2013 amendments to Child Support Act covering 'income amount order' and taxable income, the definition of 'receiving carer', income adjustment and more.

Sections 110B to 110H of the Child Support Amendment Act 2013

A small number of technical and remedial amendments have been made to the Child Support Amendment Act 2013 to correct errors, clarify provisions and to include additional consequential changes.

Background

Parliament enacted changes to the Child Support Act 1991 in April 2013 through the Child Support Amendment Act 2013. The key features of the Child Support Amendment Act 2013 are set out in Tax Information Bulletin Vol 25, No 5, June 2013.

Key features

An estimate of taxable income may not be accepted or revoked if an "income amount order" is in force. The definition of "income amount order" has been updated as a result of amendments to section 106 of the Child Support Act 1991, which identifies the orders that a court may make. The updated definition reflects that a receiving parent will also be able to make an estimate of taxable income. An "income amount order" is now defined as a determination or an order that substitutes a new child support income amount, an amount of taxable income or adjusted taxable income, or an annual amount of child support.

New section 4A(1) and new section 8(1) have been amended to clarify that a parent or carer cannot apply for a formula assessment of child support if they are living in a marriage, civil union or de facto relationship with the parent from whom payment of child support is sought. Where there are more than two legal parents of the child, and two of these parents are living together in a marriage, civil union or de facto relationship (for example, the applicant and a legal step-parent) an application for formula assessment can still be made, as long as the parent making the application is not in a relationship with the parent from whom payment is sought.

New section 17 defines a parent to be a receiving carer if their care cost percentage is greater than their income percentage, and a parent to be a liable parent if their income percentage is greater than or equal to their care cost percentage. The policy intent is for a parent with a zero care cost percentage and a zero income percentage to be liable for at least a minimum amount of child support, where there is a receiving carer providing at least 35% of ongoing care. Section 17 has been amended to ensure that a parent with 100% of the care costs of a child and 100% of the income is defined as a receiving carer, despite their income percentage being equal to their care cost percentage.

Amendments to new section 35 clarify the income to be used for assessing adjusted taxable income for a child support formula assessment as follows:

  • The use of adjustments made to taxable income, as set out in new subsection 35(1), will apply to assessments of child support for the child support year starting 1 April 2015 and later child support years. For assessments of child support for the child support year starting 1 April 2014, the calculation of adjusted taxable income will be based on taxable income, without making any adjustments of the sort referred to in subsection 35(1).
  • The most recent tax year will be reviewed when determining if a person's taxable income was derived only from withholding income and the person has no adjustments of the sort referred to in subsection 35(1). If, in the most recent tax year, the person meets these two criteria, their taxable income will be taken to be their employment income for the calendar year immediately preceding the start of the child support year.
  • If the person does not meet the two criteria referred to above, their taxable income for a child support year must be their taxable income in the tax year immediately preceding the most recent tax year, including the inflation percentage for the child support year. Likewise, the adjustments under section 35(1) that must be applied are those that relate to the tax year immediately preceding the most recent tax year.
  • Additional consequential amendments have been made to the definition of "last relevant tax year".

Additional consequential amendments to Part 6A and section 103B of the Child Support Act 1991 have been made to reflect that under a formula assessment for child support there can now be more than two parties affected.

Application date

The changes apply from 17 July 2013.