The new Child Support Scheme

The new Child Support Scheme and changes to Family Assistance

Changes to child support already in place

Along with the changes to the Child Support Scheme, we are significantly expanding our collection activities to ensure both parents meet their child support responsibilities.

In this section:

• What about people who minimise their income?
• Collecting outstanding child support
• Stopping non-paying parents from leaving the country
• Taking court action
• How you can help

The Child Support Agency (CSA) compliance program aims to improve the integrity of the Child Support Scheme so that parents and the community can be confident that the Scheme is operating effectively, that parents are meeting their child support responsibilities, and that if they do not, consequences will apply.

A correct child support payment that genuinely reflects both parents' capacity to pay is the foundation of child support. Getting income levels right is only fair to the other parent, the children involved, and taxpayers who contribute through increased family assistance payments.

Outstanding child support
We will continue to pursue outstanding child support, now and after 1 July 2008.

What about people who minimise their income?

Child support payments are mostly based on the child support formula. However, CSA won't use the formula where it does not properly reflect either parent's capacity to financially support their children. This is in addition to the right of either parent to apply for a change of assessment on the grounds that their own (or the other parent's) income is not properly reflected in the child support assessment.

We have hired more than 120 financial investigators who are examining the finances of both parents to ensure child support payments reflect both parent's financial situations and their capacity to financially support their children. In 2006-07 this area generated $9.1 million in increased child support.

Areas of income minimisation that CSA is investigating:

• Either parent earning income in the 'black economy', for example, 'cash in hand' from the building, domestic help and other industries.
• Parents earning their income as non-salary and wage, for example, business income.
• Using corporate veils (companies, trusts, partnerships) to hide or reduce taxable incomes, which results in minimising their child support obligations.
• Parents who legitimately reduce their taxable income and fringe benefits. We can add these amounts back on to establish a more accurate child support assessment.

Fixed payments
Parents who deliberately minimise their income to avoid paying child support will have to pay $20 per child per week, indexed annually, up to a maximum of three children ($60 per week), unless they can prove their income is very low. This approach discourages parents from reducing their child support liability by manipulating their taxable income, and supports the principle that parents' contribution to their children's financial support should be based on their total income.

Collecting outstanding child support

We are working more closely with the Australian Taxation Office to ensure parents lodge tax returns and outstanding child support can be collected through the interception of tax refunds. In 2006-07, over 33,000 parents have been encouraged to lodge returns, resulting in an extra $16.3 million for children.

Stopping non-paying parents from leaving the country

We can issue departure prohibition orders to stop parents who owe large amounts of child support from leaving the country until they pay their outstanding child support or come to an arrangement. In 2006-07 we issued 474 orders generating $5.9million for children.

Taking court action

We work hard to negotiate with parents who have outstanding child support and if that fails, we can take them to court if we believe it's the only avenue to collect this money.

The Child Support Agency is targeting serious avoiders with large amounts of outstanding child support, who often have significant assets and business interests and have consistently refused to enter into any negotiations to settle their outstanding payments.

How you can help

We encourage you to get in touch with us if you think you might have information that will help us collect child support for your children, or others.

Have you got new information?
Perhaps you have information about how a parent may be under reporting their income through cash payments, using other avenues to avoid paying child support, or maximising their child support. If so, call the Australian Government Fraud Tip-off Line on 13 15 24 — any new information will be considered for investigation.

Have you paid or received a direct payment?
If you pay or receive a direct payment, tell us so we can make sure these payments are taken into account. Certain payments, such as amounts for school fees, don't need the other parent's agreement. See more information.

Do you know someone entering or leaving the country?
If you know if a parent who has outstanding child support is planning to leave or re-enter the country, tell us. We may be able to issue a departure prohibition order to stop them leaving until they pay or come to some arrangement.

Are your contact details up to date?
Keep your contact details up to date, so you won't miss out on any important information from the Child Support Agency (CSA) about your case.

 Important information for people receiving family assistance

Are your income and care details up to date?
Ensure CSA and Centrelink have your most current and accurate income and care information. Accurate incomes and care levels for both parents ensure that child support payments and family assistance are correct now and into the future.

If you are in paid employment, to update your income details, all you have to do is lodge your tax return each year. If your child support is based on an estimate of your income, you need to advise CSA as soon as your income changes. See information about estimating your income.