The term ‘Child Support’ refers to the financial support provided for children by parents who do not live together. The law says that both parents (including same sex parents) have an obligation to financially support their children. How much should be paid depends on the financial circumstances of each parent, the costs of children (based on Australian research), the level of care each parent provides, and whether either parent supports other children who they have a legal duty to support.
In the first instance, the formula assessment uses information about each parent’s taxable income (for the previous year) to calculate the child support payments. For this reason it is important that parents lodge their tax returns promptly.
In recent years significant changes have been made to the Child Support Scheme. The changes have been made in concert with changes to the Family Law Act and Family Assistance Office legislation, and have coincided with the establishment of Family Relationship Centres.
The Child Support Agency is a part of the Commonwealth Department of Human Services. It was created in 1988 to administer the Child Support legislation, which is made up of the Child Support (Assessment) Act 1989 (Cth) and the Child Support (Registration and Collection) Act 1988 (Cth).
CHILD SUPPORT ASSESSMENTS
The Child Support Agency processes applications for child support, creates assessments of child support based on the legislative formula or a child support agreement, and manages a variety of administrative remedies which are available to customers under the legislation. The most common of these remedies include seeking a change to the level of care recorded in the assessment, lodging an Estimate of Income and seeking a Change of Assessment in Special Circumstances.
To achieve the most effective results from the formula assessment, it is important that parents lodge their tax returns promptly and provide the Child Support Agency with accurate information about the care of the children.
It is also important to notify the Child Support Agency of any other change in circumstances as soon as possible. Examples include the birth of a relevant dependent child, or if a child dies, marries or enters into a de facto relationship.
COLLECTION & ENFORCEMENT OF CHILD SUPPORT PAYMENTS
If necessary, the Child Support Agency can collect payments of child support or maintenance from payers, and transfer it to payees. The CSA has a range of powers to enforce collection of child support debts if they are not paid voluntarily. These powers include the ability to collect payments directly from a payer’s employer, to intercept tax refunds due to a payer who has a child support debt, and to withdraw funds from a payer’s bank account (where it can be identified).
RELATIONSHIP WITH CENTRELINK
The Child Support Agency, Centrelink and the Family Assistance Office share information about the amount of child support calculated in an assessment, and about the level of care each person provides for the children. If the Child Support Agency is collecting the payments, information can also be provided about the actual amount of child support transferred.
Child support payments can affect Family Tax Benefit (A) entitlements. A person must have at least 35% care of a child to be eligible to apply for either child support payments or a payment of FTB(A) for a child.
An eligible carer of a child (either a parent or non-parent), or a liable parent, can apply to the Child Support Agency for an administrative assessment of child support. The application can be made to the Agency by telephone, over the internet or in writing.
Child Support AgencyLevel 6, 100 King William Street
ADELAIDE SA 5000 Telephone: 131 272TTY: 1800 631 187
When applying for a child support assessment, the Child Support Agency will require proof of parentage from each parent. This can be provided in a number of ways, as set out in section 29(2) of the Child Support (Assessment) Act 1989 (Cth). The Child Support Agency can accept any of the following as proof that a person is a parent of a child:
- the child was born during the course of a marriage or de facto relationship;
- the person is recorded on the birth certificate as a parent of the child;
- the person has been found to be a parent of the child by a relevant court;
- the person has acknowledged parentage by signing a Statutory Declaration or other instrument;
- the person has adopted the child;
- the father lived with the mother during the period 44 weeks to 20 weeks before the birth of the child;
- the person is a parent of the child under section 60H (artificial conception procedures) or section 60HB (surrogacy provisions) of the Family Law Act 1975 (Cth).
From 1 July 2009 the law recognises same-sex parents who have had a child using artificial conception procedures.
Determining parentage can be complex, and DNA parentage testing can be used to help resolve uncertainties. Testing for legal purposes must be done by laboratories accredited under the Family Law Act 1975 using strict procedures that are set out in the Family Law Regulations.
The Child Support Agency cannot accept a DNA parentage testing report as proof of parentage. DNA reports can be produced as evidence in a court to obtain a court order stating that a person is, or is not, a parent of a child.
PARENTAGE DISPUTES
In circumstances where a mother is required by Centrelink to apply for child support payments, and the application cannot be accepted because there is no proof of paternity, the Child Support Unit of the Legal Services Commission may be able to assist by
If a father is concerned that he is assessed to pay child support for a child who is not his child, he should obtain legal advice as soon as possible. The Child Support Unit of the Legal Services commission may be able to assist by
- arranging DNA parentage testing where appropriate;
- making an application to a court for a declaration that a payee is not entitled to receive child support from the payer;
- seeking a court order to recover monies already paid.
In other circumstances where there is a dispute about parentage and the right to pay or receive payments of child support, parents are encouraged to obtain legal advice about their circumstances as soon as possible.
WHERE TO GET HELP
Legal advice should be sought in relation to any matters involving disputed parentage. Delay in bringing an application can adversely affect the legal rights of the parties.
Free independent legal advice can be obtained from the Child Support Help Line on 846 33 576.
Centrelink and the Family Assistance Office are key stakeholders in the Child Support Scheme. One of the major reasons that the Child Support Scheme was introduced was to reduce the burden on the welfare system, and to ensure that parents were responsible for the financial support of their children in the first instance.
