Explanatory Memorandum
(Circulated by authority of the Minister for Family and Community Services, Senator the Hon Jocelyn Newman)Chapter 5 - Effect of Care Arrangements on Assessment
Overview
5.1 Schedule 5 of the Bill will amend the Child Support (Assessment) Act 1989 (the Assessment Act) to modify the effect of care arrangements on assessments as follows:
- •
- Item 1 of Schedule 5 - to include a step child as a relevant dependent child where the paying parent has a legal duty to maintain the child, under section 66M of the Family Law Act 1975 or section 58D of the Family Court Act 1975 of Western Australia . (Step-child)
- •
- Items 2 to 5 of Schedule 5 - to reflect parents' agreement about care arrangements for their children. (Major/substantial care)
- •
- Items 6 to 7 of Schedule 5 - to reflect both the factual and lawful daily care of a child. (Factual/lawful care)
Summary of the amendments
5.2 The proposed amendments extend the definition of a relevant dependent child to include a step-child where a court has made an order under section 66M of the Family Law Act 1975 or section 58D of the Family Court Act 1975 of Western Australia . The amendments eliminate the requirement for a paying parent to seek a departure from an assessment and enable a legal duty to maintain a step-child to be taken into account for the purposes of the child support formula.
5.3 The proposed amendments will enable the Registrar to accept parents' agreement that substantial contact applies to modify an administrative assessment even if the care is less than 30% to 40% of the nights in a child support year.
5.4 The proposed amendments will address concerns that an assessment may not reflect lawful care arrangements by providing that administrative assessments will be based on both the lawful daily care of the child (as provided for in a court order or registered parenting plan) and on the actual care of the child.
5.5 The proposed amendments will require the Registrar to give effect to the lawful care arrangements in relation to a child when determining both a person's level of care and the appropriate rate of child support payable by a person.
5.6 On the day on which the Act receives Royal Assent and will not apply in relation to the part of the 1998-99 child support year that occurs before the 1998-99 commencing date.
Background to the legislation
5.7 Division 1 of Part 5 provides the components that apply in the basic child support formula. One component is the exempted income of the paying parent which includes an allowance for a relevant dependent child (namely a natural or adopted child) of the paying parent.
5.8 Division 2 of Part 5 of the Assessment Act provides for a number of modifications to the basic formula in certain cases. SubdivisionE in that Part provides for modified rules for children where care is shared or divided between parents.
5.9 Where care is shared or divided between parents they are both taken to be paying parents and eligible carers in respect of those children. An allowance is made in calculating the child support payable under the administrative formula according to the level of care each parent has in relation to the child or children.
5.10 Currently a paying parent may claim only natural or adopted children as relevant dependent children for the purposes of the child support assessment formula. A paying parent may have a legal duty, determined by the court, to maintain a step-child. A paying parent is required to seek a departure from an assessment in order to have this legal duty taken into account in the formula.
5.11 Substantial contact is based on the number of nights that a parent has care of a child over a child support year. In order to qualify for substantial contact a parent must have the care of a child between 30% and 40% of the nights in a child support year. By requiring substantial contact to be established on the basis of nights there are some care arrangements which the Registrar is unable to give effect to regardless of any agreement between the parents.
5.12 The current law is unclear whether assessments should be based solely on the factual daily care of a child or whether that care should also be lawful. The legislation does not specifically require care of a child to be lawful in order for an administrative assessment to be raised based on the level of care as disclosed in the application.
5.13 The level of care taken into account for the purposes of varying the level of care in an assessment is based on the arrangements as disclosed to the Registrar by one of the parties when the level of care of the child changes. The assessed rate of child support is based on the factual care of the child. In some circumstances this may be contrary to the care arrangements a court has ordered or that are contained within a registered parenting plan.
Explanation of the amendments
Definition of relevant dependent child
5.14 The definition of relevant dependent child in section 5 of the Assessment Act will be amended to include a step-child where:
- •
- an order is in force under section 66M of the Family Law Act 1975 in relation to the parent and the step-child; or
- •
- the parent has the duty under section 58D of the Family Court Act 1975 of Western Australia of maintaining the step-child.
