Explanatory Memorandum
(Circulated by authority of the Minister for Family and Community Services, Senator the Hon Jocelyn Newman)Chapter 17 - Flexible Due Dates For Child Support
Overview
17.1 Schedule 17 of the Bill will amend the Child Support (Registration and Collection) Act 1989 (the Registration and Collection Act) to enable paying parents to elect to pay their child support in accordance with a nominated period rather than having to pay a monthly amount by the 7th of each month.
Summary of the amendments
17.2 The proposed amendments will provide for more flexible due dates for child support liabilities.
17.3 On a day to be fixed by Proclamation, not more than 12 months after the day on which the Act receives Royal Assent.
Background to the legislation
17.4 Section 66 of the Registration and Collection Act requires that all child support debts be paid monthly, the amount for the month being due and payable on the seventh day of the following month.
17.5 Payment of a child support liability is due on the seventh day of the following month irrespective of a paying parent's pay cycle. This can cause confusion to paying parents who receive an account statement which may seem to indicate that they are in arrears despite making regular payments.
Explanation of the amendments
Particulars of liability to be entered in Child Support Register
Particulars of the child support assessment, court order or maintenance agreement
17.6 The Register must include particulars from the child support assessment, court order or maintenance agreement. [Item 3 - repeal section 26, insert new subsection 26(1)
Particulars as to the payment period and payment rate
17.7 Under the proposed amendments, the Register must also include particulars relating to the payment rate and payment period in respect of the liability, including the initial period at which an amount is payable in respect of the liability, the payment period at which amounts are payable in respect of the liability and the start day of the period, a weekly rate of payment in relation to the periodic amount if employer withholding is to apply and the rate of payment in relation to the periodic amount. [Item 3 - repeal section 26, insert new subsection 26(2)]
Particulars relating to enforceability of the liability
17.8 Under the proposed amendments, the Register must also include particulars relating to the enforceability of the liability, being the day on which the liability first becomes enforceable, each day where the liability ceases to be enforceable, each day on which the liability again becomes enforceable and particulars relating to any suspension of the liability. [Item 3 - repeal section 26, insert new subsection 26(3)]
Other particulars that the Register may include
17.9 The Register may also include the daily rate of payment in relation to the periodic amount, a statement as to whether or not employer withholding applies and any other particulars that the Registrar considers necessary or desirable to include. [Item 3 - repeal section 26, insert new subsection 26(4)]
Payment period to be entered in Register where Registrar is to collect by deduction from salary or wages
17.10 The proposed amendments will require the Registrar to enter a payment period on the Register, where the Registrar is going to collect amounts due to the Commonwealth under a liability, or in relation to a liability, by deduction from the salary or wages of the paying parent (referred to as the "payer"). The period that the Registrar must enter is the payment period that reflects the payer's pay cycle. The start day of the payment period is the first day of the first of the payment periods in which deduction from the salary or wages of the payer will occur. [Item 3 - insert new section 26A]
17.11 "Payment period" will be defined as "a period of a week, a fortnight, a 4 week period, a month or a calendar month". [Item 2 - insert definition of "payment period" in subsection 4(1)]
Payment period where the Registrar is not to collect by deduction from salary or wages
Paying parents wanting to make child support payments other than monthly
17.12 The proposed amendments will allow the payer of an enforceable maintenance liability, to elect to pay in accordance with a nominated payment period if the Registrar is not going to collect amounts due to the Commonwealth under, or in relation to, a liability by deduction from their salary or wages. If the payer elects to pay in accordance with an elected payment period, the Registrar must enter the elected period as the period at which amounts are payable under the liability, if the Registrar is satisfied that it will be more convenient for the payer to accrue debts in respect of the elected period. [Item 3 - insert new section 26B]
Day from which an elected period starts
17.13 If the payer elects to pay child support in accordance with a nominated payment period, they must specify the day from which the payment period starts. The Registrar must enter in the Register the specified day as the day from which the elected period starts. For example, the payer may elect to pay fortnightly with the start day of the period being a Wednesday. Therefore the period will end two weeks later on a Tuesday. [Item 3 - insert new subsection 26B(4)]