A person must have at least 35% care of a child to be eligible to apply for a payment of Family Tax Benefit Part (A). The payment is individually calculated for each child.
Any parent who is eligible to receive more than the base rate of Family Tax Benefit (A), is required to obtain child support payments from the other parent. This is called taking ‘reasonable maintenance action’, and a parent has 13 weeks to take this action before their Family Tax Benefit(A) can be reduced to the minimum rate.
Some parents may be eligible to obtain an exemption from taking maintenance action for the following reasons:
- Fear of violence
- Risk of harmful or disruptive effects
- Exceptional cultural circumstances
- Father of child unknown
- Identity of father cannot be proven despite legal assistance
An appointment should be made with a Social Worker at a Centrelink Office to discuss obtaining an exemption on these grounds. The social worker will make a decision based on his or her assessment. A parent may be asked to provide evidence in support of a claim for an exemption.
Legal advice can be obtained from the Child Support Help Lineon 846 33 576.
Calculation of Family Tax Benefit Part (A)
The rate of Family Tax Benefit (A) is affected by both family income and the amount of child support that is paid or received.
The rate of FTB(A) can also be affected by the way that the child support payments are collected.
Private Child Support Collection Arrangements
- If a payee opts to collect payments of child support privately, Centrelink will assume that s/he is receiving the full amount that s/he is entitled to receive, and calculate the FTB(A) accordingly.
Centrelink customers should declare all payments of child support to Centrelink, including any payments in excess of the assessed rate. If payments are not made, or are not made in full, a payee can ask the Child Support Agency to collect the payments.
Child Support Agency Collection
- If the Child Support Agency collects the payments of child support, information about any payments received will be notified to Centrelink. If payments are not being made, the payee can ask Centrelink to calculate the rate of FTB(A) based on the amount of child support that has actually been received, rather than on the amount they are entitled to receive.
It is recommended that payees discuss these issues with Centrelink to achieve the best outcome for them.
The child support assessment can be based on the formula set out in the legislation, or an agreement reached between the parents.
FORMULA ASSESSMENT
The current formula was introduced on 1 July 2008. It takes into account many variables including the incomes of each parent, the number and ages of children, the costs of children, the level of care each parent provides for the children, and whether either parent has a legal duty to support any other children.
The formula consists of three main elements:
- Parents’ Incomes
- Costs of Children Table
- Level of Care
The starting point is each parent’s taxable income plus other amounts such as
- Net financial investment losses (eg rental property, shares, managed investments)
- Reportable fringe benefits
- Foreign income
- Reportable superannuation contributions
- Some tax-free pensions or benefits
- Some payments from Dept of Veteran’s Affairs
The total of these amounts is called the ‘Adjusted Taxable Income’.
The first step in the formula is to subtract an amount described as the ‘self-support’ amount ($19618 in 2010) from each parent’s Adjusted Taxable Income. The self-support amount is the same for each parent.
If a parent has other relevant dependent children in their care, or is paying child support for other children, a further amount is subtracted from the Adjusted Taxable Income to recognize the costs associated with these commitments. In general terms, a relevant dependent child is defined as a child who is in the care of the parent for at least 35% of the time. The definition can include step-children, but only in rare cases where there is a court order pursuant to s66M of the Family Law Act stating that the person has a duty to maintain the step-child.
The remaining income is called the Child Support Income. Each parent’s Child Support Income figures are added together to obtain the Combined Child Support Income. This combined figure determines the Costs of the children by reference to a table.
The individual incomes of parents determine each parent’s share of the costs of children that needs to be met.
Costs of children
Research was undertaken to determine the amount of money spent on children in households with differing incomes. Tables were created to predict the costs of children in families with differing combined child support incomes.
The Costs of Children tables also take into account the number of children (up to a maximum of 3) and the ages of the children who require support. There is a table for children from 0-12 years, a table for children 13 years and over, and a table for children of mixed ages.
http://www.csa.gov.au/ChildSupportFormula/childCostsTable2010.aspx
Level of Care
The amount of care provided by each parent can be counted as a contribution to the costs of the children. The formula assessment takes the amount of care each parent provides for a child into account when calculating the rate of child support.
Parents who provide care for less than 52 nights (Less than Regular Care) are not considered to contribute sufficiently to the costs of the child through the care provided to have an impact on the assessment.
Parents who have ‘Regular Care’ of 52 - 127 nights per year are said to meet 24% of the costs of the children through care. For parents with this band of care, the cost percentage is a flat 24%.
Shared Care of 128 - 237 nights per year is worked out on a sliding scale delivering a cost percentage of 25-75%.
Parents who have ‘Primary Care’ of 238 - 313 nights are said to meet 76% of the costs of the children through care.
It should be remembered that increasing levels of care generally reduce the amount of child support to be transferred in periodic payments because it is recognized that parents contribute to the overall costs of the child by paying for a range of items while the child is in their care. Contribution to the child’s costs is not limited to the provision of food and accommodation while the child is in their care. Contributions to the costs of the child include an equitable contribution to all costs including clothing, public school costs, medical and pharmaceutical expenses, and extra-curricular activities.
While the child support formula does not prescribe in minute detail how these costs are to be divided, parents should be aware that significant levels of care produces a reduction in monetary payments, because it is assumed that a contribution is being made to the whole range of costs associated with raising children while they are in each parent’s care.
