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 6 - Amendments relating to departure orders (commencing on 1 July 2008)

Summary

This Schedule simplifies the processes and rules for determinations or orders made under the Child Support Assessment Act to depart from the administrative assessment provisions (also known as 'changes of assessment'), making them clearer for parents.

Background

Despite the changes made to the formula for assessing child support, there may still be circumstances, particularly where parents reside some geographical distance apart, when the formula allowance for costs enabling contact with a child may be inadequate. The costs of travel for the children to and from their non-resident parent's home, or for the parent to travel to see the child, may be significant. When this cost is borne entirely by the non-resident parent, it can represent a large amount of the child support income of that parent. This justifies an increased allowance beyond the allowance made in the formula for regular care.

The present changes, therefore, amend section 117 to provide that where the costs involved in the parent having contact with the child have already been included in the child support assessment, for example, the payer has a lower rate of payment because he or she has a significant amount of contact with the child, the costs of enabling contact are limited to travel costs only. This means that regardless of whether the parent's contact costs, such as the cost of providing accommodation for the child, have been taken into account in assessing the parent's liability, the Registrar should still be able to consider travel costs required for the parent to have contact with the child, in deciding whether there should be a departure from the assessment. The amendments also provide that this ground is available where the contact has not yet occurred, that is, it applies in relation to future costs, as well as costs already incurred.

There are also many families which include children who are not biologically related to the parent of the child support children. Children not living with both biological or adoptive parents should receive support from their absent parent. Yet not all non-resident parents are in a position to contribute to the support of their child. For example, the non-resident parent may be deceased, unknown or not locatable. In such situations, the step-parent (also called a resident parent) is actually supporting the child. However, the child support scheme does not adequately recognise the responsibility that a step-parent has towards resident children. A court will rarely declare that a step-parent has a responsibility to support a step-child where the step-child is living with the step-parent against whom the order is sought.

Consequently, the present changes amend section 117 to require a court to consider a step-parent's responsibilities towards step-children. This involves the court considering the position and capacity of the child support parent of the step-child (generally, the step-child's biological parent), along with the impact of any change on the child support children and the payee. This ground can only be established where neither of the biological parents is in a position to support the child. The fact that the non-resident parent is unable to pay child support is not, in itself, sufficient. The parent with whom the step-parent lives must also be unable to earn an income to provide for the child's support.

Explanation of the changes

Part 1 - Amendments

Child Support Assessment Act

Item 1 omits from subsection 98C(3) 'subsections 117(4)' and substitutes 'subsections 117(2A) and (4)'. Item 2 omits from subsection 98L(2) 'subsections 117(4)' and substitutes 'subsections 117(2A) and (4)'. Item 4 omits from subsection 98U(3) 'subsections 117(4)' and substitutes 'subsections 117(2A) and (4)'. These changes are required because of the insertion of new subsection 117(2A).

Item 3 repeals subsection 98S(3A). This change is required because subsection 98S(3A) refers to subparagraphs 117(2)(c)(iii) and (iv), which are being repealed (see item 9 ).

Item 4 omits from subsection 98U(3) 'subsections 117(4)' and substitutes 'subsections 117(2A) and (4)'.

Item 5 inserts after paragraph 117(2)(a) a further paragraph 117(2)(aa). It provides that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of the responsibility of the parent to maintain another child (the resident child) of the parent.

Item 6 omits from subparagraph 117(2)(c)(ii) 'child; or' and substitutes 'child.'. This change is required because subparagraphs 117(2)(c)(iii) and (iv) are being repealed (see item 7 ).

Item 7 repeals subparagraphs 117(2)(c)(iii) and (iv). This is because the matters dealt with in these subparagraphs, that is, additional amounts of income earned derived or received by the liable parent or eligible carer for the benefit of the resident child, will be dealt with by new subsection 117(2A) (see item 11 ).

Item 8 repeals the note following subsection 117(2), which states that section 117A deals with income earned for the benefit of resident children.

Item 9 repeals subsection 117(3) and subsections 117(2A) and (2B). Subsection 117(2A) provides that the ground for departure mentioned in paragraph 117(2)(aa) (see item 5 ) is taken not to exist in respect of a child unless the matters set out in subsection 117(2A) are satisfied. These factors are that:

(a)

the resident child normally lives with the parent but is not a child of the parent;

(b)

the parent is, or was, for two continuous years, a member of a couple;

(c)

the other member of the couple is, or was, a parent of the resident child;

(d)

the resident child is aged under 18;

(e)

the resident child is not a member of a couple;

(f)

neither the parent of the resident child is able to support the resident child due to death, ill-health, or the responsibility of the parent to care for another child; and

(g)

the court is satisfied that the resident child requires financial assistance.

Subsection 117(2B) provides that a parent's costs of enabling the parent to have care for the child can only be high for the purposes of making out the ground of departure that there are special circumstances relating to:

•

the parent's high costs involved in enabling a parent to have contact with any other child or another person that the parent has a duty to maintain , or

•

the high costs involved in enabling a parent to have contact with the child,

if the costs that have been or will be incurred are no more than 5% of the amount worked out by the formula included in the subsection. The inclusion of the words 'or will be incurred' mean that future costs can also be taken into account.

Subsection 117(2C) provides that if a parent has at least regular care of a child, then the only costs that can be taken into account for the purposes of subsection 117(2B) are costs related to travel to enable the parent to care for the child.

Item 10 repeals section 117A. This change is required because consideration of the cost of maintaining a resident child is now dealt with by subsection 117(2A) (see item 9 ).

Item 11 repeals subsection 118(2A). This change is required because subsection 118(2A) refers to subparagraphs 117(2)(c)(iii) and (iv), which are being repealed (see item 7 ).

Part 2 - Application provision

Item 12 sets out the application of the items in Schedule 5. It provides that the amendments apply in respect of:

(a)

applications made under section 98B after this item commences;

(b)

determinations in respect of which the parties were notified under section 98M after item 16 commences (that is, after 1 July 2008). In other words, if a person is notified under section 98M before 1 July 2008, then the current procedure - that the Registrar may make a determination for an almost unlimited past period - applies;

(c)

an application made under section 116 after this item commences (that is, after 1 July 2008), even if the application relates to a decision made before that date to make or refuse to make a determination under Part 6A, or to make an administrative assessment under subsection 66(1).