the child support scheme a broad overview

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The Child Support Scheme

A Broad Overview

Ken McWhinney

Assistant Director, International Policy & Procedures

Child Support, Department of Human Services

*This material was presented on 01/08/2012 and valid at that date

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Overview of session

This session will cover:

• Legislative overview & history;• Child Support formula - Income & Care provisions;• Child Support Agreements – legal & practical implications;• Change of Assessment process – where the formula doesn’t work;• Reviewing Child Support decisions;• Court applications;• Parentage issues; • International Child Support

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Child Support Scheme

Some Facts

840,353 Current cases

1,422,319 customers (parents and carers)

3,295,356 phone calls (July 11–January 12)

Overview

Child Support Scheme

Before 1988 (Pre Child Support Agency, now DHS Child Support)

•Less than 30% of separated parents had court orders for child maintenance•Only 25% of those parents paid or received child maintenance•Court orders were for low amounts ($10-$30 per week)•Parents had problems with enforcement•Social welfare payments increased to bridge the gap

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Overview

The Child Support Legislation

The Child Support (Registration and Collection) Act 1988

The objects of the Act include ensuring that:•Children receive the financial support that their parents are liable to provide.•Periodic amounts payable by parents for financial support of their children are paid on a regular and timely basis•Australia give effect to its obligations under international arrangements relating to maintenance

Registerable maintenance liabilities: Child support & spousalmaintenance set by court order, collectable by Child Support (CS)

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Overview

The Child Support Legislation

The Child Support (Assessment) Act 1989

The objects of the Act include ensuring that:•Children receive a proper level of financial support from their parents based on their financial capacity.•That the level of financial support be determined by legislatively fixed standards•Australia give effect to its obligations under international arrangements relating to maintenance

The level of financial support be able to be determined without the need to resort to court as child support assessed (and collected) by CS

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Overview

Child Support Legislative changesThe Assessment Act

Amendments included:•1992: From 1 July - administrative review, change of assessment [Part 6A].•1993: a person with at least 30% care is an eligible carer (109 nights) [ss8(3)]•1995 & 1997: amendments to the presumption of parentage provisions [ss29(2)]•1999: Objection to administrative decision provisions introduced; care based on the factual and lawful care of the child(ren); assessments can be extended to end of school in year which child turns 18 [s151B]; changes to formula assessment & child support periods provisions [s7A(2)]; •2007: court application changes [s106A & s107/s143] and leave of court required for departure/CoA application for period(s) <18 months prior to application and departures limited to maximum 7 years. Stay order provisions relocated to R&C Act; Australia’s international maintenance obligation incorporated into Act•2008: Significant scheme reforms implemented (detailed in following slides)•2009: recognition of same sex couples in parentage provisions [ss29(2)]•2010: amendments to care and estimate of income provisions•2011: amendments to income provisions [ss58(2), (3) & 58AA]

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Overview

Child Support Legislative changes (cont.)The Registration & Collection Act

Amendments included:•1989: Child Support Act 1988 renamed Child Support (Registration & Collection) Act 1988 •1992: CS can issue a notice to a 3rd party to collect unpaid child support [s72A]; CSA can credit non-agency payments to child support [s71A-s71D]•1999: Child support debts owed by parents to each other can be offset [s17AA]; prescribed amounts of child support collectible from Centrelink payments [s272AA]•2000: Australia to give effect to its international maintenance obligations; •2001: CSA can issue a departure prohibition order to prevent a payer leaving the country where that payer has failed to meet his or her child support obligations •2007: Stay order and objection provisions relocated to R&C Act; Australia’s international maintenance obligation incorporated into Act (previously in separate Regulations); Social Security Appeal Tribunal to provide external review process•2008: Significant scheme reforms implemented (detailed in following slides)•2009: Definition registrable maintenance liability extended to include periodic de facto maintenance orders [ss18(2)]•2010: amendments to care objection provisions; deductions from parental leave payments

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Overview

2008 Child Support Scheme changes

The formula is based on three principles:

1.the cost of a child

2.an income shares approach

3.care is a contribution towards meeting the costs of a child.