Parents need to be able to negotiate with each other about how they will meet the costs of children while they are in their care. If you are finding it difficult to reach agreement you may wish to contact a mediation service for assistance.
Child support and Cost Percentage Table
| Nights per year | CSA terminology | Equals |
Percentage of costs met through care |
|---|---|---|---|
| 0-51 | Less than Regular Care | = | 0% |
| 52-127 | Regular Care | = | 24% |
| 128-237 | Shared Care | = | 25-75% (sliding scale) |
| 238-313 | Primary Care | = | 76% |
| 314-365 | Greater than Primary Care | = | 100% |
Jack and Jill separate. They have one child, Jenny, aged 3 years, who spends 285 nights of the year with Jill, and 80 nights with Jack. Jack earns $79618, and Jill earns $39618. They have no other children.
1. Work out each parent’s Adjusted Taxable Income.
Jack - $79618 Jill - $39618
2. Subtract the self-support amount.
Jack - $79618 Jill - $39618
$19618 $19618 _______ _______
$60000 $20000
3. Subtract a further amount if either parent has a relevant dependent child or pays child support for another child or children. This is not applicable in this example.
4. Calculate the Combined Child Support Income.
$60000 + $20000 = $80000
5. Consult the Cost of Children table to determine the cost of a 3 year old child in a family with a Combined Child Support Income of $80000.
$9417 plus 12cents for every $1 of income above $58854
$80000 - $58854 = $21146 x .12c = $2537.52
$9417 + $2537.52 = $11954.52 per year
5. Calculate each parent’s Income Percentage, which is their share of the costs of the child based on the Child Support Income alone.
Jack 60000 / 80000 x 100 = 75%
Jill 20000 / 80000 x 100 = 25%
6. Work out the Cost Percentage based on the level of care each parent provides for the child.
Jack 80 nights Regular Care Cost percentage 24%
Jill 285 nights Primary Care Cost percentage 76%
7. Calculate the Child Support Percentage by subtracting the Cost Percentage from the Income Percentage. This adjustment recognizes that some or all of Jenny’s costs are being met through the care that is provided by Jack and Jill.
Jack 75% - 24% = 51% Jack will have to pay child support to Jill.
Jill 25% - 76% = -51%
8. Work out the amount of child support payable by multiplying the cost of the child by the Child Support Percentage.
Jack $11954.52 x 51% = $6097 per year
The Child Support Agency has a child support Estimator on their website. Parents may find it a useful tool in less complex cases.
On 1 July 1999, a minimum liability of $260 per annum was introduced. Previously, payers on a low income had a Nil Assessment.
On 1 July 2006, the minimum rate increased from $260 to $320 per annum, and is now linked to increases in the consumer price index.
From 1 July 2008, if a payer has a liability to pay child support at the minimum rate to more than one family, the liability became payable to each family (up to a maximum of three cases), rather than split between them. Prior to 1 July 2008, the minimum liability was shared between all cases.
From 1 July 2008, if a payer has Regular Care of the child/ren and is assessed to pay the minimum rate of child support, s/he is considered to be meeting all of the liability through the care provided, and no payment is required.
From 1 July 2008, if a paying parent has a very low income but is not in receipt of a Centrelink benefit, the minimum annual rate has been replaced by a fixed annual rate of approximately $23 per week per child (capped at 3 times the fixed rate or approximately $69 per week).
The fixed annual rate is not payable if the paying parent has 35% (or more) care of the child, because it is accepted that they are contributing to the costs of the child through the care provided.
This measure was introduced to identify those cases where a payer’s low taxable income was not an accurate reflection of their ability or inability to pay child support.
If a parent wishes to dispute a fixed rate assessment s/he should contact the Child Support Agency on 131 272. The Agency will require further information to enable the officer to make a decision.
Child Support Care and Cost Percentage Table
| Nights per Year | Care Level | Child Support Cost % |
|---|---|---|
| 0-51 | Nil Care | Nil |
| 52-127 | Regular Care | 24% |
| 128-175 | Shared Care | 25% to 49% by sliding scale |
| 176-189 | 50% | |
| 190-237 | 51% to 75% by sliding scale | |
| 238-313 | Primary Care | 76% |
| 314-365 | Sole Care | 100% |
The level of care set out in the table above applies to child support assessments from 1 July 2008. The assessment will be affected if a party has 14% care of the child(ren), rather than the previous minimum of 30%.
Because of this change, it is important that the Child Support Agency has accurate records of the care that each parent provides. Parents should not assume that the Agency will obtain this information from Centrelink.
It is important to tell the Child Support Agency about any changes in the level of care provided for the children immediately. The Agency will contact the other party to confirm the level of care and make any changes to the assessment that are required.
If there is a dispute about care levels, the parties may be asked to provide further information before the Child Support Agency makes a decision. If either party is dissatisfied with the decision, an objection can be lodged in writing within 28 days. The objection decision can be appealed to the Social Security Appeals Tribunal, if either party is not satisfied with the objection decision. The appeal must be made within 28 days.
There can be many reasons that require a change to a child support assessment - a parent’s income may not be accurately reflected in the assessment, or the level of care recorded may be wrong, or there may be a special circumstance that is not taken into account in the formula. What can be done? The child support legislation has some inbuilt remedies, which are administered by the Child Support Agency, and which allow an assessment to be changed to better reflect the circumstances in the case. This allows the child support formula assessment to respond to unanticipated changes in the lives of the parents and children.
