Explanatory Memorandum
(Circulated by authority of the Minister for Family and Community Services, Senator the Hon Jocelyn Newman)Chapter 18 - Estimate Requirements
Overview
18.1 Schedule 18 of the Bill will amend the Child Support (Assessment) Act 1989 (the Assessment Act) to allow a person to lodge an income estimate election up to 31 July following the end of the child support year, and to allow the Registrar to reject an income estimate election where satisfied it does not accurately reflect the person's financial circumstances.
Summary of the amendments
18.2 The proposed amendments will:
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- give parents more time to confirm their actual taxable income for the child support year
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- reduce the incidence of overpayments to persons receiving child support which currently occur as a result of inaccurate estimates.
18.3 Immediately after the commencement of the "Child Support Adjusted Formula Income Amounts" in Schedule 1 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
18.4 Child support assessments are based on each parent's relevant income for the child support year. This income is arrived at by starting with the amount of taxable income shown in a person's income tax return two years prior to the child support year in question.
18.5 The Assessment Act allows a person to elect that their child support income amount for the child support year is their estimated income for that year but only where such an election is made before or during the child support year (section 60). Therefore after the child support year ends (currently 30 June) and a person wishes to modify their child support income to reflect their actual income, they can only make a departure application.
18.6 The Joint Committee expressed considerable concern on the issue of inaccurate estimates and the effect manipulation of the estimate provisions has on carers. Additionally reconciliation of a person's estimated income against actual taxable income can cause an unexpected arrears amount for liable parents. Recommendation 128 was proposed to address these concerns.
Explanation of the amendments
18.7 The proposed amendment will partially satisfy Recommendation 128 of the Joint Committee in relation to improving the flexibility of the Scheme in dealing with individual client circumstances.
18.8 The proposed amendment will allow a person to lodge an income estimate election up to 31 July of the following child support year, thereby ensuring that their assessment accurately reflects their income for the year. For example, an estimate for the 1998-99 child support year may be lodged up to 31 July 1999. Prior to this amendment the cut off date would have been 30 June 1999. [Item 1 - amend paragraph 60(1)(a); Item 2 - insert subsection 60(4); Item 3 - amend paragraph 60(2)(b)]
18.9 The Registrar will be able to reject an estimate where satisfied it does not accurately reflect the person's capacity to pay. The proposed amendment will reduce the incidence of overpayments to persons receiving child support which currently occur as a result of inaccurate estimates. [Item 4 - insert new section 60A]