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2006 legislative reforms
The Child Support Legislation Amendment (Reform of the Child Support Scheme—Initial Measures) Bill 2006 was given Royal Assent on 15 June 2006. This means that the proposed legislation for Phase 1 of the reforms has become law and commenced on 1 July 2006.
The new measures are:
Reduce maximum Child Support payments
Current research shows that non resident parents on high incomes pay Child Support at a higher rate than the costs of raising children.
The income cap, or the income above which no additional child support is payable, will now be calculated using 2.5 times the yearly equivalent of the 'all employees average weekly total earnings' (EAWE) rather than the 'full time adult average weekly total earnings' (AWE).
This will cause a reduction in the income cap amount from $139,347 to $104,702 for formula assessments where the child support period started in 2006 and from $130,767 to $98,280 where the child support period started in 2005. Changes to the assessment applied from 1 July 2006 only.
Increase minimum payments
The minimum payment for most parents on a low income was $260 per year or $5 a week. This amount was introduced in 1999 and had not changed since then. This payment has been increased to $320 per year or just over $6 per week, and will be indexed yearly to the Consumer Price Index (CPI) to make sure these payments keep pace with inflation.
Introduce fairer assessments of the capacity of parents to earn income
Parents can be required to pay additional child support (or receive less) if the Child Support Agency determines that they have a higher capacity to earn income. This happens under the Change of Assessment process.
This change more clearly defines under what circumstances 'capacity to earn' can be considered. The new criteria are more flexible for parents to make lifestyle choices such as caring for new children.
Increase Prescribed Non Agency Payments credits
Non Agency Payments are payments made directly to the parent receiving child care or a third party. Normally a Non Agency Payment may only be credited when both parents agree that the payment was for child support. Paying parents could receive credit for up to 25 per cent of their regular child support liability for paying for essential costs for the children such as school fees or essential medical costs, without the receiving parent agreeing to the credit. These are called Prescribed Non Agency Payments.
This credit has increased from 25 per cent to 30 per cent. All uncredited amounts remaining after 30 June 2006 will be credited at 30 per cent, regardless of when the payment was made.