If the assessment is not fair or not correct, it is important to identify the problem so that the appropriate remedy can be selected. For example, if the issue is about the care level used in the assessment then the remedy is to inform the Child Support Agency (or Centrelink) and ask for a care decision to be made.
If the issue concerns a special circumstance such as the special needs of a child or private education expenses, the appropriate remedy may be to make an application to Change the Assessment in Special Circumstances.
Alternatively, if the issue relates to the income used in the assessment for either parent, there are two main ways of changing the assessment – lodge an Estimate of Income or apply to Change the Assessment in Special Circumstances. Deciding which of these remedies is appropriate will depend on the particular circumstances in the case.
Ordinarily, the income used in the assessment is based on the person’s most recent taxable income. For some people, particularly those people who are self employed or have experienced periods of unemployment, this may not produce an accurate assessment of child support.
Because the level of care forms an integral part of the formula assessment, it is important to tell the Child Support Agency about any changes to the level of care immediately. The Agency will contact the other party to confirm the level of care and make any changes to the assessment that are required.
If there is a dispute about care levels, the parties may be asked to provide further information before the Child Support Agency makes a decision. The law in relation to the way the Agency makes level of care decisions changed on 1 July 2010.
If the actual care is different to the care provided for in a written agreement, parenting plan or court order, and the parties cannot agree on the amount of care that each is providing, the Child Support Agency can make an interim decision to use the level of care recorded in the document.
The Agency will consider an interim care decision when the person who has less care than is provided for in the written document, takes action to enforce or change the care arrangement. An interim decision can be made to use the care provided for in the written document for a period of 14 weeks, after which care will usually change to reflect the actual care that is occurring.
If either party is dissatisfied with the decision, an objection can be lodged within 28 days. Unlike most objections, an objection in relation to a care decision can be made orally to the Child Support Agency. It does not have to be in writing.
The objection decision can be appealed to the Social Security Appeals Tribunal, if either party is not satisfied with the objection decision. The appeal must be made within 28 days. A further appeal can be made to the Administrative Appeals Tribunal in relation to care decisions.
From 1 July 2010, decisions about the level of care made by the Child Support Agency or Centrelink will be communicated to the other agency, so that the level of care used is consistent.
The table that converts the number of nights of care into the percentage of a child’s costs is below.
Child Support Care and Cost Percentage Table
| Nights per year | CSA terminology |
Equals
|
Percentage of costs met through care |
|---|---|---|---|
| 0-51 | Less than Regular Care | = | 0% |
| 52-127 | Regular Care | = | 24% |
| 128-237 | Shared Care | = | 25-75% (sliding scale) |
| 238-313 | Primary Care | = | 76% |
| 314-365 | Greater than Primary Care | = | 100% |
If the income used in the assessment is not correct, either parent can provide an Estimate of Income to the Child Support Agency if the following criteria are satisfied –
- the estimated income of the parent seeking the change, is at least 15% lower than the income used in the assessment calculation,
- the change to the assessment is required for future periods (an Estimate cannot be used to make a change to the assessment that is before the day on which the Estimate is made),
- the parent wishing to change the income used in the assessment has lodged a tax return, or provided the Agency with their adjusted taxable income, for the most recent tax year,
- an estimate of income cannot replace an income in an assessment that has been set by a decision made by a court or in the Change of Assessment process.
Parents are asked to estimate their income for a period starting on the day they provide their estimate to the Agency, or on the first day of a new child support period, and ending on the last day of the financial year.
When lodging an Estimate of Income, parents are also asked to provide the income they have earned up to the day on which they lodge their Estimate. It is important that this ‘year to date’ figure is accurate, as it will be used when the Child Support Agency reconciles estimates of income with the income that the person actually earned.
Parents are obliged to update their estimate of income if there is any change to their income during the estimate period, by notifying the Child Support Agency. It is important to remember to do this as the Assessments can be amended retrospectively in cases where the estimated income is found to be less than the actual income. It is also important to recognize that the receipt of any kind of taxable income should be reported, including any drawdown on superannuation or any event that might attract capital gains tax. Penalties can apply if a person significantly underestimates their income.
Either parent can apply to change the assessment if they believe that special circumstances exist to justify a change. This application must be made in writing on the appropriate form. A copy of the application is provided to the other parent, who is given the opportunity to respond and/or make a cross-application.
When considering whether to make a change to the assessment, the decision maker must be satisfied of the following three criteria:
- that special circumstances exist,
- that one of the reasons (listed below) exists, and
- that it is fair to all the parties and the community to make a change.
If these criteria are met, a change can be made to the assessment in the immediate past (up to 18 months before the application is lodged), as well as into the future. This process is most commonly used to change the income of either or both parents, or to recognize extra verified costs associated with a child’s special needs, or to acknowledge the extra costs associated with private school education where it can be proved that both parents intended that the children would be educated privately.
Although these are the most common reasons, there are ten specific grounds of review that can be established:
Reason 1 It costs more than 5% of the child support income amount to have contact with the child(ren). (If a parent has at least regular care of the child(ren), a claim under this reason is restricted to travel related expenses).