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Child Support Formula

Eight steps to the formula

1.Child Support Income

2.Combined Child Support Income

3.Income Percentage

4.Percentage of Care

5.Cost Percentage

6.Child Support Percentage

7.Costs of the Children

8.Annual rate of Child support transferable

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Child Support Income (Adjusted Taxable Income)

A parent’s Adjusted Taxable Income is the total of the following components (sub section 43(1) CSAA): • taxable income• reportable fringe benefits • target foreign income • the total of tax free pensions or benefits• reportable superannuation contributions • the parent’s total net investment loss

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Child Support Income Estimates of Income

• If a customer’s income drops significantly (more than 15%) they can elect to use an estimate of their expected income for a financial year, or part of a financial year.

• The estimate must be the total of all income component amounts of the parent’s adjusted taxable income for the year.

• The assessment will be recalculated based on the estimated adjusted taxable income.

• The estimate will be checked against the real adjusted taxable income.

• From 1 July 2010 the estimate process has been aligned to financial years to make the income calculations simpler.

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Percentage of Care Actual Care

•Under the child support formula, care is considered a contribution towards the costs of a child.

•Parents with regular (14%) or more care are acknowledged as directly meeting some of the costs of their children through care.

•A percentage of care is generally calculated on the actual care a parent or non-parent carer is likely to provide for the child in the relevant care period.

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Percentage of Care Interim Determinations

•In limited circumstances a percentage of care may be determined in line with a written agreement, parenting plan, or court order for an interim period (14 weeks) even though the parent is not having the agreed care, but where they wish to, and are taking reasonable action to have such care.

•An interim care determination may also be made in circumstances where a parent is not seeking the care as set out in the agreement, plan or order, but will be seeking a new agreement, plan or order for a new lower amount of care due to special circumstances.

•Interim determinations may be extended up to 26 weeks where there are special circumstances on the facts of the case

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Percentage of Care

•A customer must have a care percentage of at least 35% (128 nights) to receive child support

•A care percentage of less than 14% (52 nights) does not effect the child support assessment

•A parent will not be assessed to pay child support if they have more than 65% care

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Care Percentage

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Child Support formula

Cost percentage

The cost percentage is determined by applying the percentage of care a parent has of a child, to the cost percentage table.

Percentage of Care Cost percentage0 to less than 14% Nil14% to less than 35% 24%35% to less than 48% 25% plus 2% for each percentage point over 35%48% to 52% 50%more than 52% to 65% 51% plus 2% for each percentage over 53%more than 65% to 86% 76%more than 86% to 100% 100%

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Cost of Children Table (example)

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Change of Assessment

What is Change of Assessment (CoA)?

An administrative process which enables special circumstances to be reflected in the child support assessment

• There are 10 reasons

• Either parent can make an application or the registrar can initiate the process

• Departure decisions cannot reduce the assessment below the minimum rate ($383 - 2012)

• Decisions cannot change the assessment for a period more than 18 months before the applications was made

• Application, any response or other documents are exchanged between parents.

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Change of Assessment reasons

1. Costs parent more than 5% of their income to enable them to spend time with, or communicate with, the child(ren) – only travel costs if the parent has at least regular care.

2. Costs extra to meet the child(ren)’s special needs.

3. Costs extra to care for, educate or train the child(ren) in the way both parents intended.

4. Child support assessment is unfair because of the child's income, earning capacity, property or financial resources.

5. The paying parent has paid or transferred money, goods or property to the child, the payee, or a third party for the benefit of the child.

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Change of Assessment reasons

6. Child care costs are more than 5% of parent’s income (and the child is under 12 years). From January 2009 for all carers.

7. The parent's necessary expenses significantly affect their capacity to support the child.

8. The child support assessment does not take into account the income, property, financial resources or earning capacity of one or both parents.

9. Applicant has a legal duty to maintain another person or children which significantly reduces their capacity to support the child(ren).

10. The parent's responsibility to maintain a resident child significantly reduces their capacity to support the child(ren) – only if both biological parents of the resident child are unable to support the child due to ill-health, caring responsibilities or death 21


Determining a COA Application

In considering a change to the child support assessment Senior Case Officers are required to determine (section 117):

• that there is a reason to make a change to the assessment, there are ‘special circumstances’

• that a change to the assessment would be ‘just and equitable’ or fair to the children and both parents

• that changing the assessment would be ‘otherwise proper’ or fair to the community

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Child Support Agreements


There are two types of Child Support Agreements:

• Limited Agreements (S80E,F&G - Assessment Act)

• Binding Agreements (s80C,CA&D - Assessment Act)- including lump sum payments provisions (s84(1)(e)&(7))

• Most pre 1 July 2008 Agreements transitioned to the current scheme and are deemed to be Binding Agreements

• Binding & Limited Agreements must meet the general requirements for a child support agreement (ss84(1) - Assessment Act)

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Limited agreements•Do not require legal advice.

