Offsetting rules

The amendments extend the automatic offsetting of liabilities (when two parents are liable to pay child support to each other) to cases where one of the parties goes on to a social security benefit.

Background

The Act provides that when care of a child or children is split or shared between two liable parents, the annual rate of child support payable by one parent may be reduced (offset) by the amount which would be payable by the other parent. Since 1994, offsetting has been available when one parent is a beneficiary, although the nonbeneficiary parent had to apply for it in writing.

When offsetting was in place and one parent went on a benefit, the automatic offsetting ceased but the nonbeneficiary parent was not made aware of this fact until he or she received a statement showing a higher amount to pay. About a third of non-beneficiary parents did not notice the increase on the statement; they paid their usual amount and incurred a debt and associated penalty.

Key features

A new section 34 has been substituted in the Act to make it clear when offsetting applies in cases of split custody.

Section 35 has been amended by substituting a new subsection (1) to make it clear when offsetting applies in cases of shared custody.

Application date

The amendments apply from 1 November 2006.