Reason 2 It costs extra to cover the child(ren)’s special needs.
Reason 3 It costs extra to care for, educate or train the child(ren) in the way that both parties had intended.
Reason 4 The child support assessment does not take into account the income, earning capacity, property and financial resources of the child(ren).
Reason 5 The child(ren), payee or someone else has received or will receive, money, goods or property from the payer.
Reason 6 It costs more than 5% of the child support income amount for child care for the child(ren) who are 12 years or under.
Reason 7 The payee or payer have necessary expenses in supporting themselves that affect their ability to support the child(ren) of the assessment.
Reason 8 The child support assessment does not taken into account the income earning capacity**, property and financial resources of one or both of the parties.
Reason 9 The payee or payer has a legal duty to maintain another person or another child(ren) not included in the child support assessment and/or it costs them:
- More than 5% of their child support income to have contact with the person or child(ren) they have a legal duty to maintain; and/or
- Extra to cover the special needs of the person or child(ren) they have a legal duty to maintain; and/or
- Extra to cover the necessary expenses of the person or child(ren) they have a legal duty to maintain.
Reason 10 The payee or payer has a responsibility to support a resident child who lives with him/her but is not a biological child. A resident child is a child of the partner of the payee or payer with whom they have lived for at least 2 years. It must be shown that neither of the biological parents of the resident child is able to support them.
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**Child Support Reforms On 1 July 2006, the law governing ‘earning capacity’ decisions changed. In order to have a parent assessed on their earning capacity (rather than on their actual income), an applicant has to satisfy three criteria – 1. The parent is either: a) not working despite ample opportunity to do so, or b) has reduced weekly working hours below full-time hours, or c) has changed occupation, industry or working pattern AND 2. The parent’s decision about work is not justified by either: a) caring responsibilities, or b) health reasons AND 3. The parent (whose earning capacity is being examined) has failed to show that the work arrangements have not been put in place in order to have an effect on the child support assessment. |
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The Senior Case Officer, in making a decision, is bound by the Child Support (Assessment) Act 1989, Child Support (Registration & Collection) Act 1988 and the Family Law Act 1975. The legislation states that an assessment can only be varied where it is just, equitable and otherwise proper to do so.
Applications can only be made to the Child Support Agency to change an administrative assessment that is less than 18 months old on the date the application is lodged.
A person must first apply to a court for leave (permission) to seek a change to an assessment that is more than 18 months old. A court cannot give permission to change an assessment that is more than 7 years old.
- Applying to change an administrative assessment in special circumstances is free.
- Either the payer or payee parent can apply to have the assessment changed.
- The applicant must fill out an application form, complete the financial statement and nominate the reasons they rely on, before the application can be processed.
- The applicant should provide any additional information or documents which are relevant to their case.
- Applicants and Respondents should be aware that the CSA has a policy of open exchange of information. This means that copies of the application/response and any supporting documents will be provided to the other person. Any information that an applicant does not want revealed to the other person, such as address, phone number or bank or credit card numbers should be removed before submitting the application to the Child Support Agency.
- A Senior Case Officer will consider the application. Unless otherwise indicated, the Senior Case Officer will try to contact the parties to discuss the application and response.
- Applicants should retain a copy of their application.
- It is possible to receive a contrary decision in this process. For this reason, it is advisable to seek free legal advice and assistance from the Child Support Unit of Legal Services Commission before lodging or responding to a Change of Assessment application.
- The Senior Case Officer will provide written reasons explaining the decision.
- The Senior Case Officer’s decision is binding on both parties until further order.
- If a party is not satisfied with the decision s/he can object to the decision in writing within 28 days.
- If a party is still dissatisfied with the objection decision s/he can appeal to the Social Security Appeals Tribunal within 28 days. An appeal to the SSAT can be made by telephone on 1800 011 140.
- Appeals to a Court from a Social Security Appeals Tribunal decision can only be brought on a question of law.
Objections
It is possible to object to many of the decisions made by the Child Support Agency if an error has been made in determining the facts or applying the law. The Child Support Agency is required to inform people of their objection rights when a decision is made. An objection is usually required to be in writing, but the exception to this rule is that objections in relation to level of care decisions can be made orally, either in person or by telephone.
Time limit
A person has 28 days in which to object to a decision by the Child Support Agency. This time limit is usually strictly enforced. An application for an extension of time in which to object to a decision can be made either in writing or by telephone.
The most common decisions which can be objected to include:
- decisions in relation to a Change of Assessment application;
- decisions to accept or refuse an Estimate of Income;
- decisions in relation to the level of care of the children used in the assessment;
- decisions to accept or refuse a Child Support Agreement;
- decisions in relation to remission of late payment penalties, or non-agency payments.
Appeals to the Social Security Appeals Tribunal
Since 1 January 2007 the Social Security Appeals Tribunal has been able to review many objection decisions made by the Child Support Agency. A person must first have objected to the decision through the Child Support Agency’s objection process, before lodging an appeal with the Social Security Appeals Tribunal. An appeal can be lodged with the SSAT by telephone (1800 011 140).
When an appeal is lodged, the Child Support Agency provides all relevant documents on the case to the SSAT and a copy is given to each party. The Tribunal is able to request that further information be provided to assist it to make a decision.
