2.6.8: Reason 2 - the special needs of the child

Context

A payer or payee can apply for a change of assessment in special circumstances if the costs of maintaining a child are significantly affected by the child's special needs.

Legislative references

Sections 98C(2), 98S and 117 Child Support (Assessment) Act 1989

Sections 71C and 71D Child Support (Registration and Collection) Act 1988

Explanation

What are 'special needs'?

When are the costs of maintaining a child significantly affected?

What is fair or 'just and equitable' in terms of special needs?

Entitlements of a payee that CSA does not take into account

The kinds of changes to an assessment that reflect the special needs of a child

The effect of a change to an assessment on any means-tested assistance from government

How long will a decision to change the assessment under this reason apply?

Reason 2 and the legislative provisions for credit of non-Agency payments

What are 'special needs'?

There may be a reason for changing an assessment if in the special circumstances of the case, the costs of maintaining a child are significantly affected because of the special needs of the child (section 117(2)(b)(i)(B)).

The phrase 'special circumstances of the case' is not defined in the Assessment Act. The Family Court has held that 'it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary' (Gyselman and Gyselman (1992) FLC 92-279).

A parent can make an application to change the child support assessment if they consider that the cost of meeting the special needs of a child significantly affects the costs of maintaining the child.

The term 'special needs' is not defined in the legislation. There must be some evidence that the needs of the child relate to a condition or disability that is out of the ordinary. These special needs can be because of a physical, mental or learning disability or because of a special talent or ability of the child (Lightfoot v Hampson (1996) FLC 92-663).

Examples

A child's special needs will often be a fact accepted by both the payer and payee. However, in cases where there is a dispute, the person who seeks to rely on this reason will need to provide documentation, such as medical evidence, to substantiate their claim. Similarly, CSA will require the parent making the application to provide evidence of the net expenditure associated with the special need, unless it is clear that the respondent accepts the other parent's claim.

When are the costs of maintaining a child significantly affected?

If a child has special needs CSA will consider whether the costs of maintaining the child are higher because of the costs related to the special needs. The special needs must involve a cost that is additional to the normal needs of a child that are expected to be met from the child support assessment. For an assessment to be changed the costs must result in a need for additional financial support in addition to that provided by the child support assessment.

The fact that the child suffers from a severe disability or a special ability does not, in itself, mean that an assessment should be changed. The overall test is whether the costs of supporting that child are significantly different from those faced by most other parents. If the costs are only slightly higher than usual they might not be considered to significantly affect a parent's ability to provide financial support for the child.

In some cases, a child may suffer from an illness that is easy and relatively inexpensive to treat but, because of complications, the expenses associated with that condition are significant in the short-term. In other cases, the child may have a disability but the costs associated with that disability are nominal in terms of the parent's out-of-pocket expenses. This may be because the parent receives significant subsidies from the government in relation to medication, therapy or treatment or because another person meets the expenses associated with the condition.

What is fair or 'just and equitable' in terms of special needs?

If a special need exists and it significantly adds to the costs of maintaining a child CSA must decide on the amount by which those costs exceed the 'usual' or expected costs. CSA will consider the financial circumstances (including assets) of a payer to decide if they have the capacity to meet the additional expenses as well as the assessed rate of child support.

CSA will also consider the financial circumstances of the payee to decide if the child's needs, including the additional costs, can be met by the assessed rate of child support (as might be the case where the payer is paying a high rate of child support).

Either parent may be able to contribute towards the child's additional expenses taking into account their individual financial circumstances.

Entitlements that CSA does not take into account

Some parents may receive assistance such as a Carer Allowance from Centrelink. Carer Allowance is intended to compensate the carer for their indirect costs in providing personal care for the child. It is not a payment to assist with the direct expenses of the child's disability.

CSA will not offset or consider any payments of Carer Allowance (previously known as 'child disability allowance') that a parent receives from Centrelink because they provide care for a child with a disability.

The kinds of changes to an assessment that reflect the special needs of a child

The kind of decision made will depend upon who is bearing the costs of the child's special needs. The additional costs of maintaining a child with special needs should be readily quantifiable. If the payee is meeting those expenses, it would usually be fair to apportion a percentage of responsibility for those costs to each parent according to their financial capacity, and increase the assessment by the annual amount of the payer's share of the costs.

Where a payer is bearing the costs of the child's special needs, it may be appropriate to adjust their exempted income amount to reflect the amount that they would have to earn to meet the costs of the special needs of the child (using the method in Houlihan and Houlihan (1991) FLC 92-248). This allows the parents to use other administrative processes if necessary such as an estimate of current income. This approach will not produce a fair result in every case as the value of the financial relief to the parent can be low but it may be used when this reason is considered in isolation from other reasons. An exempted income is likely to produce a fair result where other elements of the formula remain consistent.

The final decision will depend on the circumstances of the case and any other reasons under consideration.

The effect of a change to an assessment on any means-tested assistance from government

Generally, any child support received by a payee is considered to be 'maintenance', and will affect the payee's entitlement to Family Tax Benefit Part A at more than the base rate.

Maintenance that is paid specifically for the child's disability expenses is not assessable under the maintenance income test. However, not all 'special needs' costs are considered disability expenses for Family Tax Benefit purposes. Disability expenses are those relating to a physical, psychological or intellectual disability or a child's learning difficulties. If CSA decides to increase a child support assessment based wholly or partly on the child's special needs, the notice of decision will clearly identify the component that relates to those special needs. The payee can then provide that information to Centrelink and ask it to consider whether that amount should be disregarded for Family Tax Benefit.

How long will a decision to change the assessment under this reason apply?

Where there is a change to an assessment because of the special needs of a child the period of time the decision covers will depend upon how long the child is likely to require additional financial support. If a child has an ongoing or chronic illness or condition the decision to change the assessment may be for a long time. If the special need relates to a short-term condition (e.g. orthodontic work or treatment for an injury or a specific activity such as a sports camp) the change may be for a shorter time.

The interaction of reason 2 and the provisions for credit of non-agency payments

A payer who makes certain types of payments to third parties, including fees for essential medical and dental services for a child, is generally able to have those payments credited towards their liability to pay child support for that child, even if the payee did not intend that the amount be for child support. However, this option is not generally available if CSA has already taken into account those costs met by the payer in making a decision to reduce, or refuse to change the assessment. (See chapter 5.3 - Non-agency payments and offsetting liabilities for further information.)

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Version 1.3

Issued 24 December 2005

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