E. Child support package
- E1. Post-separation counselling and support for non-resident parents
- E2. Lower formula 'percentages' for payers exercising contact with their children
- E3. A lower 'cap' on payer income subject to child support formula assessment
- E4. Assessment of income for child support parents undertaking overtime/second jobs
- E5. An increase in the family tax benefit income test deduction for payers with a subsequent family
- Return to What's New What's Different contents
E1. Child support package - Post-Separation Counselling and Support for Non-Resident Parents
1 January 2001
A pilot program to assist non-resident parents improve their post separation relationships and parenting skills will be piloted in two sites.
The pilot program will provide intensive practical assistance and ongoing support by assisting clients to access existing community and government programs such as: parenting skills training; peer support services; relationship management programs; legal advice services; and financial counselling services.
Two different delivery methods will be piloted; one via an advisory service attached to the Men's Access Line; and one via face to face community based advisers.
Research suggests that better post-separation relationships lead to better outcomes for children and the continuing involvement of both parents in the lives of their children results in improved child support payment rates.
Non-resident parents face a range of practical difficulties following separation and may not be aware of the wide range of government and community services available to assist them. A single point of contact to access services will assist these parents
Measures to assist non-resident parents to continue to parent their children after separation are in line with the 1996 Family Law reforms and the Government's Stronger Families and Communities Strategy.
Funding: $0.6 million over four years
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E2. Child support package - Lower Formula 'Percentages' for Payers Exercising Contact with Their Children
1 July 2001
Where a child support payer exercises contact with their children of between 10 per cent and 30 per cent of the year, their child support formula percentages will be reduced.
For payers with contact between 10 per cent and 19 per cent, the relevant formula percentage that is applied to their income will generally be reduced by two percentage points (for example, from 18 per cent to 16 per cent for one child). Where contact is between 20 per cent and 29 per cent, the formula percentage will generally be reduced by a total of three percentage points (for example, from 18 per cent to 15 per cent for one child).
This initiative is intended to encourage parents to maintain contact with their children following separation. It recognises the additional costs faced by child support payers who exercise contact with their children.
Currently, there is no allowance in the child support formula for the costs of caring for a child for less than 30 per cent of the nights of the year. Recent Australian research suggests that the cost of contact by the non-resident parent is high, due to the need to transport the children and to provide a bedroom, furniture, clothing, food, etc.
By recognising that parents incur costs during contact, the proposal will improve incentives for non-resident parents to maintain contact with their children. Contact with both parents is of benefit to the development of the children and leads to a higher likelihood of payment of child support.
This proposal brings child support arrangements into line with the provisions of the new Family Tax Benefit where parents who have care of their children for at least 10 per cent of the time will be entitled to receive assistance for that child.
Funding: $47.5 million over four years
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E3. Child support package - A Lower 'Cap' on Payer Income Subject to Child Support Formula Assessment
1 January 2001
The measure of 'average weekly earnings' (AWE) that sets the upper limit or 'cap' on payer taxable income used in their child support assessment will be aligned with that used for the payee's disregarded income amount.
The payee disregard income amount is currently set by the Average Weekly Earnings of All Employees. However the level at which the income used to assess child support payable is 'capped' and is currently set by using 2.5 times the Average Weekly Earnings of Full Time Employees. Aligning the measures of AWE will give a 'cap' of $78,378 compared to $101,153 under the current arrangements.
The current level of the 'cap' is not supported by research on the costs of children. Recent Australian research indicates that the child support formula requires higher income payers to pay more child support than the total gross costs of their children.
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E4. Child support package - Assessment of Income for Child Support Parents Undertaking Overtime/Second Jobs
1 January 2001
An additional ground for departure from the child support formula will be created for parents who have income derived from a second job, regular overtime or other additional income source. The ground for departure will apply where:
- a parent can demonstrate that the additional income is earned for the benefit of the children (both natural/adoptive and step-children) in their current (subsequent) family;
- the additional income is not earned as part of the normal earning pattern established by the parent prior to establishing a subsequent family, for example, through regular or seasonal overtime or seasonal employment; and
- the additional income does not arise from a condition of an existing income source, for example, mandatory overtime, shift work conditions or normal incremental increases in pay (including normal career advancements).
The overall amount of additional income to be excluded from the assessment will be limited to a maximum of 30 per cent of the parent's total child support income. This maximum amount will limit the potential effect on the resources available to the children of the parent's first family.
Currently, when a parent takes on a second job or overtime to support a new family, additional earnings are included in the assessment of child support. The measure will assist in addressing concerns of payers (with subsequent families) that child support liabilities restrict their ability to improve the position of their new families.
Funding: $ 2.4 million over four years
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E5. Child support package - An Increase in the Family Tax Benefit Income Test Deduction for Payers with a Subsequent Family
1 July 2001
Payers with subsequent families will now be able to claim 100 per cent of any child support paid as a deduction from the household income used for determining the family's entitlement to the Family Tax Benefit and Childcare Benefits.
Currently, where a payer forms a new family, half the child support they pay is deducted from their households' income when their entitlement to family assistance is calculated. The measure will improve the fairness of the means testing arrangements for Government provided family assistance by allowing a full deduction for all child support paid. Child support payers with children in new families will have their Family Tax Benefit and Childcare Benefit assessed on income that reflects the actual income available to their new family.
Funding: $ 17.2 million over four years