If the appeal is related to a Change of Assessment decision, a pre-hearing conference is often held to identify the issues and determine if further information is required from either party.
Both parties attend the hearing in person, although in some circumstances arrangements can be made to attend by telephone. A person can bring along a support person, but the Tribunal will decide if the support person is allowed to attend the hearing. A party can have a legal representative attend the hearing if they wish.
Time limit
If a person is dissatisfied with an objection decision made by the Child Support Agency, he or she has 28 days in which to lodge an appeal to the SSAT. This time limit is usually strictly enforced. An application can be made to the SSAT for an extension of time in which to appeal.
Social Security Appeals Tribunal
Freecall 1800 011 140
TTY 1800 060 116
Website www.ssat.gov.au
The Child Support Agency can use an agreement that has been reached by the parties as the basis for the child support assessment, instead of using the formula calculation. In many cases, parents can make their own arrangements about the amount of financial support they provide for their children, if they can reach agreement. Child Support Agreements can include periodic payments, in-kind payments or lump sum payments.
Agreements can allow parents the freedom to make arrangements to suit their individual needs. However, the object should always be that the children receive a proper level of financial support from their parents, and agreements should not be used to unfairly take advantage of either party.
Parties should be cautious about the duration of an agreement. The longer the agreement, the less likely it is to be able to anticipate changes in the circumstances of either parent or the child(ren) that may occur in the future. Agreements are often inflexible documents that cannot respond to changes in circumstances in the same way that a formula based assessment can.
On 1 July 2008, the law was changed to allow for two kinds of formal child support agreements.
- Limited Child Support Agreements
- Binding Child Support Agreements (including Lump Sum Child Support Agreements)
Agreements that were registered with the Child Support Agency prior to the change in the law on 1 July 2008, were reviewed by the Child Support Agency to determine if the agreement would be able to continue to operate under the new law. The majority of these agreements were considered to be able to survive or ‘transition’ into the new era. They were deemed to fall into the category of Binding Child Support Agreements, even though the strict criteria governing new binding agreements were not satisfied.
A Limited Child Support Agreement has the following fundamental characteristics:
- provides a rate of child support equal to or more than the amount payable under the formula assessment
- can include periodic and non-periodic payments
- can be replaced with a further Limited or Binding agreement, but cannot be varied
- can be terminated upon application of either party after the passage of 3 years, or when the annual rate of child support payable under the notional formula assessment changes by >15%
- can be set aside by a court under s136 (see below)
It is recommended that parties seek legal advice before entering a Limited Agreement, but this is not a mandatory requirement.
From 1 July 2008 the law allows parents to enter a Binding Child Support Agreement. It is not necessary to have an administrative assessment in force prior to entering the agreement. However, if a binding agreement is registered with the Child Support Agency, a notional formula assessment will be created. A notional assessment is the formula based assessment that would apply if the agreement was not in place. Some fundamental characteristics of Binding Agreements are listed below:
- can provide for the payment of child support that is less than, equal to, or more than the rate of child support that would be payable under the formula assessment
- will not be sent to Centrelink for approval, unless the agreement includes a period that is prior to 1 July 2008
- each party must receive legal advice from a legal practitioner, and a Certificate of Independent Legal Advice must be annexed to the Binding Agreement
- can provide for periodic, non-periodic and lump sum payments
- Family Tax Benefit (A) entitlements will be calculated by reference to the child support payable under the notional formula assessment, (notthe amount payable under the Agreement)
- can be terminated by executing a Termination Agreement or a further Binding Child Support Agreement. Both alternatives require the provision of independent legal advice to each party
- can be set aside by a court under s136 (see below)
It is mandatory for each party to receive independent legal advice before entering a Binding Child Support Agreement. Section 80C of the Child Support (Assessment) Act) requires legal practitioners to advise parties as to:
(i) the effect of the agreement on the rights of that party;
(ii) the advantages and disadvantages, at the time that the advice was provided, to the party of making the agreement
To provide this advice, a legal practitioner would need an understanding of the Child Support scheme, and knowledge of the financial situation of each party. This involves the exchange of financial information. Even if a party indicates that s/he is perfectly satisfied with the terms of the agreement, the law requires that the advice be given by the legal practitioner.
Binding Child Support Agreements can include an agreement to transfer a lump sum payment of cash or non-cash. For example, transferring equity in the former matrimonial home can constitute a lump sum child support payment. Some fundamental characteristics of Binding Agreements are listed below:
- an administrative assessment must be in force prior to entering the agreement
- each party must receive legal advice from a legal practitioner, and a Certificate of Independent Legal Advice must be annexed to the Binding Lump Sum Agreement
- the lump sum amount must be more than or equal to the annual rate of child support
- actual payment of the lump sum will be transferred between the parties (not paid to the Child Support Agency)
- the lump sum credit will be recorded at the Child Support Agency where it will reduce each year by the annual rate of child support, and the remaining credit will be indexed by the CPI
- unless the Binding Child Support Agreement also changes the rate of child support payable, the Child Support Agency will continue to produce formula assessments in the usual way
- Family Tax Benefit (A) entitlements will be calculated by reference to the formula assessment of child support, or if the agreement has also changed the rate of child support payable, by reference to the notional assessment
- if the rate of child support is not set by the agreement, it will be impossible to predict how long the lump sum amount will last because the assessment will vary with changes in the parents’ incomes, ages of the children and care levels,
- when the lump sum credit is reduced to nil, it will be necessary to commence periodic payments according to the administrative assessment
- a Binding Lump Sum Agreement can prescribe that the lump sum can represent either 100% or some other proportion of the amount payable under the administrative assessment
A Binding Lump Sum Child Support Agreement may be used in conjunction with Property Settlement Orders. For example, the agreement may provide for the transfer of equity in the family home to represent a lump sum payment of child support. The parties can agree that the lump sum is to be used to pay for all or part of the child support assessment.
