Budget 2000 CHILD SUPPORT CHANGES
B1. Child Support Package - Post-Separation Counselling And Support For Non-Resident Parents
Implementation
1 January 2001
What's New
A program to assist non-resident parents improve their post-separation relationships and parenting skills will be piloted in two sites.
The pilot program will provide intensive practical assistance and ongoing support by assisting clients to access existing community and government programs such as: parenting skills training; peer support services; relationship management programs; legal advice services; and financial counselling services.
Two different delivery methods will be piloted; one via an advisory service attached to the Men's Access Line, and one via face-to-face community-based advisers.
Background
Research suggests that better post-separation relationships lead to better outcomes for children and the continuing involvement of both parents in the lives of their children results in improved child support payment rates.
Non-resident parents face a range of practical difficulties following separation and may not be aware of the wide range of government and community services available to assist them. A single point of contact to access services will assist these parents.
Measures to assist non-resident parents to continue to parent their children
after separation are in line with the 1996 Family Law reforms and the Government
strategy to strengthen families.
B2. Child Support Package - Lower Formula 'Percentages' For Payers Exercising Contact With Their Children
Implementation
1 July 2001
What's New
Where a child support payer exercises contact with their children of between 10 per cent and 30 per cent of the nights of the year their child support formula percentages will be reduced.
For payers with contact between 10 per cent and 19 per cent, the relevant formula percentage that is applied to their income will generally be reduced by two percentage points (for example, from 18 per cent to 16 per cent for one child). Where contact is between 20 per cent and 29 per cent, the formula percentage will generally be reduced by a total of three percentage points (for example, from 18 per cent to 15 per cent for one child).
This initiative is intended to encourage parents to maintain contact with their children following separation. It recognises the additional costs faced by child support payers who exercise contact with their children.
Background
Currently, there is no allowance in the child support formula for the costs of caring for a child for less than 30 per cent of the nights of the year. Recent Australian research suggests that the cost of normal contact is high, due to the need to transport the children and to provide a bedroom, furniture, clothing, food, etc.
By recognising that parents incur costs during contact, the proposal will improve incentives for non-resident parents to maintain contact with their children. Contact with both parents is of benefit to the development of the children, and leads to a higher likelihood of payment of child support.
This proposal brings child support arrangements into line with the provisions of the new Family Tax Benefit where parents who have care of their children for at least 10 per cent of the time will be entitled to receive assistance for that child.
B3. Child Support Package - A Lower 'Cap' On Payer Income Subject To Child Support Formula Assessment
Implementation
1 January 2001
What's New
The measure of 'average weekly earnings' (AWE) that sets the upper limit or 'cap' on payer taxable income used in their child support assessment will be aligned with the that used for the payee's disregarded income amount.
The payee disregard income amount is currently set by the Average Weekly Earnings of All Employees while the level at which the child support income is 'capped' is currently set by using 2.5 times the Average Weekly Earnings of Full Time Employees. Aligning the measures of AWE would give a 'cap' of $78,378 compared to $101,153 under the current arrangements.
Background
The current level of the 'cap' is not supported by research on the costs of children. Recent Australian research indicates that the child support formula requires higher income payers to pay more child support than the total gross costs of their children.
B4. Child Support Package - Assessment Of Income For Child Support Parents Undertaking Overtime/Second Jobs
Implementation
1 January 2001
What's New
An additional ground for departure from the child support formula will be created for parents who have income derived from a second job, regular overtime or other additional income source. The ground for departure will apply where:
The overall amount of additional income to be excluded from the assessment will be limited to a maximum of 30 per cent of the parent's total child support income. This maximum amount will limit the potential effect on the resources available to the children of the parent's first family.
Background
Currently, when a parent takes on a second job or overtime to support a new family, additional earnings are included in the assessment of child support. The measure will assist in addressing concerns of payers (with subsequent families) that child support liabilities restrict their ability to improve the position of their new families.