•There must be an assessment already in place.

•Amount payable under the agreement must be equal to or greater than the child support assessed by the formula (s80E(3)(b)).

•Cannot be varied but can be ended by a new limited or binding agreement or a court order.

•Can be terminated on the request of one party after three years (s80G) or,

•If notional assessment has varied by a change of more than 15% in the annual rate (when compared to previous notional assessment) that has not been contemplate in the agreement.

•The election to end must be made within 60 days of receipt of the new notional assessment.

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Binding agreements• Formal agreement, in writing and signed by both parents.

• Requires a certificate from both parent’s lawyers stating they have been provided with independent legal advice (s80C(2)(c)&(d)).

• Can be made for any amount that both parents agree is appropriate. • Can only be ended by a new binding agreement (to terminate or replace) o a court order (s80D(1)).

• In order to replace an existing binding agreement with a new binding agreement, the new agreement must include a provision to the effect that the earlier agreement is terminated (s80D(1)(a)).

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Application to Accept Agreement

• If the application for acceptance of the agreement is made to CS within 28 days after the agreement was signed then the assessment is amended in accordance with the terms of the agreement

• If the application for acceptance of the agreement is not made to CS within 28 days after the agreement was signed then the assessment is amended from the date the application was made to the CS.

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Notional Assessmentss146A-146L - Assessment Act

• When CS accepts a Limited or Binding Agreement, CS will make a Notional Assessment (preceded by a Provisional Notional Assessment)

• A Notional Assessment is the assessment that would have been in place but for the Agreement

• Notional Assessments are transmitted to Centrelink to determine entitlement to Family Tax Benefit

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Notional Assessments (cont)

– For Binding – made once every three years

– For Limited – made once every three years or upon request

– Will generate whenever the rate under an agreement varies by more than 15% (this does not trigger an option to end if the change is in a manner contemplated by the agreement)

– Not made for transitional or lump sum binding agreements

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Agreements - lump sum crediting provisions

• lump sum must be equal to or greater than the annual child support rate under the assessment.

• if the lump sum is greater the difference will be used as credit for future child support payments.

• parents will be able to nominate a percentage, or all, or the upcoming child support payments that are to be met using the credit.

• the lump sum amount will be reduced at the end of each financial year according to the liability met under the agreement for that year.

• any remaining amount will be adjusted by the consumer price index annually.

• Family Tax Benefit will be based on the assessment amount.

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Setting Aside AgreementsPart 7 Division 6 - Assessment Act

•A court with jurisdiction can set aside a limited or binding agreement under section 136 of the Assessment Act in the following circumstances:

– Fraud, failure to disclose material information

– Undue influence or unconscionable conduct

•Note: former section 98 repealed from 1/7/2008. All setting aside provisions contained within section 136.

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Setting Aside Agreements (cont)

•Limited Agreement– Significant change in circumstances such that it would be unjust not to

set aside, or– Agreement provides for an annual rate that is not proper or adequate.

•Binding Agreement– Exceptional circumstances that have arisen since the agreement was

made and the applicant or the child will suffer hardship if the agreement is not set aside.

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Review mechanisms

Review of CSA decisions

Internal Review – Objections (Part VII of the CS R&C Act)•Decisions under both Acts listed at s80•Apply in writing within 28 days of notice of decision (*different process for care objections)

•Stating fully & in details the grounds relied upon•60 days for decision – allow or disallow

External Review – SSAT (Part VIIA of the CS R&C Act)•Review of CS objection decisions, or refusal to grant extension of time to object

– AAT (Part VIIA of the CS R&C Act & Part 5 CSAA)•Review of CS Departure Prohibition decisions, or percentage of care decisions under FAA Act for child support purposes

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Court applications

Child Support Court Applications A copy of all applications under the CSAA or the CS(R&C)A must be served on the Registrar (Rule 4.23(1)(b), Family Law Rules 2004).

