A new administrative review ground to recognise re-establishment costs following a separation, in certain circumstances
Summary of proposed amendment
The bill contains provision for a parent to seek an administrative review of a child support assessment to take account of re-establishment costs that were paid out of income that was earned in accordance with a pattern that was established after the parents first separated. Any excluded income in respect of these re-establishment costs should be no more than 30 percent of adjusted taxable income.
The amendment will apply from 1 April 2014.
Clause 26 introduces new section 105(2)(d) that sets out a new administrative review ground. The new ground is that, at any time within three years starting on the date on which the child’s parents ceased to live together in a marriage, civil union or de facto relationship, the assessed amount of child support results in an unjust and inequitable financial result because of re-establishment costs incurred by the parent.
New section 105(7) sets out specifically when this ground can be used. Under new section 105(7) this ground will be satisfied if the adjusted taxable income of a parent of the child for the child support year concerned includes a proportion that is:
- no more than 30 percent of that income;
- income from work done by that parent additional to work that he or she did before the child’s parents ceased to live together in a marriage, civil union or de facto relationship;
- used, or needs to be used, in whole or in part, by a parent of the child in that child support year to meet actual and reasonable costs incurred to re-establish himself or herself, and any child or other person that he or she has a duty to maintain, after the child’s parents ceased to live together in a marriage, civil union or de facto relationship.
New section 105(8) relates to computing the three-year period in which the child’s parents ceased to live together in a marriage, civil union or de facto relationship. It permits the exclusion of a period of resumed cohabitation with the sole or main motive of reconciliation if the period does not exceed, or the periods in aggregate do not exceed, three months.
A paying or receiving parent may take on additional employment or overtime to help re-establish themselves after a separation – for example, to buy an alternative family home. Currently, income from secondary employment and overtime is automatically included in a child support formula calculation.
Trying to incorporate recognition of all re-establishment costs into the child support formula would not be appropriate. Instead, the bill proposes that re-establishment costs, for a period of up to three years after a relationship separation, become a ground for administrative review.