Example:
Parties agree to a $20,000 lump sum payment, and agree that it will represent 50% of the assessed annual rate of child support. The annual rate is currently $5,000.
A Binding Child Support Agreement is executed and registered with the Child Support Agency, and the $20,000 credit is recorded.
The payer will pay $2,500 (50% of the annual liability) in periodic payments, and after twelve months the lump sum credit will reduce to $17,500, which will be indexed by the CPI.
This sequence will continue (taking account of any variations in the assessed rate of child support and CPI) until the lump sum is exhausted or the case ends.
Agreements that were registered with the Child Support Agency prior to 1 July 2008, and were deemed by the Child Support Agency to be able to operate beyond that date, are often referred to as Transition Agreements. Even though such agreements do not satisfy the current requirements of a Binding Child Support Agreement, they are deemed to fall into this category.
Prior to 1 July 2008, any Child Support Agreement that involved a party who received more than the base rate of Family Tax Benefit (A), had to be forwarded to Centrelink for approval. Parents were not able to agree to the child support payment being less than the formula assessed rate of child support, as this would have increased the amount of Family Tax Benefit payable.
From 1 July 2008, parties are able to make a Binding Child Support Agreement which provides for less than the assessed rate of child support. However, the entitlement to Family Tax Benefit (A) will not be calculated on the amount of child support payable under the agreement. FTB(A) will be calculated by reference to the notional assessment of child support, which will reflect the amount of child support that would have been payable, if the agreement had not been made.
For clients with Limited Child Support Agreements and Binding Child Support Agreements, Family Tax Benefit (A) will be calculated by reference to the notional assessment, and not by the agreement.
Lump Sum Binding Child Support Agreements will not require the creation of a notional assessment, unless the agreement also changes the rate of child support payable.
Although Transitioned Agreements (those executed and registered prior to 1 July 2008), are deemed to be Binding Child Support Agreements, in these cases Family Tax Benefit entitlement is based on the amount of child support provided for in the agreement.
A court can set aside a Limited Agreement or a Binding Agreement if
- if the agreement was obtained by fraud or the failure to disclose material information, or
- the court is satisfied that sufficient undue influence, duress, or unconscionable or other conduct was applied to secure the agreement.
(Section 136 (a) and (b) of the Child Support (Assessment) Act)
It is clear from this section that parties should provide full and frank disclosure of their financial positions at the time of negotiating an agreement. It is also important that neither party, or someone acting on their behalf, use any undue pressure or coercion to secure the agreement of the other party, because this can provide the grounds to have an agreement set aside.
In the case of Limited Agreements, a court can also set the agreement aside if there is a significant change in the circumstances of either party or the child, or if the agreement provides for an annual rate of child support that is not proper or adequate (Child Support (Assessment) Act s 136(c)).
In the case of Binding Agreements, a court can set aside the agreement if exceptional circumstances occur after the agreement is made, that would cause hardship if the agreement was not set aside (Child Support (Assessment) Act s 136(d)).
Although parties may enter an agreement in order to provide certainty about their future liability or entitlement, a court is able to set aside agreements if the grounds set out in section 136 can be made out.
Appropriately executed agreements can be registered for collection with the Child Support Agency if they provide for periodic payments of child support. Agreements for non-periodic payments (such as school fees) cannot be enforced by the Child Support Agency.
The Agency cannot enforce verbal agreements.
An agreement cannot exclude collection by the Child Support Agency, even if expressed to do so. If the payments are not made voluntarily in accordance with the agreement, the payee can ask the Child Support Agency to commence collection of periodic payments.
What happens when my child turns 18?
A Child Support Assessment will usually end when a child turns 18. However, if the child is going to be attending secondary school when s/he turns 18, the receiving parent can ask the Child Support Agency to extend the child support assessment until the end of the school year. This application must be made before the child turns 18.
What happens after the child support assessment ends?
Adult children (18 years or over) can seek financial support from their parents if they are unable to fully support themselves because
1) they are completing their education, or
2) they have a disability that prevents them from supporting themselves.
Either the adult child, or the person who is caring for them, can apply to the court for an adult child maintenance order. The maintenance contribution to be made by the parents will depend on the child’s necessary expenses, and the financial situation of each parent and the adult child.
For more information, call the Child Support Help Line on 8463 3576 or 1300 366 424, or see our pamphlet Adult Child Maintenance.
Private Collection
Parents can make their own arrangements for collection of payments. It is recommended that a record of payments is maintained in the form of a receipt book or payment by regular bank transaction. Private collection is only recommended in cases where the payer is likely to pay or has a good payment history.
Parents can agree to pay or receive less than the amount calculated in the assessment. However, the Family Tax Benefit (A) will be calculated on the amount stated in the assessment, not the lesser amount agreed by the parents.
