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Policy Changes

A new discretion to allow certain payments to be recognised for child support payment purposes

(Clause 27)

Summary of proposed amendment

The bill gives the Commissioner the discretion to allow certain payments made for a child’s direct benefit to count towards a paying parent’s child support liability, in certain circumstances.

Application date

The amendment will apply from 1 April 2014.

Key features

Clause 27 introduces new sections 130, 131 and 131A, which provide for a new payment method for some of the financial support for a child that a liable person is required to pay in a child support year.

The new payment method is to be available only if it is acceptable to the Commissioner. It allows, as a payment method, one or more qualifying payments made for the child’s direct benefit during that year if:

  • the liable parent who is to make or has made the payment is not to provide, or is not providing, in the relevant year, a proportion of ongoing daily care for the child that exceeds 28 percent;
  • no receiving carer of the child is to be, or is, in that year a parent who is in receipt of a social security benefit (as defined in section 2(1));
  • the child’s parents have, before the start of that year, entered into a written agreement to the effect that they intend to pay no less than 10 percent, and no more than 30 percent, of the child support payable for the child in that year, by way of such payments;
  • no parent of the child making the payments should have any child support debt (including penalties) outstanding; and
  • the Commissioner is satisfied, on the basis of information available, that each of the payments to be recognised is a payment for the child’s direct benefit made in that year.

Background

Currently, payments made by a paying parent for the benefit of their children are not credited against the parent’s child support liability. Introducing the ability to do so may provide a greater incentive to pay child support, as a paying parent may be more comfortable that the payment (or at least part of it) is directly benefiting the child according to the paying parent’s desires for the child’s upbringing.