This Digest is prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments.
This Digest was available from 17 September 1996.
Child Support Legislation Amendment Bill (No. 1)
Date Introduced: 27 June 1996
House: The Senate
Commencement: 28th day after Royal Assent - except
for items 21 to 25 of Schedule 1. They commence on a day to be
fixed by Proclamation, or, if no date is fixed, six months after
the Act receives Royal Assent.
To change some aspects of the Child Support Scheme, so that:
- custodial parent will not have to refund overpayments, but,
instead, will have future payments for the year reduced
- non custodial parents will be able to make their payments
direct to the Child Support Agency, rather than through their
- when making property or maintenance decisions, the Family Court
will be able to take into account future liabilities under the
Child Support (Assessment) Act 1989 even if an assessment
has not been made.
The Child Support Scheme was established after a long period of
community consultation. The object of the scheme is to ensure that
both custodial and non-custodial parents pay for their children's
upkeep, rather than the tax payer. Stage 1 came into effect on 1
June 1988, stage 2, on 1 October 1989. Different rules apply to
parents covered by the two stages.
Stage 1 covers parents who separated before 1 October 1989, and
have no children born after that date. In these cases, the Child
Support Agency has the power to enforce court orders or court
registered agreements on behalf of the custodial parents.
Stage 2 goes a step further. The Child Support Agency can:
- assess and collect child support;
- assess child support but leave the parents to make their own
- collect child support where State 2 parents have made a private
child support agreement;
- register a child support agreement(1) (without making an
assessment or playing a role in collection);
- enforce child support obligations.
In assessing child support, the Child Support Agency makes an
administrative assessment using a formula. Where the agency
collects child support it may do so through an arrangement with the
paying parent's employer (via deductions from the parent's pay
packet - called withholding) or directly from the paying
Where parents agree privately as to the amount and method of
payment, the agency won't interfere unless the custodial parent is
seeking a means-tested social security payment. Then, the agency
must assess the amount to be paid. The money may then be paid
directly to the custodial parent, or to the agency.
According to evidence given to the 1994 Joint Select Committee
on Certain Family Law Issues, about one-third of separated parents
are clients of the Child Support Agency. The rest collect child
support through informal agreements.(2)
The scheme has had significant teething problems. The select
committee was very critical of some aspects, and made one hundred
and sixty-three recommendations.
Under the Child Support (Assessment) Act 1989 child
support assessments are calculated by reference to income tax
returns from the previous two years. If a person believes their
income for the current year will be more than 15 per cent less than
anticipated he or she may elect to have their position reassessed.
Any decision would be based on an estimate of current annual
income. The estimate amends the child support assessment from the
beginning of the financial year. A parent receiving payments may
have to refund money. The explanatory memorandum puts it this
Both a paying parent and a parent receiving child support may
make an election as to their income estimate for the year. The
majority of income estimate elections are made by parents who pay
child support and often result in overpayments. Where the parent
paying child support has made the election, the person receiving
child support is often put in the difficult position of having to
repay money which they have spent to support the child. Frequently,
some of this money is returned to them as child support payments
over the remaining period.(3)
Items 21 - 25 repeal sections 60(3)(b),
61, 61A, 62(1), 62(1A), 63, 63A, and
substitute new ones so as to ensure that a parent will not be
required to refund money already paid. Instead, any overpayment
will reduce the non custodial parent's remaining liability for the
year, with the regular payments reduced accordingly (new
section 61). Similarly, any underpayment will also be made
up over the remaining year. According to the explanatory
memorandum, the new payments will normally be calculated from the
date on which the application for variation was lodged(4). However,
new section 61(b) says the date from which the new
rate will be calculated will be determined in accordance with the
regulations, and may be earlier than the day on which the person
made the election.
The parent will still pay the correct amount for the year. The
new sections do not prevent a court from altering payments or the
parties from privately changing the agreement (new section
61(5)(a) and (b)).
Under new section 60(3)(b) a person may not
apply for another alteration within two months of a the effect of a
The amendments are line with recommendation 124 by the Joint
Select Committee, with one significant difference. The committee
recommended the new rate take effect one month after lodgement.
Under the amendments, the new rate would take effect from the date
the application was lodged.
Cutting the employer out
As the Child Support (Assessment) Act 1989 stands now,
payments being channelled through the Child Support Agency are, in
many cases, deducted from a parent's pay packet by his or her
employer who forwards it on to the agency for payment to the
custodial parent. Direct payment from the non-custodial parent to
the registrar only takes place:
if the liability arose prior to 1 June 1988;
- if a court has ordered it because of special circumstances
relating to privacy;
- if a court has ordered it pending outcome of proceedings before
a court; or
- if the registrar is satisfied that withholding by the employer
is not an efficient method of collection.
