 July 2008 under the Child Support Assessment Act as in force immediately before that day, the Registrar must review the agreement and determine whether the agreement is a binding child support agreement or is to be terminated.

Subitem 74(3 ) provides that after the Registrar makes a determination under subitem 74(1) or (2 ), the Registrar must serve notice of the determination on each of the parties to the agreement.

Subitem 74(4 ) provides that the notice must include, or be accompanied by, a statement to the effect that the party may, subject to the Child Support Registration and Collection Act, object to the decision. Paragraph 29(3)(b) provides that if the person is aggrieved by a later decision on an objection, no matter who lodged the objection, that person may apply to the SSAT. This ensures that if the other party lodged the objection, and the matter is resolved to that person's satisfaction, the person referred to in paragraph 29(4)(b) does not lose his or her right to apply to the SSAT for review of the decision.

Subitem 74(5 ) provides that a contravention of subtitem 29(2 ), for example, if the notice does not set out that a person may apply to the SSAT for review of a decision, does not affect the validity of the decision.

Subitem 74(6 ) provides that the Child Support Registration and Collection Act (as amended by Schedule 3 to this bill, which deals with review of child support decisions by the SSAT) applies as if the table in subsection 80(1) included table item 16. This ensures that a party to the agreement may apply to the SSAT for review in relation to a decision of the Registrar that an agreement is to be a binding child support agreement, or is to be terminated.

Item 75 sets out the effect of a determination under item 74 .

Subitem 75(1 )( a ) provides that if the Registrar makes a determination under subparagraph 74(1 )( b )( i) or (2 )( b )( i ), then at the time specified in subitem 75(3 ), if the agreement has not previously been terminated, the agreement is taken to be a binding child support agreement. Paragraph 75(1 )( b ) provides that the amendments made by this Schedule do not affect the continuity of any assessment that is in force immediately before the new arrangements for agreements commence that affects the annual rate of child support that is payable under the agreement.

Subitem 75(2 ) provides that if the Registrar makes a determination under subparagraph 74(1 )( b )( ii) or 74(2 )( b )( ii ), then, at the time specified in subitem 75(3 ), (if the agreement has not already been terminated), the agreement is terminated by force of this item.

Subitem 75(3 ) provides that subitems 75(1) and (2 ) do not affect the operation of provisions in an agreement that do not have effect for the purposes of the Child Support Assessment Act or the Child Support Registration and Collection Act. For example, if a child support agreement also contains provisions which relate to division of property, those provisions are not affected by the child support law.

Subitem 75(4 ) sets out when determinations take effect for the purposes of subitems 75(1) and (2 ). Paragraph 75(4 )( a ) provides that if the determination is made under subparagraph 29(1)(b)(i), then it takes effect on 1 July 2008. Paragraph 75(4 )( b ) sets out that determinations take effect on the latest of the following times:

(i)

if the decision of the Registrar to make the determination becomes final - at the time when that decision becomes final ( subparagraph 75(4 )( b )( i )). Subitem 75(5 ) provides that a decision of the Registrar becomes final at the end of the time within which an application could have been made to the SSAT under section 80 of the Child Support Registration and Collection Act (as it applies because of subitem 74(2 ) of this Schedule - that is, whether the child support law in its present form, or its amended form, applies);

(ii)

if a decision of the SSAT relating to the Registrar's determination becomes final-at the time when that decision becomes final (within the meaning of subsection 110W(1) of the Child Support Registration and Collection Act) ( subparagraph 75(4 )( b )( ii ); or

(iii)

if neither subparagraph (i) nor (ii) applies-at the time when a decision of a court relating to the Registrar's determination becomes final (within the meaning of subsection 110W(2) or (3) of that Act) ( subparagraph 75(4 )( b )( iii );

(iv)

at the time when the agreement takes effect.

For example:

An agreement is made on 1 June 2008 to take effect from that date until 1 December 2009. It is lodged for acceptance with the Registrar on 14 June 2008.

If the Registrar makes a decision on 21 June 2008 to accept the agreement, then as a result, the Registrar must vary the assessment under the current provisions, from 1 June 2008 until 30 June 2008, in accordance with the agreement. The Registrar must also determine whether, from 1 July 2008, the agreement will be terminated or become a binding child support agreement. If the agreement becomes a binding child support agreement, the Registrar must vary the assessment from 1 July 2008 until 1 December 2009.

If the Registrar makes a decision on 7 July 2008 to accept the agreement, the Registrar must vary the assessment from 1 June 2008 until 30 June 2008, in accordance to the agreement. The Registrar must also determine whether, from 1 July 2008, the agreement will be terminated or become a binding child support agreement.

However, if this agreement was to take effect from 1 July 2008, instead of 1 June 2008, and was still lodged on 14 June 2008, if accepted, the Registrar would just need to determine whether the agreement would be terminated from 1 July 2008. That is, in effect the agreement would never commence or it would become a binding child support agreement when it was implemented from 1 July 2008.

If the agreement was lodged for acceptance on 2 July 2008, the new law applies and transitional arrangements are not necessary.

Subitem 75(5 ) provides that for the purposes of subparagraph 75(4 )( b )( i ), a decision of the Registrar becomes final at the end of the period within which an application could have been made to the SSAT under section 80 of the Child Support Registration and Collection Act (as it applies because of subitem 74(6 ) of this Schedule).

Subitem 75(6 ) provides that parties to a child support agreement may terminate that agreement by another agreement that is in writing and signed by the parties to the original agreement, as well as by making a binding termination agreement under section 80D.

Item 76 gives to the Registrar the power to delegate, in writing, all or any of his or her powers under item 74 to an SES officer, or acting SES officer, of the Department. A delegate, in exercising the Registrar's power, must comply with any directions of the Registrar. This delegation power reflects the way that delegations are currently arranged in the Child Support Agency.

Item 77 sets out the application provisions in relation to crediting of lump sum payments. It provides that the amendments apply to lump sum payments that are paid by a payer in accordance with lump sum payment provisions in an agreement under paragraph 84(1)(e) of the Child Support Assessment Act or a court order made under section 123A of that Act (as amended or inserted by this Schedule), and after the commencement of Division 2 of Part 1, that is, the provisions dealing with lump sums, of this Schedule.

Part 3 - Consequential amendments

Family Assistance Administration Act

The items in this Part all make consequential amendments to remove various references to subsection 91A(3) of the Child Support Assessment Act, because of the repeal of section 91A by Part 1 of this Schedule.

Items 78 to 89 amend the Family Assistance Administration Act for this purpose.

Item 78 amends subsection 104(1).

Item 79 repeals subsection 104(2).

Item 80 repeals and substitutes subsection 106(3).

Item 81 repeals and substitutes subsection 108(1).

Item 82 repeals section 109.

Item 83 repeals and substitutes subsection 109B(3).

Item 84 repeals subsection 111(1B).

Item 85 repeals subsection 118(2A).

Item 86 repeals subsection 122(4).

Item 87 repeals and substitutes paragraph 139(1)(a).

Item 88 repeals paragraph 139(5)(aa).

Item 89 repeals subsection 142(5).

Social Security Act

Item 90 amends the Social Security Act for the same purpose, by omitting words from the definition of officer in subsection 23(1).