B5. Child Support Package - An Increase in the Family Tax Benefit Income Test Deduction for Payers with A Subsequent Family
Implementation
1 July 2001
What's New
Payers with second families will now be able to claim 100% of any child support paid as a deduction from the household income used for determining the family's entitlement to the Family Tax Benefit and Childcare Benefits.
Background
Currently, where a payer forms a new family, half the child support they pay is deducted from their household's income when their entitlement to family assistance is calculated. The measure improves the fairness of the means testing arrangements for Government provided family assistance by allowing a full deduction for all child support paid. Child support payers with children in new families will have their Family Tax Benefit and Childcare Benefit assessed on income that reflects the actual income available to their new family.
Questions & Answers
Child Support Package
The Overall Package
Q. Why are these changes being made?
A. This package is about strengthening families and encouraging parents to maintain contact with their children after separation. The package will improve the Child Support Scheme in a balanced way, resulting in a fairer scheme. Payees will benefit through improved post-separation relationships resulting in improved relationships between paying parents and their children, leading to improved child support payment rates.
Q. Will both payees and payers benefit?
A. The package will improve the child support scheme in a balanced way, resulting in a fairer scheme. Payees will benefit through improved post-separation relationships resulting in improved relationships between paying parents and their children, leading to improved child support payment rates.
Payees will also benefit from the significant additional family assistance announced in the Government's Tax Reform measures. As well, many payees will benefit from the inclusion of fringe benefits in the payer's income base used for child support assessments.
Under Family Tax Benefit, all payees will receive an additional $140 per child per annum and those with a child under 5 will also receive an extra $350 per annum. Payees will also benefit from increases to pension free areas and rates, lower pension and family assistance taper rates and the income tax cuts.
B1. CHILD SUPPORT PACKAGE - POST-SEPARATION COUNSELLING AND SUPPORT FOR NON-RESIDENT PARENTS
Q. I've heard about the new service for non-resident parents and want more information?
A. The new post-separation counselling service for non-resident parents will be commencing in January 2001. The pilot program will provide intensive practical assistance and ongoing support by assisting clients to access existing community and government programs such as: parenting skills training; peer support services; relationship management programs; legal advice services; and financial counselling services.
Two different delivery methods will be piloted: one will be an advisory service attached to the Men's Access Line; and the other face to face community based advisers. Details on where the community-based advisers will be located will be released shortly.
Q. Why only two pilot sites?
A. Pilots are an effective way of testing new programs at a reasonable cost to the community. Two different delivery methods will be piloted: one will be an advisory service attached to the Men's Access Line, and the other face to face community-based advisers. Evaluation of the pilots will assist in determining the best delivery method for the services.
B2. CHILD SUPPORT PACKAGE - LOWER FORMULA 'PERCENTAGES' FOR PAYERS EXERCISING CONTACT WITH THEIR CHILDREN
Q. What changes are being made?
A. Where child support payers have contact with their children of between 10 per cent and 30 per cent of the nights of the year, their child support formula percentages will be reduced.
For payers with contact between 10 per cent and 19 per cent, the relevant formula percentage that is applied to their income will generally be reduced by two percentage points (for example, from 18 per cent to 16 per cent for one child). Where contact is between 20 per cent and 29 per cent, the formula percentage will generally be reduced by a total of three percentage points (for example, from 18 per cent to 15 per cent for one child).
Q. Why are these changes being made?
A Currently, there is no allowance in the child support formula for the costs of caring for a child for less than 30 per cent of the nights of the year.
This measure recognises that parents incur costs during contact, which may not have been fully recognised in the past. Contact with both parents is of benefit to the development of the children, and leads to a higher likelihood of payment of child support.
As well, this measure brings child support arrangements into line with the provisions of the new Family Tax Benefit where parents who have care of their children for at least 10 per cent of the time will be entitled to receive assistance for that child.
Q. When will this measure be implemented?
A. 1 July 2001.
Q. What do I have to do to claim the reduction?
A. Payers will need to contact the CSA to discuss their level of contact. The CSA will verify the amount of contact with both parents. Court orders, registered parenting plans or agreements can be used as evidence to substantiate claims.