Items 31 to 39 would allow the parent to elect
paying child support to pay the agency directly - in line with
recommendations by the Joint Select Committee.(5)
The Joint Committee considers it important that the
intrusiveness of the Scheme be minimised and that parents should be
given a choice in deciding the means by which they pay their child
support liabilities. While child support continues to be paid on a
regular basis, non custodial parents should be able to pay the CSA
(Child Support Agency) through the mechanism of their choice. If a
non custodial parent defaults on child support payments, the Child
Support Registrar could immediately contact the non custodial
parent's employer to commence autowithholding of child support.
This would avoid the necessity of unnecessary disclosure of
personal information to non custodial parents' employers and offer
an incentive to non custodial parents to comply voluntarily with
their child support obligations.'(6)
Item 32 repeals sections 44(1), (1A),
(2), (3) and (4) of the Child Support
(Registration and Collection) Act 1988 and substitutes three
new ones. New section 44(1) allows a parent
currently making payments, to elect to send the money directly to
the registrar. If the registrar is satisfied the parent is likely
to pay on time, the registrar must within 28 days after receiving
the request, alter the Child Support Register to reflect the new
New section 44(2) makes similar provision for
parents whose maintenance liabilities will be registered in the
New section 44(5) empowers the registrar to
reverse the decision and require the employer to deduct the
payments from the pay packet if the parent defaults and does not
make timely payments.
New section 44(5A): the registrar may decide
not to re-institute employer withholding if satisfied that: direct
deduction from the parent's pay packet would not be an efficient
method of collection; or the parent is likely to recommence timely
payments in the near future.
New section 44(7) applies to parents who are
not subject to employer withholding due to special circumstances.
The registrar must take that exemption away if timely payments are
not made unless: employer withholding is not an efficient method of
collection; or the parent is likely to recommence timely payments
in the near future.
New section 44(7B) provides that if the
registrar has decided to re-institute employer withholding, a
paying parent must wait another six months before again electing to
make direct payments.
New section 44(7C) provides that if a request
to switch to direct payment has been refused by the registrar, the
parent must wait another two months before making another election
for direct payment.
Item 39 amends section
59(1)(b) to reduce the number of years employers are
required to keep records of direct payments from seven to five.
Family Court and child support
The Joint Select Committee was concerned that some non custodial
parents were disadvantaged in Family Court decisions over property,
because, in some circumstances, they were not able to obtain an
assessment of any future obligations under the Child Support
(Assessment) Act 1989 for the court to take into account. This
was one of a number of concerns the committee had about the
relationship between property settlements and child support.
A submission to the committee by the Law Council of Australia
put the problem this way.
Where there are property proceedings before the Family Court,
and there is no child support assessment, the NCP (non custodial
parent) has no way of obtaining an assessment so that the Family
Court can take his/her liability for child support into account in
determining what is a just and equitable property settlement under
Section 79 of the Family Law Act.
This situation arises quite frequently where the NCP is making
voluntary payments for the benefit of the child and the CP
(custodial parent) is not therefore motivated to obtain an
assessment. After the property proceedings have been determined,
the CP can apply for an assessment which could include substantial
arrears which the Court did not take into account in the property
To rectify this, the committee recommended that non custodial
parents be given the right to apply to the agency for a child
support formula assessment.(8)
However, the Minister has chosen not to adopt this
recommendation, but to try a different approach amending
section 75 of the Family Law Act
Under section 75(1)(na), the Family
Court, when making decisions on maintenance, may take into account
any child support under the Child Support (Assessment) Act
1989 that a party has provided, or is to provide, for a child.
New section 75(1)(na) substitutes the words 'is to
provide, or might be liable to provide in the future'. Section
79(4)(g) is altered in the same way, so that when
deciding property issues, the court may also take into account
potential liabilities under the Child Support (Assessment) Act
The second reading speech says these amendments will mean that
parents with private arrangements for child support will be treated
in the same way as those already paying child support under the
Child Support (Assessment) Act 1989. The loose of the
amendments may have that effect, however, it may have been possible
to draft the provisions more tightly so they more clearly expressed
the Government's intention.
- Registration enables a child support agreement to be
- Joint Select Committee on Certain Family Law Issues, The
Operation and Effectiveness of the Child Support Scheme,
November 1994, p38.
- Explanatory memorandum, Child Support Legislation Amendment
Bill (No. 1) 1996, p10
- ibid, p10.
- The Join Select Committee report, Op cit,
recommendations 55, 56, 57. pp 169-170.
- ibid, p169.
- ibid, submission quoted p 510
- Recommendation 156 and pages 510-511
Bronwyn Young Ph. 06 277 2699
16 September 1996
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Last updated: 13 September 1996
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