Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2016-2017-2018
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
FAMILY ASSISTANCE AND CHILD SUPPORT LEGISLATION AMENDMENT
(PROTECTING CHILDREN) BILL 2017
ADDENDUM TO THE EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Social Services, the Honourable Dan Tehan MP)
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FAMILY ASSISTANCE AND CHILD SUPPORT LEGISLATION AMENDMENT
(PROTECTING CHILDREN) BILL 2017
This addendum responds to comments raised by the Senate Standing Committee for
the Scrutiny of Bills in Scrutiny Digest 13 of 2017, dated 15 November 2017, and
makes corrections to the Explanatory Memorandum.
NOTES ON ITEMS
Item 1 - Interim periods
On page 4, in the paragraph starting with "Item 1", delete "1U" and replace it with
"21".
Item 22 - Interim periods
On page 11, in the paragraph starting with "Item 22", delete the words "14 to 19B"
and replace them with "39 to 38".
Item 25 - Interim periods
On page 12, in the paragraph that starts at the end of page 11 with "Item 25", delete
"2A" and replace it with "25".
Item 40 - Amended tax assessments
On page 19, immediately before the paragraph starting with "Item 41", insert:
"These provisions support the principle that parents take financial responsibility for
the costs of raising their children in line with their financial capacity to do so, and
align with existing rules governing the retrospective application of taxable income.
This will result in a retrospective adjustment to the child support assessment, and
may lead to an overpayment or underpayment debt being raised against the other
party in the child support case. Where the parent with the lower amended taxable
income has taken timely action to amend their tax assessment, any debt raised
against the other parent will be minimal. This supports the fairer treatment of child
support parents who take timely action to correct any errors made in their tax
assessment, particularly where another party, such as a tax agent or the Australian
Taxation Office, made the error. These provisions also provide fairer outcomes for
parents who, due to circumstances beyond their knowledge or control, or in special
circumstances such as serious ill health or natural disaster, are unable to amend
their tax assessment earlier.
Backdating of a lower amended taxable income is also limited by the timeliness of
the lodgement of the person's original tax assessment. Under current provisions,
where a parent has not lodged their tax return when a new child support period
starts, a provisional income is used. If the parent's original tax assessment is lodged
late and is lower than the provisional income, the taxable income will only apply
prospectively. If the parent then meets the relevant criteria under new
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subsections 58A(3C) or 58A(3D) for retrospectively applying a lower amended tax
assessment, the lower amended tax assessment would only retrospectively replace
the original tax assessment, and would not replace the higher provisional income."
Item 43 - Amended tax assessments
On page 21, immediately before the paragraph starting with "Item 44", insert:
"These provisions support the principle that parents take financial responsibility for
the costs of raising their children in line with their financial capacity to do so, and
align with existing rules governing the retrospective application of taxable income.
This will result in a retrospective adjustment to the child support assessment, and
may lead to an overpayment or underpayment debt being raised against the other
party in the child support case. Where the parent with the lower amended taxable
income has taken timely action to amend their tax assessment, any debt raised
against the other parent will be minimal. This supports the fairer treatment of child
support parents who take timely action to correct any errors made in their tax
assessment, particularly where another party, such as a tax agent or the Australian
Taxation Office, made the error. These provisions also provide fairer outcomes for
parents who, due to circumstances beyond their knowledge or control, or in special
circumstances such as serious ill health or natural disaster, are unable to amend
their tax assessment earlier.
Backdating of a lower amended taxable income is also limited by the timeliness of
the lodgement of the person's original tax assessment. Under current provisions,
where a parent has not lodged their tax return when a new child support period
starts, a provisional income is used. If the parent's original tax assessment is lodged
late and is lower than the provisional income, the taxable income will only apply
prospectively. If the parent then meets the relevant criteria under new
subsections 58A(3C) or 58A(3D) for retrospectively applying a lower amended tax
assessment, the lower amended tax assessment would only retrospectively replace
the original tax assessment, and would not replace the higher provisional income."
Items 46, 47 and 51 - Child support agreements
On page 22, immediately after the paragraph starting with "Item 47", insert:
"The amendments at items 46 and 47 give effect to the policy that certain provisions
in child support agreements would cease to have effect when a child support
terminating event occurs due to section 142, for example, where a child leaves their
parents' care to live independently or becomes a member of a couple. This clarifies
the current policy in light of differing opinions put forward by Murphy and Aldridge JJ
in the recent decision of the Full Court of the Family Court of Australia Masters and
Cheyne [2016] FamCAFC 255."