Payer does not elect a payment period
17.14 Under the proposed amendments, if the Registrar is not going to collect amounts due to the Commonwealth under, or in relation to, a liability by deduction from the salary or wages of the payer of the liability and the payer has not elected a payment period, the Registrar must enter a month as the period at which amounts are payable in respect of the liability. [Item 3 - insert new subsection 26B(5)]
Initial period that may be registered
17.15 The proposed amendments will require the Registrar to register an initial period in the Register if the payer elects to pay in accordance with an elected payment period or if the Registrar is required to enter a payment period that reflects the payer's pay cycle and the payment period starts on a day after the day that the liability becomes enforceable. [Item 3 - insert new subsection 26C(1); Item 2 -insert definition of "initial period" in subsection 4(1)]
When will an initial period start and finish - Registrar about to enter liability
17.16 If the Registrar is about to register a liability, the proposed amendments will require that the initial period starts on the day on which the liability first becomes enforceable under the Act. The initial period will finish on the day before the payment period that reflects the payer's pay cycle or on the day before the payer's elected payment period commences. [Item 3 - insert new subsection 26C(2)]
When will an initial period start and finish - Registrar varies Register when a low-income non-enforcement period ends
17.17 The Registrar is required to vary the Register when a low-income non-enforcement period ends to make the liability again enforceable. The initial period, in respect of the liability, starts on the day that the Registrar has entered in the Register as the time at which the liability again becomes enforceable under the Act. The initial period will finish on the day before the payment period that reflects the payer's pay cycle or on the day before the payer's elected payment period commences. [Item 3 - insert new subsection 26C(3)]
When will an initial period start and finish - Registrar receives an application for a registered maintenance liability to again become enforceable
17.18 The Registrar is required to vary the Register when an application for a registered maintenance liability to become enforceable again is received. The initial period, in respect of the liability, starts on the day that the Registrar has entered in the Register as the day on which the liability again becomes enforceable under the Act. The initial period will finish on the day before the payment period that reflects the payer's pay cycle or on the day before the payer's elected payment period commences. [Item 3 - insert new subsection 26C(4)]
Conversion of periodic amounts into payment rates in respect of payment periods
17.19 The proposed amendments will require the Registrar to convert a periodic amount payable under a registered maintenance liability arising under a court order or a maintenance agreement to a daily rate and then to either a weekly, fortnightly, 4 weekly or monthly rate of payment. [Item 4 - insert new subsection 28B(1)]
17.20 The proposed amendments will require the Registrar to convert a periodic amount payable under a registered maintenance liability arising under a child support assessment in respect of a day into a weekly, fortnightly, 4 weekly or monthly rate of payment. [Item 4 - insert new subsection 28B(2)]
17.21 If the Registrar is to collect amounts due to the Commonwealth under, or in relation to a liability, by deduction from the salary or wages of the payer, the Registrar must also convert the periodic amount or the daily amount to a weekly rate of payment. [Item 4 - insert new subsection 28B(3)]
17.22 The Registrar must convert a periodic amount payable under a registrable maintenance liability to the rate of payment that reflects the payment period that is entered in the Register in respect of the liability. [Item 4 - insert new subsection 28B(4); Item 5 - amend section 29]
17.23 If a registrable maintenance liability is registered under the Act, amounts payable are debts due to the Commonwealth by the payer in accordance with the particulars of the liability entered in the Child Support Register. The eligible carer (referred to as the "payee") is not entitled to, and may not, enforce payment of amounts payable under the liability. The amounts are payable by the payer at the rate entered in the Register in respect of the periods entered in the Register. [Item 6 - repeal section 30 and substitute new section 30]
17.24 The following are examples of how amounts payable under section 30 are to be calculated.
EXAMPLE 1:
Peter pays child support under a child support assessment at a daily rate of $6.84463.
