Changes to
Australia
’s Child Support Scheme
The Australian Government is changing the Child Support Scheme. These changes
have been based on the report of the Ministerial
Taskforce on Child Support.
Below is a summary of the changes to Child Support.
For further information you can call our toll
free information line on
1300 725 470
Or
you can contact us via email at ncsmc@ncsmc.org.au
What's New: Welfare Rights Centre,
Qld has prepared the following fact sheets to help explain child support, the
changes to the scheme and how it interacts with Social Security payments:
Fact Sheet One:
The Child Support Scheme
Fact Sheet Two:
Recent Child Support Scheme Changes
Fact Sheet Three:
Social Security Payments and Child
Support
The
Government also has produced a number of fact sheets in regard to these changes.
Fact Sheet
One:
An
overview of the reforms
Fact
Sheet
Two:
Questions
and Answers about the reforms
Fact
Sheet
Three:
Stage 1 - Changes
to the Child Support Scheme from July 2006
Fact
Sheet
Four:
Stage 2 - Changes
to the Child Support Scheme from January 2007
Fact
Sheet
Five:
Stage 3 - Changes
to the Child Support Scheme from July 2008
Fact
Sheet
Six:
The
New Child Support Formula
Fact Sheet Seven:
Stage 2 – Improving the relationship between the courts, the Scheme and the CSA
Fact Sheet Eight:
Stage 2 - Extension of Time to Apply for Child Support
Fact Sheet Nine:
Stage 2 - Parentage issues and child support payments
Fact Sheet Ten:
Stage 2 – Appealing child support decisions to the Social Security Appeals
Tribunal
For further information regarding these changes, visit the
Department of Families, Community Services and Indigenous Affairs' Child
Support Website
For information about the current Child Support System,
visit the Child Support Agency's website.
An Overview of the Changes
Changes to the Child Support Scheme are being introduced
in three stages commencing form 1 July 2006, 1 January 2007 and 1 July 2008.
Child Support Changes July 2006
1.
Minimum Payments to Increase
The
current $5 per week minimum payment will be increased to just over $6 per
week and be indexed yearly to the Consumer Price Index (CPI), ensuring the
minimum child support payments keep pace with inflation.
Unfortunately the $1.00 increase per week is not likely to substantially improve
the financial circumstances of the children.
2.
More Parents claiming Newstart will be able to claim a higher ‘with child’
rate
Currently
parents who care for their children for at least 30 per cent of the time receive
a higher ‘with child’ rate of Newstart. This is an additional $16.50 per
week. Eligibility
for the higher rate will apply when the parent claiming Newstart sees the child
for at least 14 percent of the time – or one night a week.
3.
Changes to the assessment of the capacity of parents to earn income
More payer parents will be able to claim a reduced capacity to earn an income
and thus be able to reduce the child support assessed as payable. Currently
parents can be required to pay additional child support (or be entitled to
receive less) if the Child Support Agency determines they have a higher capacity
to earn. This change will limit the circumstances under which a parent’s
income for child support assessment purposes can be increased.
4.
Cap on Maximum Income Assessed for Child Support to be Reduced
The
maximum amount of child support payable by high income earners will be reduced. The amount of income above which no additional child support is payable
will be reduced from $139,347
to $104,702.
5. Enable payer parents to
increase the percentage of their payments where they specify expenditure
Payer
parents can already direct up to 25% of their child support to pay for specific
items essential for their children such as school fees or essential medical
costs. This
is to increase to 30% to further enable payer parents to direct the expenditure
of child support in the payee parents’ households.
6.
Improved child support collection
Despite
the powers of the Child Support Agency only half of all payer parents pay child
support in full and on time. The Child Support Agency has claimed it will
increase its use of its existing powers to take court action to recover
outstanding amounts. It also promises an increase in the number of parents
investigated for deliberately understating their income and not lodging tax
returns. The Child Support Agency is also promising a more customer-focused
approach will include improved training, increased staffing, and more intensive
case management for difficult cases. Services for separating parents are also
being expanded. Parents will be required to attend services such as the new
Family Relationship Centres
Proposed
Changes From January 2007
1.
Independent review of Child Support Agency decisions
The
Government will expand the role of the Social Security Appeals Tribunal to
include review of Child Support Agency decisions instead of the courts. This
change is expected to improve the consistency, timeliness and transparency of
decisions.
2.