5.15 To be a relevant dependent child, the step-child must also be under the age of 18 and not a member of a couple. The paying parent must have sole or major contact with the step-child. Shared care of a step-child does not and will not fall within the definition of a relevant dependent child. The term major contact is defined in the Assessment Act as being a person who has care of the child for 65% of the nights. [Item 1 - repeal definition of "relevant dependent child" in section 5 and insert new definition of "relevant dependent child"]
Where parents agree to substantial care of a child
5.16 The proposed amendments will allow parents to agree that a parent, other than the principal provider of ongoing daily care, has substantial contact with a child and to have this care arrangement reflected in their administrative assessment.
5.17 The proposed amendments will provide that where parents are in agreement the Registrar will not be required to assess the level of care. Where parents agree, factors other than nights may be taken into account in determining substantial contact. [Item 2 - amend definition of "child support percentage"; Item 3 - amend definition of "major contact"; Item 4 - amend definition of "substantial contact"; Item 6 - repeal paragraph 8(3)(b) and insert new paragraph 8(3)(b)]
Modified formula where care of a child contrary to court order
5.18 The proposed amendments will apply to modify how a person's level of care is calculated where the Registrar is notified or becomes aware that a person, without "reasonable excuse", has contravened a court order or registered parenting plan that deals with the care or contact of a child. The circumstances that will be covered by the term "reasonable excuse" will be prescribed in Regulations. [Item 5 - insert subsection 8(1A); Item 7 - insert paragraph 8A(1)(c)]
5.19 For the purposes of the modified formula, a person who has more care than is provided for in a court order or registered parenting plan will be taken to have care only to the level specified in the order or parenting plan. The person who has less care as a result of the contravention will be taken to have care only to the level of their actual care of the child. [Item 7 - insert new subsection 8A(2) and (3)]
5.20 The kind of care each person has will be based on the amount of time they actually have the child in their care, or limited by the amount of time they could lawfully have the child in their care. A person who is taken to have shared care, substantial or major contact with a child cannot also be taken to be the sole or principal provider of ongoing daily care of the child. This is so even though the child may not actually be in the care of any other person. [Item 7 - insert new subsection 8A(3), (4), (5) and (6)]
EXAMPLE
A court order in place in relation to Jenny provides that during the year Jenny is to live with Kim for 182 days and Jo for 183 days. This means Kim and Jo have lawful care amounting to shared care. The court order has been contravened so that Jenny lives with Kim for 120 days, (which amounts to substantial contact) and Jenny lives with Jo for 245 days (which amounts to major contact). Jo applies for an administrative assessment of child support. Jo is taken to have only the care provided for in the court order, namely shared care. Kim's care is worked out on the basis of Kim's actual care, namely substantial contact.
5.21 The proposed amendments will only apply where there is a court order or registered parenting plan in force that deals with the person or persons with whom the child is to live or have contact. If there is no court order or registered parenting plan in force care will be based on the factual care of the child.
5.22 The terms "court order" and "registered parenting plan" for the purposes of the new provision are defined. [Item 7 - insert definition of "court order" and "registered parenting plan" in section 8A(7)]
5.23 The proposed amendments will modify how a parent's entitlement to child support is calculated. Each parent will only be entitled to receive child support to the extent of their lawful level of care. A parent's actual level of care will reduce their entitlement under a court order, where it is less than their lawful level of care. Where both parents are eligible carers the liability of one to the other will continue to be calculated under Subdivision E of Part 5. Where due to the contravention of a court order, one parent is no longer an eligible carer, then the liability will be calculated under the new Subdivision H of Part 5 so that they will be liable to pay child support to the other parent only to the extent of that parent's lawful care. [Item 8 - insert new Subdivision H to deal with parents whose care is modified by effect of court order/parenting plan]