Matters outside the Inquiry

Avoidance of child support obligations

11.13 Some payers may avoid their child support obligations by minimising the income that is factored into the child support assessment.^[17] Payers may also avoid child support by paying child support late or irregularly, paying less child support than the assessment, or not paying at all. These issues may be particularly prevalent where payees collect privately. Where the CSA collects child support, it has a range of coercive powers to effect payment, discussed in Chapter 12.

11.14 Avoiding child support obligations may be linked with family violence. It has been identified as ‘part of an ongoing attempt to maintain power and control’,^[18] and an extension of other forms of family violence.^[19] It may also, in itself, constitute economic abuse.

11.15 Avoiding child support obligations is also an issue that affects a broad range of payees, including those who may not be victims of family violence. The systemic reforms that would be required to address this issue are beyond this Inquiry’s Terms of Reference.^[20] The ALRC does, however, consider reforms to protect victims of family violence who, due to fear of or coercion by the person who has used family violence, opt for private collection of child support—and are, therefore, more vulnerable to non-payment or underpayment of child support.^[21]

The percentage of care

11.16 The ‘percentage of care’ is the amount of time a parent or carer provides care for a child. A person must provide at least 35% of a child’s care to be eligible for both child support payments and FTB.^[22] The percentage of care also affects the amount of child support and family assistance entitlements. This is an area where child support and family assistance laws intersect with each other, and with family law.

11.17 The ALRC has broadly identified two systemic issues in relation to the percentage of care. First, it is possible that parents may seek parenting orders or agreements under the Family Law Act 1975 (Cth)that will affect the child support assessment under the Child Support (Assessment) Act, or FTB under A New Tax System (Family Assistance) Act 1999 (Cth). Parents may wish to increase their care percentage to reduce their child support liability or, conversely, resist a reduction in their care percentage to maintain their child support entitlements.^[23] Maintaining or increasing family assistance may also provide such motivation.

11.18 Manipulation of care arrangements to alter the child support assessment may affect victims of family violence, as well as a broader range of CSA and Family Assistance Office (FAO) customers. Reforms to child support and family assistance legislation to address the issue would be systemic in nature, affecting the child support formula and the rules for determining FTB. In addition, reforms to ensure family violence is suitably considered in determining parenting arrangements should be—and have been—aimed at the family law system.

11.19 The second systemic issue concerns the rules for determining the percentage of care. Both the percentage of care rules, and stakeholders’ concerns about the rules, were described in more detail in the Discussion Paper.^[24]

11.20 By way of background, since amendments to child support and family assistance legislation came into effect on 1 July 2010, the FAO and the CSA determine percentages of care in the same way. Percentage of care determinations are based on the actual care that is occurring, and each agency will apply a percentage of care determined by the other agency.^[25] Prior to 1 July 2010, the CSA generally made care percentage determinations in accordance with oral or written agreements, parenting plans or court orders (where in place).^[26] The FAO based the percentage of care on the child’s ‘living arrangements’.^[27]

11.21 The shift to percentage of care determinations based on actual care would, on the face of it, appear to benefit customers in cases where actual care does not correspond to court orders or previous agreements. Evidence regarding the pre-July 2010 child support system suggests that parents were reluctant to update court orders or agreements—particularly where they had experienced family violence—and accepted the often detrimental child support consequences of having assessments based on outdated care orders or agreements.^[28]

11.22 However, an unfortunate consequence of care percentages based on actual care is that it may financially benefit, or even encourage, parents who contravene court orders. On the other hand, the interim determination provisions in the child support and family assistance legislation, discussed below, may operate to discourage contravention of orders.^[29]

11.23 Stakeholders also raised concerns about the availability of interim determinations.^[30] The CSA and FAO may make interim determinations about percentage of care in certain circumstances where written agreements, parenting plans and court orders are not being complied with.^[31] However, there is no legislative avenue for parties to obtain interim determinations where there are no court orders or agreements in place, even when a party disrupts an established care pattern.

11.24 Aspects of the CSA and FAO procedure for determining percentages of care, when parents dispute the care that is occurring, also appear problematic. When parents cannot resolve disputes about the care that is occurring, the agencies make a determination based on evidence provided by the parents.^[32] Such reliance on parents to provide evidence to establish care patterns may be burdensome and intrusive, as discussed below in relation to CSA investigations.

11.25 The Guide: CSA’s Online Guide to the Administration of the New Child Support Scheme (Child Support Guide)provides that, when conflicting evidence cannot be reconciled, the CSA will determine the percentage of care on the balance of probabilities. In the ‘rare circumstances’ the CSA cannot reach a conclusion, it assumes that the state of affairs at the time of the assessment is continuing, and the percentage of care will not change.^[33] It is unclear how the CSA makes a determination where there has not been a prior assessment. Further, the practice of reverting to previous care percentage determinations appears unsatisfactory. The Family Assistance Guide does not outline the applicable procedure for the FAO in these circumstances. However, given that the family assistance rules and child support rules are aligned regarding percentage of care, it is likely that FAO procedures are similar to CSA procedures in this regard.

Use of investigatory powers

11.26 Child support legislation empowers the CSA to conduct investigations; however the CSA is not required to conduct any inquiries or investigations in making administrative assessments.^[34] The ALRC understands that, in practice, the CSA does not usually actively investigate cases. This means that parents may need to collect evidence, or investigate the other parent’s circumstances, themselves. Where parents are unable to do this, they may be financially disadvantaged.^[35]

11.27 Stakeholders have expressed concern about the lack of CSA investigations in the context of percentage of care determinations—both where levels of care are, and are not, in dispute.^[36] They have indicated that reliance on parents to provide confirmation regarding levels of care, or evidence about levels of care, has the potential to put victims of violence and their children at risk,^[37] and disadvantage parents who are scared to challenge the other parent’s word, unwilling to involve third parties, or ashamed to disclose their situation to friends and family.^[38]

11.28 Another context in which concerns about the lack of CSA investigations have arisen is change of assessment (or ‘departure’) determinations. A parent or carer may apply to the CSA for a change to their child support assessment in ‘special circumstances’.^[39] The CSA or a court may change the assessment, if satisfied that one or more grounds, as specified in the legislation, exist; it is ‘just and equitable’ for the child, the payer and the payee; and it is ‘otherwise proper’.^[40] The CSA may also initiate a change of assessment on limited grounds, as discussed in Chapter 12.

11.29 The Child Support (Assessment) Act provides that the CSA may, but is not required to, conduct inquiries and investigations in making change of assessment determinations.^[41] In practice, the ALRC understands that the CSA does not actively investigate these cases, which may disadvantage parents who may not have the capacity or resources to investigate the financial circumstances of the other parent themselves. Victims of family violence, in particular, may be ill-equipped to investigate the assets and income of persons who have used violence against them.

11.30 The degree to which CSA uses its investigatory powers is a wide-ranging issue in relation to the child support scheme, and is beyond the Terms of Reference for this Inquiry.^[42] However, the ALRC considers that a broader review of the CSA’s investigatory role may be timely, particularly given the 2010 legislative changes regarding the rules for determining percentages of care.