On page 22, in the paragraph starting with "Item 51", delete "27B" and replace it with
"51".
On page 22, immediately after the paragraph starting with "Item 51", insert:
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"The amendments at items 46 and 47 affirm the operation of the current policy and
would therefore not result in detriment to any person."
Item 52 - Child support agreements
On page 23, in the paragraph that starts at the end of page 22 with "Item 52", delete
"27BA" and replace it with "52".
Subitems 74(3) and 74(6) - Child support agreements
On page 27, immediately before the paragraph starting with "Subitem 74(5)", insert:
"By preserving entitlements before commencement of this item, but ensuring that all
assessments of child support from commencement onwards reflect the new policy,
the commencement provision at subitem 74(3) removes the unfair outcome where a
parent might be required to continue paying child support to a parent who has
ceased to be an eligible carer of a child. Subitem 74(4) qualifies the operation of
these amendments so that, for example, a parent who has ceased to be an eligible
carer of a child may still have the option to privately enforce contractual obligations."
On page 27, immediately before the paragraph starting with "Subitems 74(5) and
74(6)", insert:
"Subitem 74(6) ensures an outcome similar to subitem 74(3) for the suspension of
child support agreements in cases of temporary care changes."
Subitems 172(2) and 172(4) - Overpayments
On page 38, immediately before the paragraph starting with "Subitem 172(5)", insert:
"Together, subitems 172(2) and 172(4) enable the expanded recovery mechanisms
in Division 1 of Part 4 of Schedule 1 of the Bill to be utilised in the recovery of
amounts overpaid to payees, which will be taken to be carer debts. In these cases,
the Registrar would first consider whether recovery of the overpayment could occur
through a reduction in future child support entitlements or through cash repayment
arrangements (that is, through mechanisms already available in the child support
legislation). The expanded recovery mechanisms are only intended to be used
where recovery from future child support entitlements is not possible or where
negotiation with the payee on cash repayment arrangements has not been
successful. Currently, the only alternative for the payer is to pursue recovery through
the courts, in contrast with the range of options available for the recovery of payer
debts."
Item 174 - Overpayments
On page 39, insert:
Immediately before the subheading "Division 3 - Date of effect rules", insert:
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"These amendments are necessary to ensure that child support arrears or
overpayments are not raised against parents, where it is through no fault of their own
and is due to the other parent not complying with their legal obligations.
Currently, where a parent lodges a tax return for a period before 1 July 2008, there is
no limitation to retrospectively applying a taxable income to a child support
assessment. For tax returns lodged in respect of periods from 1 July 2008, a lower
taxable income would not be applied where that tax return was lodged outside the
Australian Taxation Office lodgement timeframe. This change was enacted so that a
parent could not be disadvantaged in their child support assessment by the other
parent not lodging a tax return in line with legal requirements.
The continuation of the pre-1 July 2008 rules has been raised by the Commonwealth
Ombudsman in its Annual Report 2012-13 as they have resulted in large
overpayments being raised against payees who had received and spent the child
support received in good faith (based on a provisional income). Generally, where a
taxable income has been applied retrospectively and was not reflective of the other
parent's earning capacity, a parent could seek review under the departure provisions
in the child support legislation. However, parents can no longer access the departure
provisions in these cases, given the time elapsed and the seven-year limitation on
backdating departure orders."
Item 176 - Overpayments
On page 40, immediately before the paragraph starting with "Under the new
subsections 54F(3) and 54H(3)", insert:
"At present, a new care percentage would only have effect from the date of
notification where notification of the change in care is delayed (more than 28 days
after the change in care). Item 176 amends the current rules so that a decreased
care percentage would be reflected in the child support assessment from the date of
the care change (while an increased care percentage would continue to be reflected
from the date of notification)."
Item 183 - Overpayments
On page 41, immediately after the paragraph starting with "Item 183", insert:
"This provides parents who have delayed in notifying a change of care with a
transitional 'grace period' of 26 weeks from commencement to notify of the change
of care before they become subject to the new care percentage date of effect rules.
As a result, a parent who had reduced their care of a child before commencement
but failed to notify of the change until more than 26 weeks later would have the
reduced care percentage reflected in their child support assessment from the date of
the care change. This could lead to a child support overpayment or arrears debt
being raised against that parent in some cases. However, this is appropriate given
the reduced care percentage is an accurate measure of the lower care costs
incurred by that parent as the date of the care change, and the ability to notify within
a timely manner, was within the parent's control."
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