Departure from assessment – after a ‘too complex’ CoA decision, or there must be another matter before the court (s116 CSAA)

Amend assessment more than 18 months old- apply for leave to amend assessment up to 7 years from date of application (s111 CSAA)

Discharge or vary agreement – applicant can go straight to court (s136 CSAA)

Substitution order – order that child support be paid in a form other than periodic amounts (s124 CSAA)

Stay Order – an application can be made if there are court proceedings on foot, a change of assessment application or objection is being considered by CSA or the SSAT is considering an application for review (s 111C CS(R&C)A)

Appeal SSAT decision - Must be on a point of law (Subdivision B of Division 3 of Part VIII CS(R&C)A)

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Court applications

Court Applications (cont.)

Section 106A Court Declarations•Application for assessment is refused, often as there is no proof that the named liable parent is a parent of the child.

•Must apply to court under section 106A of CSAA

•Assessment commences from date of original application

Section 107 Court Declarations•Payer believes they are not a parent of the child

•Apply under section 107 of the CSAA

•Payments held in trust whilst liable parent seeks a section 107 court declaration (s79A R&C Act). CSA still collects but does not pass on payments to the carer parent

•Payments already paid will not be refunded by the CS. After making a 107 declaration the court will consider making a section 143 (CSAA) order for recovery of child support from the carer parent which can be registered for CS collection.

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Court applications

Court Applications (cont.)

Family Law Act 1975 orders (with Child Support implications):

Spousal maintenance – Part VIII, setting and modification orders

Child maintenance – Part VII, Div 7, children over 18; step parent duty to maintain; - courts only have jurisdiction is an administrative assessment cannot be made

Child location & recovery – Part VII, Div 8, Commonwealth information orders; - best interests of the child paramount

Parentage – Part VII, Div 12, presumptions of parentage; evidence; parentage declarations (s69VA); for the purposes of international maintenance arrangements

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Collection

Child Support Enforcement

•Information Gathering (s120 R&C Act)

•Collection from Third Parties (s72A R&C Act)

•Tax Refund Intercepts (s72 R&C Act)

•Departure Prohibition Orders (s72D R&C Act)

•Debt enforcement Litigation (s113 R&C Act)

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Parentage

The effect of the same-sex legislation reforms on Child Support

Two new Acts introduced:

Same-Sex Relationships (Equal Treatment in Commonwealth Laws - General Law Reform) Act 2008.

Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008.

These two Acts made changes to the Family Law Act 1975 and child support legislation.

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Parentage

Child Support amendments

Prior to 1 July 2009, Child Support legislation did not provide for same-sex couples to seek child support in the same manner as opposite-sex couples. The non-biological parent not recognised as a parent.

From 1 July 2009, application for assessment can be accepted based on relevant evidence of parentage.

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Parentage

Definition of a parent

Under Section 5 of the Child Support (Assessment) Act 1989, a person who is not the biological parent of the child is still a parent of that child for child support purposes if the person is:

•an adoptive parent; or•if the child was born as the result of an artificial conception procedure, a parent of the child under section 60H of the Family Law Act; or•if the child was born because of a surrogacy arrangement, a parent of the child under section 60HB of the Family Law Act.

From 1 July 2009 a separated same-sex couple is able to apply for child support as parents if they are recognised as parents under either section 60H or section 60HB of the Family Law Act 1975 (Family Law Act).

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Parentage

Evidence of Parentage

Section 29(2) of the Child Support (Assessment) Act 1989 sets out when the Registrar is to be satisfied that a person is a parent of a child (presumptions of parentage). Some changes have been made to section 29 to accommodate the changes to the definition of “parent”.

Documents that evidence that a person is a parent of a child include: •a signed statutory declaration that declares that they are “a parent” of a child (there is no longer a requirement for the person to declare that they are “the father or mother” of the child);•a court declaration that a person is a parent of a child;•evidence that the person is a parent for the purposes of section 60H of the Family Law Act; •a surrogacy parentage order made under prescribed State or Territory legislation; •a birth certificate naming the person as a parent.