If a private collection arrangement breaks down, a parent can ask the Agency to start collecting the liability. The Agency can usually only backdate collection three months, so it is important to take action promptly if payments are not being made.
Private Enforcement of Child Support Debts
From 1 January 2007 payees can personally make an application to a court to enforce collection of outstanding payments of child support while the case is still registered for collection with the Child Support Agency. Parents are required to advise the Child Support Agency in writing of their intention to take private enforcement action. The Agency must also be notified of any orders made by the Court in relation to the debt. Legal advice should be sought before taking action.
Child Support Agency Collection
Periodic payments pursuant to Child Support Assessments, Child Support Agreements, and Court Orders for Adult Child Maintenance and Spousal Maintenance can be registered for collection with the Child Support Agency.
Once the liability is registered with the Child Support Agency for collection, the debt becomes a debt to the Commonwealth, and the Child Support Agency becomes responsible for collection of the debt.
Agreements for non-periodic payments (such as school fees) cannot be enforced by the Child Support Agency.
Collection Methods
If payments of child support are not made privately, the Child Support Agency is able to collect payments from wages, bank accounts, tax refunds, compensation or insurance payments, or any other source of funds that can be identified.
Collection from Centrelink benefits
Payers who receive Centrelink benefits, and who do not pay voluntarily, will have child support payments collected from their benefits.
Collection and Family Tax Benefit(A)
A payee who opts to privately collect payments of child support will be deemed by Centrelink to be receiving the full rate of child support that s/he is entitled to receive, and their Family Tax Benefit(A) will be calculated using the Entitlement Method.
A payee who is not receiving child support payments under a private collection arrangement can ask the Agency to commence collection of the liability. Some payees may be eligible for a partial exemption from the requirement to collect child support. An appointment with a Centrelink social worker is required to obtain an exemption.
Clients contemplating changing from CSA collection arrangement to a private collection arrangement should seek legal advice before taking this step.
Non-Agency Payments
Non-Agency Payments apply to cases that are being collected by the Child Support Agency. The payer can seek credit for in-kind or cash payments made in lieu of child support by advising the CSA. If the payee agrees that such amounts were intended to be payments of child support, they will be credited against the payer’s child support liability.
However, if the payee does not agree, there are only very limited circumstances in which Non-Agency Payments can be credited. These are called Prescribed Non-Agency Payments (PNAPS) and primarily relate to
- various educational expenses
- essential medical and dental treatment and
- payments towards accommodation, utilities and vehicle expenses.
Advice should be sought before making non-Agency payments as the payer will only be able to receive a maximum credit of 30% of the future monthly liability, with any unused credit being carried over to the following months. The remaining 70% of the liability is required to be paid by the due date in order to be eligible for the 30% credit.
From 1 July 2008, a payer who has Regular Care (14%) or more will not be able to make a claim for Prescribed Non-Agency Payments. This is because the new formula recognizes that parents with regular care or more contribute directly to the costs of children.
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Child Support Reforms On 1 July 2006, the percentage of credit that can be claimed increased from 25% to 30%. |
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CHILD SUPPORT LEGISLATION
There are limited circumstances in which a party may make an application to a court in relation to child support matters. The most common situations are listed below:
Paternity Matters: either parent can apply to a court to resolve disputes involving paternity of children and entitlement to child support. The court may order DNA parentage testing in these cases. If a payer is excluded from paternity, a court may order the payee to repay child support paid by the payer.
Application for Leave to Change an Assessment that is > 18 months old: a Court can give permission to change an assessment that is more than 18 months old, but not more than 7 years old.
Child Support Agreements:Applications can be made to set aside child support agreements. If the agreement was made before 1 July 2008, the court will apply the law as it applied prior to that date.
Lump Sum Applications: In limited circumstances, a court may order the payment of child support in a lump sum.
Stays Orders: A stay order can be sought from the court in limited circumstances. Alternative administrative remedies apply in some circumstances.
Applications to Change an Assessment:Where a parent is dissatisfied with a decision by the Social Security Appeals Tribunal, an appeal can be made to a court but only on a question of law.
MAINTENANCE ORDERS (Family Law Act 1975) Court orders and agreements can be made under the Family Law Act 1975 for various types of maintenance payments, including maintenance for:
- Adult children (over 18) who are studying or have a mental or physical disability
- Children (under 18) who are living independently and applying for maintenance in their own right
- Parents who separated and whose children were all born before 1 October 1989
- Step-children (step child maintenance)
- Spouses (spousal maintenance)
- Some cases where the payer is overseas
Legal advice should be sought before making an application to a court. Applicants should seek advice about the relative merit of their case, and the risk of having a costs order made against them if their application is unsuccessful.
There are many cases where one parent is living in Australia and the other parent is living overseas.
Australiahas reciprocal arrangements with many countries for the collection of child support. The Australian Child Support Agency often has a role in collecting and enforcing payments in these matters.
Even in some cases where Australia does not have reciprocal arrangements with the country where one parent is residing, there may be some options for the carer parent to obtain child support.
This is a complex area of law and legal advice should be obtained in each individual case.
Parents can contact the Child Support Unit of the Legal Services Commission for advice about overseas matters. Enquiries from parents who reside overseas can be directed to lscchildsupportunit@saugov.sa.gov.au
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The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.
