Donate Child Support Calculator
Skip navigation

UK CSA Reforms - Parkinson influence - suspiciously like pre 2006 Australian CSA!

On Saturday, the Times newspaper ran an article on the reforms to the UK CSA system.  See:

Prof Parkinson has been over to the UK on more than one occasion to advise the UK government on CSA matters and how best to reform the UK system.

The result is a big shake up for the UK system but what I find intriguing given Prof P's involvement is that the outcome will resemble the pre-2006 Australian system, rather than the post 1 July 2008 scheme, with 2 key differences.

In the proposal the %s of gross income are far lower than those used pre 1 July 08, for example the % for 3+ kids is only 19% (so a top payment of 19k rather than the old $28k/year), and the cap appears to be £800/week which works out as about $100 000 AUD per year.

Broadly speaking the UK and Australian tax bands (provided you include UK National Insurance) are fairly similar so the difference isn't down to significant differences in net income.

Call me deeply cynical but I wonder whether the Task Force who proposed CSA reforms would have just recommended the lowering of the %s if they could have got away with it but were too concerned on the effect on FTB payouts and the backlash from the payees!
Gross income in Uk is always figure before any deductions such as tax and national insurance (which face it is just an addendum to income tax - I pay 11% but would never be able to claim most of the benefits it supposedly pays for) so CSA will be calculated from this.
Hmm not sure about lifeinsight's suggestion.

As non-australian I only have the example of my husband's ex's pay statement to go on - but CSA disregard her company's contribution to her superannuation fund when they quote her annual gross income.  In UK if you are a member of a company's pension fund, personal contributions are taken from your quoted gross income so have no effect on CSA payable - any company contributions to a company fund are not included in any gross income figure.  The state pension is funded through the National Insurance contribution that you pay from your gross income - as I said if you consider this to be a tax, the tax regimes between UK and Oz are broadly similar (husband pays 40% tax + 11% national insurance whereas I beleive top rate in Oz is 47% + 1.5% medicare levy).    If what Lifeinsight assumes is correct, it does beg the question why the Australian CSA insist on using the administrative assessment on people who live in different tax regimes!  (husband's top rate of CSA under proposed UK system could only ever be £800/month but at one point he had to pay almost £1500/month to ex in Oz with the 32% calculation)
In our first COA, husband tried to argue that his income in uk was good but certainly not that of a high earner and that the self-support amount was woefully inadequate.  CSA just said 'tough' calculation is per Family Law Act so either pay up or be taken to court.  When ex was in UK she was getting £800/month but went for max CSA as soon as she got to Oz.  We could hack this (well almost) if we then didn't have to put up with all the snipes in the CSA reports about him being a very high earner etc so therefore should give minimum reduction possible towards contact costs!

Husband's pension will be approx $50k/year  - according to SCO, this is inadequate child support income and has given him child support income of over $85k.  However we're objecting to this rather strongly!
As the CSA use the previous year's rate of exchange, actual pension will be £21k.  CSA have grudgingly agreed that he can retire due to child care responsibilities and proof that intention to retire was long standing (ex actually refers to his retirement date in the divorce paperwork from 6 years ago which CSA have seen).  However they have said that he could forego his lump sum associated with his pension (both of which incidentally are his share of the property settlement) to generate a higher income and have come up with a nominal figure (which incidentally is completely wrong - at best it could generate another $10 or so).

They cannot try to justify the working in a different country argument as husband is UK citizen who has never lived in Oz and for the last 5 years he has been assessed at top level of income due to differences in country living costs (if he worked in Oz doing the same job he would earn around $85000 not $130000).  Having said that, although we cannot prove it I think the SCO did have this in mind when she set the nominal figure as it is almost identical to the figure he would earn doing his full time job in Oz!  ANyway we have an objection in progress so we have our fingers crossed that even if CSA do still agree that he should use lump sum (ignoring their own regulations about proerty settlements), that they will have to concede that there is no way that it could generate the £80k+ income.
1 guest and 0 members have just viewed this.

Recent Tweets