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Parentage

Assisted Conception

Section 60H defines who is a parent of a child born as a result of an assisted conception procedure. Under section 60H of the Family Law Act 1975, a child is recognised as a child of the birth mother and her partner where:

•the child is born as the result of an assisted conception procedure, and•the birth mother and her partner were married or in a de facto relationship at the time, and •both the birth mother and her partner consented to the procedure at the time of conception.

An assisted conception procedure includes:•a child conceived through IVF;•donor insemination; and•home insemination.

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Parentage

Surrogacy

Under section 60HB individuals or couples (same-sex and opposite sex couples) who become parents via a surrogacy arrangement will be recognised as the parents for child support and family law purposes where a surrogacy parentage order has been issued under prescribed State or Territory legislation.

Under Section 60HB if a court has made an order under a prescribed State or Territory law that:

(a) a child is the child of one or more persons; or (b) each of one or more persons is a parent of a child;

then, for the purposes of this Act, the child is the child of each of those persons.

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Parentage

Adoption

People in a same-sex relationship can also be recognised as parents of a

child when they have adopted that child. This includes where one parent is the

biological parent and the other parent adopts the child, or where both parents

adopt the child together in Australia or overseas.

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International Child Support

International Arrangements• Australia is party to a number of international agreements and conventions

about international maintenance obligations. These include:

• The United Nations Convention on the Recovery of Maintenance signed in New York on 20 June 1956 (UNCRAM).

• The Hague Convention and Enforcement of Decisions Relating to Maintenance Obligations 1973 (the 1973 Convention).

• The Agreement between the Government of Australia and the Government of New Zealand on Child and Spousal Maintenance, signed on 12 April 2000 (Australia-New Zealand Agreement)

• The Agreement between the Government of Australia and the Government of the United States of America for the Enforcement of Maintenance (Support) Obligations, came into force on 12 December 2002 (Australia–USA Agreement).

• The Hague Convention of 23 November 2007 on the International Recovery of Child Support and Other Forms of Family Maintenance (2007 Convention) - yet to be ratified.


International Arrangements

• Australia’s international obligations require Australia to recognise and take all appropriate steps to enforce maintenance liabilities from our reciprocal jurisdictions.

• The 92 reciprocating jurisdictions are listed in Schedule 2 of the Child Support (Registration and Collection) Regulations 1988

• Child Support deals with overseas authority/central authority who is the judicial or administrative authority in each reciprocating jurisdiction responsible for implementing an overseas agreement or arrangement with Australia for maintenance obligations

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Overview

• Before 1 July 2000, the Attorney General’s Department (AGD) was the sole central authority (CA) representing Australia in international child and spousal maintenance matters.

• On 1 July 2000, with the introduction of both the Child Support (Assessment) (Overseas Maintenance Obligations) Regulations 2000 and the Child Support (Registration and Collection) (Overseas Maintenance Obligations) Regulations 2000 and amendments to the Family Law Regulations, the Department of Human Services (formally the Child Support Agency) became the main CA for international child support and spousal maintenance matters.

• AGD retains legislative responsibility in areas where administrative action is not an option

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Overview

• On 1 July 2007 the overseas maintenance obligations under the child support Regulations were incorporated into the primary child support legislation.

• An Australian court cannot confirm a overseas provisional order, made in a reciprocal jurisdiction, if an application for a child support assessment could properly be made (regulation 28A(4) and (5), Family Law Regulations 1984).

• Child Support works to prevent dual liabilities/conflicting debt amounts in different countries

• Some jurisdictions do not recognise Australia’s (administrative) child support assessment. A court order under the Family Law Act is still required.

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Questions?

Further Information:

• The Guide – www.csa.gov.au – CS’s online Guide to the administration of the Child Support scheme

• The Legal Practitioner’s Guide - www.csa.gov.au – Precedents for child support agreements and court orders

• Solicitor Hotline – 1800 004 351– CS can peruse draft Binding and Limited Agreements and orders and

consider:• legal compliance• whether the Agreement/Order will have the desired effect.

• FaHCSIA - www.fahcsia.gov.au– Publications including task force reports and research papers

http://www.csa.gov.au/

http://www.csa.gov.au/

http://www.fahcsia.gov.au/

the child support scheme a broad overview

Documents

child support act

child support cs

child support debts

pre child support agency

child support s71as71d1999

child maintenanceonly

unpaid child support

child maintenancecourt