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Budget - Strengthening Compliance for Child Support

Strengthening Compliance for Child Support

Department of Families, Housing, Community Services and Indigenous Affairs

The Government will change the method under which a Child Support payer's income is assessed to more accurately reflect their actual income.

The changes will take effect from 1 July 2011 and will only apply to those payers who have not lodged a tax return for two or more years. This change will increase the average rate of Child Support payments, reducing
Child Support recipients' Family Tax Benefit entitlements, which will result in savings of $78.7 million over four years.

Currently, Child Support payers who are late lodging or fail to lodge a tax return for two years or more have their Child Support assessment based on a default income of two thirds of Male Total Average Weekly Earnings (MTAWE), often resulting in an underestimation of their actual income. Under the new arrangements, such clients will have their income assessment based on their last known taxable income, indexed by growth in average wages during the period since their last return. The default income of two thirds of MTAWE will still be used in cases where the last known taxable income, indexed by growth in average wages, is lower than the default income.

Savings from this measure will be redirected to support other Government priorities.

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