B3. CHILD SUPPORT PACKAGE - A LOWER 'CAP' ON PAYER INCOME SUBJECT TO CHILD SUPPORT FORMULA ASSESSMENT
Q. What changes are being made?
A. The measure of average weekly earnings (AWE) that sets the upper limit or 'cap' on payer taxable income used in their child support assessment will be aligned with that used for the payee's disregarded income amount.
The payee disregarded income amount is currently set by the Average Weekly Earnings of All Employees while the level at which the child support income is 'capped' is currently set by using 2.5 times the Average Weekly Earnings of Full Time Employees. Aligning the measures of AWE would give a 'cap' of $78,378 compared to $101,153 under the current arrangements.
Q. Why are these changes being made?
A. Aligning the measure of average weekly earnings that sets the upper limit or 'cap' on payer taxable income used in their child support assessment with the that used for the payee's disregarded income amount results in a lower 'cap'. Recent Australian research indicates that the child support formula requires higher income payers to pay more child support than the total gross costs of their children.
Q. When will this measure be implemented?
A. 1 January 2001.
B4. CHILD SUPPORT PACKAGE - ASSESSMENT OF INCOME FOR CHILD SUPPORT PARENTS UNDERTAKING OVERTIME/SECOND JOBS
Q. What changes are being made?
A. An additional reason to apply for a change
of assessment from the child support formula will be created for parents
who have income derived from a second job, regular overtime or other additional
income source. The ground for change will apply where:
As is currently the case, if the grounds for change are met, the Child Support Registrar will then determine the extent of any reduction in child support taking into account the circumstances of both parents and children. However, the overall amount of additional income to be excluded from the assessment will be limited to a maximum of 30 per cent of the parent's total child support income. This maximum amount will limit the potential effect on the resources available to the children of the parent's first family.
Q. Why are these changes being made?
A. Currently, when a parent takes on a second job or overtime to support a new family, additional earnings are included in the assessment of child support. The measure will assist in addressing concerns of payers that child support liabilities restrict their ability to improve the position of their new families.
Q. When will this measure be implemented?
A. 1 January 2001.
Q. How do I claim the reduction?
A. Parents will have to apply for a change of assessment and provide evidence of their employment and work patterns. The circumstances of both parents and the children will be considered by the Child Support Registrar before any reduction is granted.
B5. CHILD SUPPORT PACKAGE - AN INCREASE IN THE FAMILY TAX BENEFIT INCOME TEST DEDUCTION FOR PAYERS WITH A SUBSEQUENT FAMILY
Q. What changes are being made?
A. Payers with second families will now be able to claim 100% of any child support paid as a deduction from the household income used for determining the family's entitlement to the Family Tax Benefit and Childcare Benefits.
Q. Why are these changes being made?
A. The initiative improves the fairness of the means testing arrangements for Government provided family assistance. Child support payers with children in subsequent families will have their Family Tax Benefit and Childcare Benefit assessed on income that reflects the actual income available to their current family.
Q. When will this measure be implemented?
A. 1 July 2001.
Q. How do I claim the reduction?
A. To claim a deduction for child maintenance expenditure parents will need to provide Centrelink with proof of payment. For parents who pay their child support through the CSA a copy of their CSA assessment will be sufficient, as these details will be verified by data matching with the CSA.
For other parents, proof of payment will need to be provided. For example, receipts, bank statements or chequebook butts for all child support/maintenance paid privately.
Lower formula percentages for payers exercising contact with their children
What percentage reduction will apply to payers with between 10 and 29 per cent contact with their children?
A table will be used to determine the child support percentage of the paying parent. In the simplest case, where there is only one level of care in place for all children, a figure of 0.85 represents a child cared for by the parent for between 10 and 19 per cent of the time, and 0.75 represents a child cared for by the parent for between 20 and 29 per cent of the time. The calculations are set out in the table below.
