The Child Support Scheme
A Broad Overview
Ken McWhinney
Senior Advisor, Technical & Quality Assurance
Child Support Agency
*This material was presented on 04/08/2010 and valid at that date
Child Support Scheme
Before 1988 (Pre Child Support Agency)
• 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
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
Child support set by court order, collectable by CSA
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.
• That the level of financial support be determined by legislatively
fixed standards
• That the level of financial support be able to be determined without
the need to resort to court as child support assessed (and collected)
by CSA
Child Support Legislative changes
The 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
Child Support Legislative changes (cont.)
The Registration & Collection Act
Amendments included:
• 1989: Child Support Act 1988 renamed Child Support (Registration & Collection) Act 1988
• 1992: CSA can issue a not 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
The New Child Support Scheme
1 July 2008
The Child Support Formula
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.
Eight steps to the formula
1.
2.
3.
4.
5.
6.
7.
8.
Child Support Income
Combined Child Support Income
Income Percentage
Percentage of Care
Cost Percentage
Child Support Percentage
Costs of the Children
Annual rate of Child support transferable
Child Support Income
(Adjusted Taxable Income)
From 1 July 2009, a parent’s Adjusted Taxable Income is
the total of the following components (section 43(1)):
• 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
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.
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.
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
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
Care Percentage
Range
Nights
Percentage of Care
Below regular
0-51 nights
0%-13%
Regular
52-127 nights
14%-34%
Shared
128 – 237 nights
35%-65%
Primary Care
238 – 313 nights
66%-86%
Above Primary
314 -365
87%-100%
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 percentage
0 to less than 14%
14% to less than 35%
35% to less than 48%
48% to 52%
more than 52% to 65%
more than 65% to 86%
more than 86% to 100%
Nil
24%
25% plus 2% for each percentage point over 35%
50%
51% plus 2% for each percentage over 53%
76%
100%
Cost of Children Table
Parents Combined Child Support Income
No of
children
$0$25324
$25325
-$50648
$50649-$75972
$75973-$101296
$101297-$126620
Over $126620
Costs of Children
Children aged 0-12 years
1 child
17c for
each $1
$4305 plus 15c for
each $1 over $25324
$8104 plus 12c for
each $1 over $50648
$11143 plus 10c for
each $1 over $75972
$13675 plus 7c for
each $1 over $101296
$15448
2 children
24c for
each $1
$6078 plus 23c for
each $1 over $25324
$11902 plus 20c for
each $1 over $50648
$16967 plus 18c for
each $1 over $75972
$21525 plus $10c for
each $1 over $101296
$24058
3+ children
27c for
each $1
$6837 plus 26c for
each $1 over $25324
$13422 plus 25c for
each $1 over $50648
$19753 plus 24c for
each $1 over $75972
$25830 plus $18c for
each $1 over $101296
$30389
Children aged 13+
1 child
23c for
each $1
$5825 plus 22c for
each $1 over $25324
$11396 plus 12c for
each $1 over $50648
$14435 plus 10c for
each $1 over $75972
$16967 plus $9c for
each $1 over $101296
$19246
2 children
29c for
each $1
$7344 plus 28c for
each $1 over $25324
$14435 plus 25c for
each $1 over $50648
$20766 plus 20c for
each $1 over $75972
$25830 plus 13c for
each $1 over $101296
$29123
3+ children
32c for
each $1
$8104 plus 31c for
each $1 over $25324
$15964 plus 30c for
each $1 over $50648
$23551 plus 29c for
each $1 over $75972
$30895 plus 20c for
each $1 over $101296
$35960
Children of mixed age
2 children
26.5c for
each $1
3+ children
29.5c for
each $1
$6711 plus 25.5c for
each $1 over 25324
$13168 plus 22.5c
for each $1 over
$50648
$18866 plus $19c for
each $1 over $75972
$23678 plus 11.5c for
each $1 over $101296
$26590
$7471 plus 28.5c for
each $1 over 25324
$14688 plus 27.5c
for each $1 over
$50648
$21652 plus 26.5c for
each $1 over $75972
$28363 plus 19c for
each $1 over $101296
$33174
Basic Formula Calculation
Cost of a Child
$10,000
Basic Formula Calculation
Cost of a Child
$ 5000
$ 5000
Parent 1
meets 24% of
costs
through care
($2,400)
Parent 2 meets 76% of
costs through care
($7,600)
Parent 2
must meet
50% ($5,000)
of the costs,
they meet 76%
($7,600)
through care
and need to
receive 26%
($2,600)
26% or
$2,600
50% or
$5,000
24%
or
$2,400
Parent 1
must meet 50%
($5,000) of the
costs, they
meet 24%
($2,400)
through care
and need to
transfer 26%
($2,600)
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 new scheme
and are deemed to be Binding Agreements
•
Binding & Limited Agreements must meet the general requirements for
a child support agreement (s84(1) - Assessment Act)
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
accounted for in the agreement.
•
The election to end must be made within 60 days of receipt of the new notional
assessment.
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)
or 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)).