The liability became enforceable on 4 July. The Registrar is going to collect the amounts payable for periods from 10 July by deduction from Peter's wages.
Periodic amount: The periodic amount payable under the assessment entered in the Child Support Register is the daily rate of $6.84463 [paragraph 26(1)(f)].
Payment period: Section 26A requires the Registrar to enter in the Register [paragraph 26(2)(b)] a payment period of a fortnight, starting from 10 July, to reflect Peter's fortnightly pay cycle.
Initial period: As the first day of the pay period in which deductions are to commence is 10 July, the initial period entered in the Register is 4 July to 9 July.
Conversion of periodic amount to a rate of payment
Section 28 requires the Registrar to convert the $6.84463 periodic amount to a fortnightly rate of $95.82 ($6.84463 multiplied by 14) so that it reflects Peter's payment period of a fortnight.
The Registrar enters in the Register $95.82 per fortnight as the rate of payment in relation to the periodic amount [(paragraph 26(2)(d)].
Amounts payable under section 30
An amount of $95.82 per fortnight [paragraph 26(2)(d)] is payable under section 30 for both the initial and subsequent payment periods.
Note: Example 1, following paragraph 16.30, shows when the amounts payable by Peter under section 30 become due and payable under section 66.
EXAMPLE 2:
Francine pays child support under a child support assessment at a daily rate of $8.21355. The liability became enforceable on 1 August. The Registrar is not going to collect the amounts by deduction from Francine's wages.
Periodic amount: The periodic amount payable under the assessment entered in the Register is the daily rate of $8.21355 [paragraph 26(1)(f)].
Payment period: As Francine does not make an election for a particular payment period to apply, section 26B requires the Registrar to enter in the Register a month as the period at which amounts are payable [paragraph 26(2)(b)].
Initial period: As the payment period starts on the same day the liability started, there is no initial period.
Conversion of periodic amount to a rate of payment
Section 28 requires the Registrar to convert the $8.21355 periodic amount to a monthly rate of $250.00 ($8.21355 multiplied by 30.4375space so that it reflects Francine's payment period.
The Registrar enters in the Register $250.00 per month as the rate of payment in relation to the periodic amount [paragraph 26(2)(d)].
Amounts payable under section 30
An amount of $250.00 per month [paragraph 26(2)(d)] is payable under section 30.
Note: Example 2, following paragraph 16.30, shows when the amounts payable by Francine under section 30 become due and payable under section 66.
Registrar may vary Register to change payment period entered to reflect payer's pay cycle
17.25 The proposed amendments will enable the Registrar to vary the Register details to reflect a payer's pay cycle if the Registrar becomes aware, other than by a notice from the payer's employer, or a notice from the payer, that the payer's pay cycle is different to the payment period entered in the Register. The Registrar may vary the particulars in the Register by deleting the period in the Register and substituting another payment period that reflects the payer's pay cycle. [Item 7 - insert new section 42A]
Registrar may vary Register if employee's pay cycle changes
17.26 The proposed amendments will enable the Registrar to vary the Register details to reflect a payer's pay cycle if the Registrar either receives a notice from the payer's employer, or a notice from the payer which indicates that the period of the payer's pay cycle is different to the payment period entered in the Register. The Registrar must within 28 days of receiving a notice from the employer or the payer, vary the particulars in the Register by deleting the period in the Register and substituting another payment period that reflects the payer's pay cycle. [Item 7 - insert new section 42B]
Election available to existing payers who want to make payments of maintenance other than monthly
17.27 The proposed amendments will allow the payer of an enforceable maintenance liability to elect to pay in accordance with a nominated payment period where the Registrar is not going to collect amounts due to the Commonwealth under, or in relation to, an enforceable maintenance liability from the salary or wages of the payer of the liability. [Item 8 - insert section 65A(1) and (3) of new Part IVA]
17.28 In making an election, the payer will be required to specify a new payment period and the day from which the period starts. [Item 8 - insert section 65A(2) of new Part IVA]
17.29 Where the payer makes an election under section 65A, the proposed amendments will require the Registrar to vary the particulars of the entry in the Register if the Registrar is satisfied that it will be more convenient for the payer to accrue debts in relation to the elected period instead of the period in the Register. In varying the Register, the Registrar must, within 28 days, substitute the elected period and enter the day from which the elected period starts. [Item 8 - insert section 65B of new Part IVA]
When child support debts become due and payable
17.30 Currently, an amount that becomes a child support debt in any month is due and payable on the seventh day of the following month. The proposed amendments will mean that an amount that becomes a child support debt in respect of a day in an "initial period" will be due and payable on the seventh day of the month following that day. For example if an "initial period" is from 16 May to 19 June, the amount that covers the days from 16 May to 31 May will be due and payable on 7 June. The amount that covers the days from 1 June to 19 June will be due and payable on 7 July.