The Child Support Scheme and the courts
Payee
parents will be allowed to pursue court enforcement of the debt while the Child
Support Agency continues ongoing collection. (At present payee parents
cannot do this)
A
court hearing an application for enforcement of child support will have the same
powers as the Child Support Agency to obtain information in relation to either
parent.
Under
the new Scheme courts will have increased powers to make temporary arrangements
about Child Support.
3.
More Time to Work Out Parenting Arrangements
Currently
a resident parent is allowed 28 days in which to take action to obtain child
support payments from their former partner before their Family Tax Benefit is
affected. This time limit will be extended from 28 days to 13 weeks.
Proposed
Changes from July 2008
1. A new formula for calculating child support
A new formula will cut the formula for calculating payments for children
aged 0-12 and the formula calculation for children aged 13-17 will increase.
The Ministerial Taskforce calculated the costs of children – excluding
the opportunity and replacements costs of providing unpaid care for children –
and ‘discovered’ that younger children cost less if the actual cost of
providing direct unpaid care is not counted.
This has been used then to justify reducing payments for two-thirds of
the child’s dependency.
2.
Contact = Child Support Reductions
One night a week of contact will count as the minimum
payment for payer parents who are on the minimum payment.
One night a week of contact will reduce the assessed
child support liability by 24%.
3.
Family Tax Benefits not split under 35% care threshold
Instead
of FTB A and B being split
proportionately once the other parent has 10% care, the payments will not be split under 35% care.
This reverses changes introduced in 2000 which reduced the level of
support for children of separated parents relative to other children.
4.
Payees Disregarded Income Threshold to be reduced to the same as that of the
payer
Payee parents can currently earn around
$40,000 before the payers’ child support is reduced by 50c for every dollar
over that amount. The new formula
will reduce this to one-third of male total average weekly earnings –
currently nearly $17,000 – for both households.
This means that household income for the household where the children are
primarily resident will be treated the same as income in the household which has
no day to day costs of children for the purposes of assessing child support
liability. Once again the unpaid work of primary carers is treated as free and
invisible.
Case
Study:
- One
six year old, mum on PPS, dad earns $50,000 pa.
- With
no contact, the new formula cuts his child support by just over $20 pw and
after FTB is restored, the children’s household income is cut by around
$10 pw.
- With
one night contact, he gains around $50 pw and the child loses just over $20
pw
The minimum payment to be applied on
a per case basis
Non-resident parents who pay child support to two or
more families will have to pay the minimum payment of around $6 per week to each
family, rather than dividing it between the families.
Higher
minimum payment for payers who minimise income
Payers who claim to have very low incomes, but
actually have higher real incomes or resources will have to pay $20 per child
per week, unless they can prove their incomes are in fact very low.
New treatment of second jobs and
overtime to help with re-establishment
For the first three years after separation payer and
payee parents will be able to have income from second jobs and overtime excluded
from child support calculations, when the extra money that they are earning is
used to help with re-establishment costs.
Step-children support can reduce
child support payments
Parents who have financial responsibility for a
step-child will be able to have the child treated as a dependant when their
child support liability is being calculated for their first family.
New ‘Change of Assessment’ rules
Simpler rules under which a parent can apply to have
a ‘change of assessment’ of their child support liability will be
introduced.
Changes to agreements for Child
Support and lump sums payments
There will be improved legal protection for parents
who want to make long-term agreements and it will be easier to make shorter term
agreements.
In addition,
there will be increased flexibility for parents wishing to make an agreement for
a lump sum amount (for instance, parents who wish to transfer ownership of the
family home instead of making regular cash payments).
Parents who want to reconcile
Parents will be able to suspend child support payments for a period of
six months if they get back together. If
the reconciliation fails, the resident parent can reinstate the assessment
without having to make a new application, further reducing conflict between
parents.
Overview
of Changes
The
biggest winners from the child support changes will be high earning payer
parents with children aged between 0-12, who see their children at least once a
week. They gain income windfalls
from the reduced income cap, the increased payer self-support component, the
formula reduction for children aged 0-12 and the 24% reduction of assessed child
support when child contact occurs once a week.
There are also new opportunities to reduce child support income by
claiming step-children, re-establishment costs and reduced capacity to earn.
The
government has estimated that 60% of payer parents will be better off,
translating to 60% of payer children being worse off.
The fact that the child support changes will deliver the biggest
financial benefits to high earning payers highlights that the changes are no
longer aiming at reducing poverty in the households of children of separated
parents. Child poverty can be
expected to increase as the changes are steadily implemented.
|