Notional Assessments
s146A-146L - Assessment Act
• When CSA accepts a Limited or Binding Agreement, CSA 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
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
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.
Application to Accept Agreement
• If the application for acceptance of the agreement is made to
CSA 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 CSA within 28 days after the agreement was signed then the
assessment is amended from the date the application was
made to the CSA.
Setting Aside Agreements
Part 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.
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.
What is Change of Assessment?
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
($360)
• 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.
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.
Review of CSA decisions
Internal Review - Objections
(Part VII of the CSR&CA)
• 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 CSR&CA)
• Review of CSA objection decisions, or refusal to grant extension of time to object
Common 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)
Common orders
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 CSA. 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 CSA 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)
The effect of the Same-sex Legislation Reforms on
the Child Support Agency
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 new Acts have made changes to the Family Law Act 1975 and
child support legislation.
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 nonbiological parent not recognised as a parent.
From 1 July 2009, application for assessment can be
accepted based on relevant evidence of parentage.
Betty and Sue have a son. Betty and Sue’s relationship ended in early 2006.
Before
1 July 2009
After
On 10 February 2006 Sue applied for child
support and a case was registered as a
non-parent case.
On 26 November 2009 Betty applies to
have Sue assessed as a parent.
Before 1 July 2009 under Formula 5, Sue
would be a non-parent carer, her income
would not be used in calculating the child
support income amount.
After 1 July 2009 Sue would be recognised
as a parent*. Sue’s income would be
included in calculating the child support
income amount using Formula 1.
*Note - The application will be decided on the available evidence of 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).
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.
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.
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.
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.
Same-sex Child Support cases
Scenario1: Assisted conception
Nicole and Samantha
• Nicole and Samantha are in a de facto relationship and decide to
have a child together. They agree that Nicole will be the birth
mother, and Nicole self-inseminates at home using donor sperm.
Their daughter Louisa is born. Sometime after this, Nicole and
Samantha’s relationship ends and Nicole agrees to have full time
care of Louisa.
• Nicole goes to Centrelink to apply for the Family Tax Benefit (FTB)
and is told that she must first contact the CSA to apply for child
support in order to ensure that she is taking reasonable
maintenance action.
• The CSA works out that Samantha is liable to pay child support to
Nicole as both mothers are recognised as legal parents under
section 60H of the Family Law Act 1975.
Scenario 2: Surrogacy
Michael and John
• Michael and John live in the Australian Capital Territory and are in a
de facto relationship. They agree to have a child together through
surrogacy with the assistance of a surrogate mother. After Sam is
born, with the consent of the surrogate mother, they apply to the
ACT Supreme Court and have a parentage order made naming
them both as parents of Sam. Some time after this, their relationship
deteriorates and Michael agrees to have full time care of Sam.
• The CSA works out that John is liable to pay child support to
Michael as they have a surrogacy parentage order issued under a
recognised State or Territory Scheme which says that they are both
parents. This satisfies section 60HB of the Family Law Act.
• Note: Only the ACT and WA currently have a surrogacy parentage
scheme recognised under the Family Law Act.
Scenario 3: Adoption
Patrick and David
• Patrick and David live in Perth and have been in a relationship for
the past eight years. Three years ago they adopted a four year old
child, Chris.
• Patrick and David’s relationship breaks down and David takes full
time care of Chris.
• Patrick and David apply to the CSA for a child support assessment.
As David has the majority of care Patrick is deemed to be the paying
parent. They decide to pay their child support privately.
• Note: This scenario is not affected by a change in the same sex
legislation, Patrick and David would always have been recognised
as adoptive parents.
Recent developments - 1 July 2010
Estimates
• Post 1 July 2010 the estimate process has been aligned
to financial years to make the calculation simpler for
parents
• This alignment to financial years also allows CSA to
more easily reconcile Adjusted Taxable Incomes for
parents who have estimated their income.
Recent developments - 1 July 2010
Care Alignment
• Post 1 July 2010 there is a single determination of care for both
child support and family assistance purposes.
• A care determination made in respect of a child will be made by one
agency (i.e. either CSA of FAO) and then used by both agencies for
child support and FTB purposes.
• CSA & FAO use the same rules to determine a customer’s care
percentage.
• The alignment of care rules mean that customers only have to
inform one agency of a change in care arrangements.
• Where either agency conducts an internal review of a care decision,
any new decision made on review will also be used by the other
agency.
• Objections to care decisions can now be made orally or in writing
and a person can object at any time. However, if the objection is
lodged more than 28 days after notification of the decision then the
date of effect is the date the objection was lodged.
CSA Website
WWW.CSA.GOV.AU
Questions?
Further Information – Contact CSA
131 272 or www.csa.gov.au
The Guide
– CSA’s online Guide to the administration of the Child Support scheme
The Legal Practitioner’s Guide - Precedents for child support agreements and court orders
Solicitors’ Hotline 1800 004 351 Australian cases
1800 180 272 International cases
FaHCSIA: www.facs.gov.au
• Task force reports and research papers