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Formula Fun (Part Two)

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In this second part of a two part paper, Grant Reithmuller, Federal Magistrate, looks at Stage 3 of the planned amendments arising from the Child Support Legislation Amendment (Reform of the Child Support Scheme — New Formula and Other Measures) Act 2006

In this second part of a two part paper, Grant Reithmuller, Federal Magistrate, looks at Stage 3 of the planned amendments arising from the Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Act 2006 expected to commence 1 July 2008.

The first part covered the background to the act and the new formula including the adjusted taxable income amount, the self support amount, the proportions of care table and the costs of children table. Part two covers relevant dependent children, minimum payment levels, second jobs and overtime, step-children, reconciliations and conclusions.

Relevant Dependent Children

Relevant dependent children are accounted for in the formula. In the Explanatory Memorandum ("EM") this is explained as:

"Under the new scheme, all biological and adoptive children are to be treated as equally as possible. Consequently, where a parent has a biological or adoptive child living with them, who is not the subject of a child support assessment, an amount is deducted from the parent's adjusted taxable income to recognise the parent's costs for supporting this child. This amount is called the relevant dependent child amount. In determining the costs of the relevant dependent child, the parent's income only is taken into account, not the income of a new partner, as it is only the parent's share of that child's costs that needs to be deducted from their income."

Ignoring the obligations of the other parent to the relevant dependent child was explained in the Parkinson Report on the basis that it "avoids involving a new unrelated person's income in the child support calculation, with the administrative complexity this entails."

Parkinson Report at page 161.

Rather than adding to the exempted income amount, the equivalent of the extra parenting payment for a child, the costs of the child are assessed upon the tables. However, only the income of the parent who is the subject of the assessment is considered in assessing the costs of the relevant dependant. Thus, a payer with a subsequent child will be assessed on the tables as though they are meeting 100% of the costs of the child for the time that the child is with them.

This is an approximation that ignores the cost sharing with the other parent of the child.

Minimum Payment levels

The child support scheme has a large number of parents on nil, or nearly nil income amounts who are not in receipt of social security. While 40% of payers in the scheme have a minimum assessment, around 15% (108,000) of those receive no income support or have any other apparent means of support. While some will be incarcerated and some supported by a spouse there remains a large number of cases that appear to be unexplained.

The amendments insert s 65A and 65B providing for an assessment of $1,060 per annum ($20 per week) in cases where the low income parent is not receiving income support. If they satisfy the Registrar of the CSA that they do not have any financial resources, the assessment may be reduced.

Second Jobs and Overtime

Section 44 will provide for the liable parent to have his or her income amount reduced by up to 30% for up to 3 years from separation to allow them to re-establish. The most significant test is in s 44(1)(d), that:

"44 Post-separation costs

Application for post-separation income to be excluded

(d) in the last relevant year of income the applicant earned, derived or received income:
(i) in accordance with a pattern of earnings, derivation or receipt that was established after the applicant and the other parent first separated; and
(ii) that is of a kind that it is reasonable to expect would not have been earned, derived or received in the ordinary course of events."

In the EM, the operation of the provision is described as:

"Section 44 sets out how post-separation costs are to be assessed. It recognises that a parent may have extra costs to re-establish themselves following separation from the other parent of their child, whether they provide care for the child or not. As a result of these extra costs, a parent may take on overtime work or a second job. The parent's child support liability should not necessarily be increased as a result of this extra income. However, as a parent's costs to re-establish himself or herself diminish over time, section 44 is limited to the first three years after the parents last separated before the commencement of the child support case. Section 44 allows a new three-year period from a subsequent separation to be considered under an application so long as the other requirements are met. Subsequent separations from a different partner will attract a new three- year period if the parent has a child support case with that parent."

The section is focused on defining extra income earned after separation, not on any costs, even though the marginal note and EM talk of "costs". Presumably, the Registrar will be considering the costs when exercising the discretion given by the section.


The difficult issue of step-children has been addressed in the amendments. In the EM, the rationale for the new provisions are explained:

"There are also many families which include children who are not biologically related to the parent of the child support children. Children not living with both biological or adoptive parents should receive support from their absent parent. Yet not all non-resident parents are in a position to contribute to the support of their child. For example, the non-resident parent may be deceased, unknown or not locatable. In such situations, the step-parent (also called a resident parent) is actually supporting the child. However, the child support scheme does not adequately recognise the responsibility that a step-parent has towards resident children. A court will rarely declare that a step-parent has a responsibility to support a step-child where the step-child is living with the step-parent against whom the order is sought.

Consequently, the present changes amend section 117 to require a court to consider a step-parent's responsibilities towards step-children. This involves the court considering the position and capacity of the child support parent of the step-child (generally, the step-child's biological parent), along with the impact of any change on the child support children and the payee. This ground can only be established where neither of the biological parents is in a position to support the child. The fact that the non-resident parent is unable to pay child support is not, in itself, sufficient. The parent with whom the step-parent lives must also be unable to earn an income to provide for the child's support."

