The Child Support Scheme A Broad Overview Ken McWhinney Senior Advisor, Technical & Quality Assurance Child Support Agency *This material was presented.

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 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

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. 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

From 1 July 2009, a parent’s Adjusted Taxable Income isthe 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 (Adjusted Taxable 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.

Child Support Income

Estimates of Income

• 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 Actual Care

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

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%

Range Nights Percentage of Care

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%

Cost of Children TableParents 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 child17c for each $1

$4305 plus 15c for each $1 over $25324




$15448

2 children24c for each $1




$21525 plus $10c for each $1 over $101296

$24058

3+ children27c for each $1





$30389

Children aged 13+

1 child23c for each $1





$19246

2 children29c for each $1





$29123

3+ children32c for each $1





$35960

Children of mixed age

2 children26.5c for each $1

$6711 plus 25.5c for each $1 over 25324

$13168 plus 22.5c for each $1 over

$50648


$23678 plus 11.5c for each $1 over $101296 $26590

3+ children29.5c for each $1

$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

$10,000

Cost of a Child

Basic Formula CalculationCost 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)

Parent 1 must meet 50% ($5,000) of the costs, they meet 24% ($2,400) through care and need to transfer 26% ($2,600)

50% or $5,000

26% or $2,600

24% or

$2,400

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)

Child Support Agreements

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 Assessmentss146A-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

• 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.

Agreements - lump sum crediting provisions

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 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.

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.

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.

What is Change of Assessment?

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.

Determining a COA Application

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 ApplicationsA 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 ordersSection 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)

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.

The effect of the Same-sex Legislation Reforms on the Child Support Agency

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.

Betty and Sue have a son. Betty and Sue’s relationship ended in early 2006.

Before 1 July 2009 After

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.

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.

*Note - The application will be decided on the available evidence of parentage.

On 26 November 2009 Betty applies to have Sue assessed as a parent.

On 10 February 2006 Sue applied for child support and a case was registered as a non-parent case.

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 2010Estimates

• 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 2010Care 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 WebsiteWWW.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

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

The Child Support Scheme A Broad Overview Ken McWhinney Senior Advisor, Technical & Quality Assurance Child Support Agency *This material was presented.

Documents

child support scheme

child support legislation

child support registration

child support assessment

pre child support agency

timely basis child support

c hild support

child maintenance court