By Andrew Blake – Senior Associate
On 1 July 2023, the Social Services Legislation Amendment (Child Support Measures) Act 2023 (“the Amendment Act”) came into effect. The main purpose of the Amendment Act is to:
- Improve the timely collection of child support owing to parents.
- Help prevent future debt among low-income parents.
The Amendment Act has brought about three significant changes:
- The first change affects child support debtors. In certain circumstances, the Child Support Registrar can make a “departure prohibition order”, which restrains a person who owes child support from leaving Australia.
- The second change allows for deductions from an employee’s wages or salary (known as employer withholding arrangements) to continue or commence after the enforceable maintenance liability period ends. This allows employer withholding to be directed to child support debts, even when the payer no longer has an ongoing child support obligation.
- The third change allows the Child Support Registrar to determine a low-income parent’s adjusted taxable income as the child self-support amount.
The three changes are likely to benefit parents who receive child support payments, particularly those who were underpaid child support or who have unpaid child support owing to them.
Let’s look at each change in closer detail:
- Child support debtors with a departure prohibition order stopping them from travelling overseas:
(a) Prior to the introduction of the Amendment Act, some individuals could, in limited circumstances, apply for permission to travel overseas via a departure authorisation certificate.
(b) The Amendment Act provides for the Child Support Registrar to refuse a departure authorisation certificate where a security is offered but the Registrar is not satisfied that arrangements will likely be made to discharge the outstanding child support or care liability.
(c) It is believed this change alone will recover up to $164 million in unpaid child support from around 18,000 parents, with an average debt of nearly $11,000 owing to the receiving parent.
2. Employer withholding arrangements:
(a) The Registrar is required to collect certain child support liabilities from payers who are employed by deducting their salaries or wages, as far as is practicable.
(b) Prior to the introduction of the Amendment Act, employer withholding only applied to those with an enforceable maintenance liability.
(c) Enforceable maintenance liabilities terminated in certain circumstances, such as when a child reached 18 years of age, or for registrable overseas maintenance liabilities, when the payee and payer both cease to be resident of Australia.
(d) When an enforceable maintenance liability was terminated or stopped being enforceable, it was not possible to commence or continue employer withholding even if there was a child support debt.
(e) The Act has expanded the employer withholding to apply to child support debts, even when the payer no longer has an ongoing child support obligation. This change will tighten the rules around departure prohibition orders for parents who deliberately and repeatedly avoid their child support obligations.
3. Determining a low-income parent’s income as the self-support amount.
(a) Generally, a child support assessment uses tax return information to determine a parent’s income. Where a tax return is not available, the Registrar can use other information to determine a parent’s income such as an old tax assessment adjusted using an indexation factor as prescribed in the Child Support Assessment Act.
(b) For those who do not provide any income information, the Registrar must use an alternative provisional income in the child support assessment. Prior to the introduction of the Amendment Act, the Registrar would apply a provisional income that is two-thirds of the annual male total average weekly earnings – $55,016 in 2023. This is twice as high as the self-support amount. Therefore, it can significantly overestimate the parent’s income. An inaccurate assessment can put low-income parents into financial hardship in two ways – it can result in a parent receiving less child support than they should, or it can result in a parent being liable to pay more child support than they are able to.
(c) The Amendment Act provides that where a parent’s taxable income has not been assessed for the last relevant year and where it is determined that the parent is not required to submit a tax return, the Registrar will create a provisional income that is equal to the self-support amount.
(d) It is believed that this measure will fix the issue of overestimating income and prevent future debts by ensuring that for both receiving and paying parents, the rate of child support reflects their financial capacity.
Child support is a complex area of law. If you require assistance with child support, please call us on 03 8672 5222 to make an appointment to speak with one of our experienced family lawyers.