17.31 An amount that becomes a child support debt in any "payment period" is due and payable on the seventh day after the end of the period. For example if a "payment period" is fortnightly then the child support debt will be due and payable on the seventh day after the end of that fortnight. [Item 9 - repeal section 66 and insert new section 66]
17.32 Examples of how amounts due and payable under section 66 are to be calculated
EXAMPLE 1
Peter pays child support under a child support assessment at a daily rate of $6.84463.
An amount of $95.82 per fortnight ($6.84463 multiplied by 14) is payable under section 30 for both the initial and payment periods. The liability became enforceable on 4 July. The initial period is therefore 4 - 9 July and the payment period starts on 10 July. The Registrar is going to collect the amounts payable for periods from 10 July by deduction from Peter's wages.
Amount due and payable under subsection 66(1) for the initial period:
The amount payable for the 6 day initial period of 4 July to 9 July is due and payable the following month on 7 August and is $41.07 (6 days @ the fortnightly payment rate of $95.82space.
Amount due and payable under subsection 66(2) for the payment period:
The amount payable for thepayment period 10 July to 23 July is $95.82 and is due and payable 7 days later on 30 July. The amount payable for thepayment period 24 July to 6 August is $95.82 and is due and payable 7 days later on 13 August. Subsequent fortnightly payments continue to be payable 7 days after the end of each fortnight.
Section 49 discharges Peter from paying to the Registrar so much of these amounts as are deducted by his employer.
EXAMPLE 2
Francine pays child support under a child support assessment at a daily rate of $8.21355. An amount of $250.00 per month ($8.21355 multiplied by 30.4375space is payable under section 30 for each payment period. The liability became enforceable on 1 August. The payment period also started on that date. The Registrar is not going to collect the amounts by deduction from salary or wages.
Amount due and payable under subsection 66(1) for the initial period:
There was no initial period because the payment period commenced on the same day the liability became enforceable. Therefore, no amount is due and payable on the 7th of the following month in respect of an initial period .
Amount due and payable under subsection 66(2) for the payment period:
The amount payable for the payment period 1 August to 31 August is $250.00 and is due and payable 7 days later on 7 September. Subsequent monthly payments continue to be payable 7 days after the end of each month.
17.33 Under the proposed amendments, where a payer makes an election to pay child support in accordance with a nominated payment period and the Registrar refuses to give effect to the election, the payer will be able to object under section 85 against the decision of the Registrar. [Item 1 - amend subsection 4(1) (definition of appealable refusal decision)]
17.34 The proposed amendments will require the Registrar to vary the particulars in the Register if the paying parent elects to pay in accordance with a nominated payment period or if the period registered does not reflect their pay cycle. The paying parent and the carer will have objection rights under section 83 in relation to any variation made to the details on the Register.