Number of children for whom the parent is a liable
parent
Number of children for
0.75
15
0.85
16
1
18
1.5
24
1.6 - 1.7
25
1.75 - 1.85
26
2
27
2.25 - 2.40
29
2.45 - 2.60
30
2.65 - 2.85
31
2.90 - 3.20
32
3.25 - 3.70
33
3.75 - 4.20
34
4.25 - 4.70
35
4.75 - 5.0 or more
36
whom the parent is a
liable parentChild Support Percentage
Q. Is this just another level of care, like divided or shared care?
A. No, it is different because the parents continue to be assessed as sole care cases; i.e. the payee has a disregarded income and the payer an exempt income. When the assessment is being made, as a sole care case, the child support percentage will be reduced according to the level of contact the payer has with the child(ren).
Q. How will the level of contact be calculated?
A. As is the case with divided and shared care cases, the amount of contact will be calculated based on the number of nights, or by agreement between both parents.
Q. Does "actual, lawful care" apply?
A. Yes.
Q. What if the level of contact changes during the child support period?
A. Care will be measured during the first 12 months of the child support period. A change in arrangements resulting in a change in care levels would be given effect to when notified to the CSA.
Q. Won't some payees and/or payers see this as a financial incentive to change their care/contact arrangements?
A. This issue is sometimes raised in regard to the number of nights children spend with each of their parents in calculating shared and divided care. However, CSA research shows that there are very few families with care arrangements that are just above or below the number needed to qualify for these levels of care. Further, if there is such an effect, it would currently be occurring at the border between sole and divided care cases, and this measure should reduce that impact.
In addition, the measure to assist paying parents with post-relationship counselling and support should assist in negotiating contact and care arrangements around the best interests of the child.
Q. Can a person with this level of contact apply to the Agency for a child support assessment?
A. No. While this measure recognises that the amount of contact should allow for a reduction in child support, it is not substantial enough to ask the other parent to make a contribution.
Q. Will payers with a minimum assessment pay a reduced amount of child support if they have contact with their children?
A. No. The minimum liability will not be reduced below $5 per week.
Q. Why has this measure been given effect by lowering the child support percentages, rather than modifying some other part of the formula?
A. This is in keeping with the way in which the Assessment Act currently gives effect to changes in levels of care; that is, it is reflected in a change to the child support percentages.
This change at the end of the assessment process is more transparent and more easily understood than a change to one of the formula components (e.g. exempt income) at the start or middle of the process, because the effect on the amount of child support payable is clear, direct and manageable. For example, clients currently understand that if there is an increase in the amount of care given (e.g. payee had shared care but now has sole care) then there is an increase in the percentage of the payer's income base which is payable as child support. By changing the percentages, clients can understand the relationship between the change in care, the change to the formula and the change in the amount of child support payable.
Q. Doesn't this take away money from carer parents?
A. The measure is intended to more accurately reflect the level of care given, and the contributions made, by both parents. It is consistent with changes to family assistance (specifically Family Tax Benefit) to take effect from 1 July 2000 as part of the new tax package.
Assessment of income for payers undertaking overtime/second jobs to support a subsequent family
Q. What do I have to show to establish this reason?
A. You would need to have children living with you, who are either you or your current partner's children. You would need to demonstrate that the additional income was earned for the benefit of these children, that it was not part of your normal earning pattern before you established this family, and that it does not arise from a condition of an existing income source (e.g. mandatory overtime). As is currently the case for all other reasons for changing an assessment, the extent of any reduction in child support will take into account the circumstances of both parents and children.
Q. Will it apply to me if I'm already in this situation?
A. Yes, but only from the date the legislation comes into effect.
Isn't it inequitable to the children entitled to benefit from the child support paid to exclude part of the payer's income from assessment?
The payer must show that the only reason for undertaking additional work, thereby increasing income, is to support children currently in his or her care. Further, each case will be determined by a Senior Case Officer on its merits, using principles of "just and equitable" to consider the impact on the child support children.
Q. Under what circumstances would payees apply for a change of assessment for this reason?
A. Payees, who earn an additional income and whose total income exceeds the disregarded amount, may apply for a change of assessment under this measure.