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2.6.11 Reason 5 - money, goods or property received by the child, the payee or a third person

Context

A parent can apply for a change of assessment in special circumstances if the child support assessment is unfair because the payer has paid or transferred money, goods or property to the child, the payee, or a third party for the benefit of the child.

Act references

CSA Act section 98C, section 98E, section 98S, section 117(2)(c)(ii), section 117(4) to section 117(9)

CSRC Regs section 19

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Grounds for departure under Reason 5

The Registrar can decide if there should be a change to an assessment when there are special circumstances because of a payment of money, or transfer or settlement of property made (or to be made) by the payer (CSA Act section 117(2)(c)(ii)). The payment or transfer can be to the child, the payee or to any other person for the benefit of the child.

The phrase 'special circumstances of the case' is not defined in the CSA Act. The Family Court held that 'it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary' (Gyselman and Gyselman (1992) FLC 92-279).

A party can apply to change their child support assessment if they think that a payment or transfer of property that has been made, or is to be made, should be considered. The party needs to show that the payment or transfer results in an unjust and inequitable level of child support under the child support assessment.

The child support scheme provides that payment of child support shall be made by periodic payments to a payee for the day-to-day care of a child. The payee then determines how that money is spent. However, there may be cases where payments have been made for the benefit of a child, outside the child support assessment, that should be taken into account when deciding how much child support should be paid.

Payments for the benefit of a child can include:

  • payments prescribed under the 'non-agency payment' provisions (CSRC Regs section 19)
  • other payments for the benefit of the child
  • payments made during a period when child support wasn't collected by the Registrar that exceed the child support liability
  • a transfer or settlement of property made for the benefit of the child, made to the child, the payee or to a third party.

The value of a payment or transfer should be able to be identified.

Unjust & inequitable

If special circumstances are established, the Registrar will determine if the assessment is unjust or inequitable because of the special circumstances. The question of unfairness depends on the particular facts of the case.

An uninvited, voluntary or excessive payment for the benefit of the child by a parent, outside the child support assessment, should not affect the payee's entitlement to receive child support to meet the day-to-day needs of the child (Strauss and Strauss (1998) FLC 92-797). A parent is not legally required to pay more than the amount set by the child support assessment. However, a parent may choose to pay additional amounts of child support without any expectation of a change being made to the assessment.

The Registrar will consider the amount of child support payable under the assessment, the amount of the payment or transfer and the requirement that children receive periodic payments for their day-to-day needs.

Although a payment might have been made prior to an assessment being raised it does not prevent the Registrar deciding that the assessment is unfair.

Transfer or settlement of property

Any transfer or settlement of property has to be looked at in relation to any order made by a court or any agreement between the parents regarding property. The Registrar will avoid undermining the property settlement or any related agreement entered into by the parents.

Generally, the Registrar will not be satisfied that a transfer of property to the other parent was made for the benefit of the child, unless the order or agreement specifically identifies the proportion and states that the transfer was made for the benefit of the child. However, where a parent can establish, with adequate evidence, that the payee received a higher share of the property or a payment for the benefit of the children, the Registrar will consider whether the transfer or payment makes the child support assessment unjust and inequitable.

The Registrar will consider any agreement or order that provides for the children, but it is not, in itself, conclusive evidence that a change should be made to the assessment (Sloan and Sloan (1994) FLC 92-507). Where express provisions have been made, it may be necessary for a court to consider the matter if the change of assessment process cannot properly consider all the relevant factors.

Where there has been an informal distribution of assets, the change of assessment process should not operate as a means of clarifying the terms of the agreement, or intentions of the parents, in respect of the arrangement. In these cases, the Registrar will refuse to make a change of assessment decision as the issues are too complex (CSA Act section 98E).

However, in cases where the facts are simple, an application for a change to the assessment can be successful and the assessment can be changed to recognise the property settlement.

How does this reason relate to non-agency payments?

An application to credit a non-agency payment may be a more suitable way to recognise that payments have been made. (See 5.3 for more information.) However, the credit of a non-agency payment or a refusal to credit does not necessarily mean that an application for a change to the assessment cannot be made (Kornacki and Lynch (1998) FLC 95-101). In that case, a payment of school fees in advance made prior to the commencement of the child support liability provided a reason to change the assessment.

It may be more appropriate to apply for a change to an assessment (rather than the credit of a non-agency payment) if the parent is seeking an adjustment to their assessment for the future and for ongoing support rather than an immediate credit for payments that have been made. There may be other situations where the payment made does not qualify as a non-agency payment, for example, the payment was not made during a period when child support was collectable by the Registrar.

If a payer has uncredited amounts for prescribed non-agency payments, the payer can seek further relief through an application for a change to the assessment. The facts of the case have to be examined to see if the payment will be fully credited or credited in part or not at all. The value of the payment, the amount of the assessment and any credits recognised as non-agency payments need to be examined.

The kinds of decisions that can be made

If the reason is established the Registrar must consider whether it would be just and equitable (2.6.17) to the child, the payer, and the payee and otherwise proper (2.6.18) to make a particular decision (CSA Act section 98C(1)(b)(ii)).

It may be fair to reflect the amount of the transaction by adjusting components of the child support formula to reduce the assessment for the paying parent by an appropriate amount. Alternatively, an annual amount of child support may be set.

Generally, in cases where there is a change to the assessment in relation to the payment of money or transfer of property, the change will only affect the assessment for a short period. In determining whether the change should continue until the child turns eighteen, the Registrar will consider the reasons for the transaction. The decision will depend on the circumstances of the case and any other reasons under consideration.

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