The amendments appear in s 117, defining the obligation as follows:

"(2A) The ground for departure mentioned in paragraph (2)(aa) is taken not to exist in respect of a resident child unless:

(a) the resident child normally lives with the parent, but is not a child of the parent; and
(b) the parent is, or was, for 2 continuous years, a member of a couple; and
© the other member of the couple is, or was, a parent of the resident child; and
(d) the resident child is aged under 18; and
(e) the resident child is not a member of a couple; and
(f) neither parent of the resident child is able to support the resident child due to:
(i) the death of the parent; or
(ii) the ill-health of the parent; or
(iii) the responsibility of the parent to care for another child; and
(g) the court is satisfied that the resident child requires financial assistance."

What remains missing from these provisions is any requirement of ongoing support for the child concerned. If the obligation to support a step-child is sufficient to affect the obligation to biological children, one must ask why it is not sufficient to found an ongoing obligation to that child.


Section 150E provides for the suspension of the assessment when parents reconcile. The EM sets out the explanation for the provision, saying that:

"Currently, if parents reconcile, the payer continues to be liable under an existing administrative assessment until the payee advises the Registrar that he or she wishes the administrative assessment to end. If the parents separate again, having previously ended the administrative assessment, they must apply for a new administrative assessment. If the parents are trying to reconcile, the requirement to end the administrative assessment, and then to make a new application if the reconciliation is not successful, may be another stress on their relationship."

The relevant provision is in the following terms:

"150E Suspension of liability to pay child support where parents reconcile

Child support not payable if parents reconcile

(1) The Registrar must make a determination (a suspension determination) that child support is not payable for a child by a liable parent to the other parent of the child if:
(a) the Registrar is notified, or otherwise becomes aware, that the parents have become members of the same couple; and
(b) the Registrar is satisfied that the parents have become members of the same couple.
(2) If the Registrar makes a suspension determination, child support for the child is not payable by the liable parent to the other parent:
(a) from the day the Registrar determines that the parents became members of the same couple; and
(b) until the Registrar makes a determination under subsection (3) in relation to the parents.

Note: Under section 12, there is a child support terminating event if the parents are members of the same couple for a period of 6 months or more.

Payment of child support to continue if reconciliation not successful

(3) If:
(a) a child support terminating event has not happened in relation to a child and the child's parents under subsection 12(5); and
(b) the Register is satisfied that the parents have ceased being members of the same couple; then the Registrar must make a determination under this subsection that child support is again payable by the liable parent to the other parent.
(4) If the Registrar makes a determination under subsection (3), child support is again payable by the liable parent to the other parent from the day that the Registrar is satisfied that the parents ceased to be members of the same couple."

Fortunately the courts will not have to deal with the allegations of reconciliation and separation that may cause difficulty under this section. However, it is a section that resolves one of the long voiced complaints about the system.


There is an easing of the burden upon parents assessed to pay child support. However, the easing of the burden is not so great as to return to the pre-child support scheme levels. It will be very important for the courts and practitioners to adjust their own internal tariffs in accord with the new legislatively fixed standards, just as the courts and practitioners adjusted when the Child Support (Assessment) Act 1989 commenced.

Executive Secretary - Shared Parenting Council of Australia
 Was my post helpful? If so, please let others know about the FamilyLawWebGuide whenever you see the opportunity
An interesting question that I will refer back to FaCSIA for a policy outline.

Your query was somewhat unclear. If your current wife was widowed she has a claim for child support liability on the estate until the child support liability is extinguished. I assume of course that is she was separated and claiming child support prior to her husband passing away. However I suspect your question might relate in relation to the fact that YOU are the Child support Payer to another party and you are looking to see the impact of these children becoming your dependants and the impact on your current payments. Is that the correct scenario? Once we get clarity we will send to the Policy group.

The relevant section is under Relevant dependent child

A payer's relevant dependent child can be their child (natural, adopted or born as the result of an artificial conception procedure) or, in certain circumstances, their step-child. The payer must be the sole or principal provider of ongoing daily care for the child (this includes where the payer and their new partner are jointly caring for the child in the home that they share) or have major contact with the child (see chapter 2.2 topic levels of care).

A relevant dependant child must be under 18 years of age, and cannot be a member of a couple. However, if an assessment for a child has been extended until they finish school the child is taken to be aged 17 until a terminating event happens (section 151D(2A)). This means that where the care of the child is divided the child is still a relevant dependant for the purposes of the assessments.

A step-child is not a payer's relevant dependent child unless the payer has a duty to maintain that child by order of a court under section 66M of the Family Law Act or section 124 of the WA Family Court Act, (see chapter 4.3 Court applications, heading Orders in relation to step-children).

A child that is in the shared care of the payer and payee is not the payer's relevant dependent child. However, a modified formula applies in these cases and the exempted income of each parent is increased by an additional amount (section 48(1)(d)).

Executive Secretary - Shared Parenting Council of Australia
 Was my post helpful? If so, please let others know about the FamilyLawWebGuide whenever you see the opportunity
Subject to the existing law continuing to be implimented should there be any change of Government then yes that is the sitiuation. There are substantial changes in the legislation and these will change your circumstances on 1 July 2008. I will reference this in general terms in the issues register which we are maintaining on the site under "Let the Government have your feedback" see this link on the home page button or in the Community Home page. The Shared Parenting Council of Australia is compiling a list of current issues and we expect to have general responses back to the site in a Q&A section.

Executive Secretary - Shared Parenting Council of Australia
 Was my post helpful? If so, please let others know about the FamilyLawWebGuide whenever you see the opportunity
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