2.6.17 Would a change be just & equitable?
Any change made to an assessment must be fair to the children and the parents.
The legislation uses the terms 'just and equitable' and 'unjust and inequitable'. The terms 'fair' and 'unfair' are also frequently used when discussing these concepts.
The Registrar must be satisfied that it would be just and equitable as regards the child, the parents and any non-parent carer before a decision to change the assessment is made (CSA Act section 98C(1)(b)). The Registrar will consider whether it is 'just and equitable' to make a particular decision after a reason for a change to the assessment has already been made out (CSA Act section 117(4)).
CSA Act section 3, section 98C, section 98S, section 112, section 117
SSAct section 23
FL Act section 4
FL Regs regulation 12A
Income Tax Assessment Act 1997 section 52-180
On this page
- Factors to consider under 'just and equitable'
- The duty of a parent to maintain a child & the proper needs of the child
- Income, earning capacity, property & financial resources of the parents & the child
- Income that is not considered
- Direct & indirect costs of providing care for the child & other considerations
- Other considerations
- Hardship caused by the making or refusing to make a change to the assessment
- Date of effect
Factors to consider under 'just and equitable'
In deciding whether a decision is fair, the Registrar will consider the amount and duration of any proposed change and the factors listed in CSA Act section 117(4) which are relevant to a particular case. The Registrar may give more weight to some factors than to others depending on the particular circumstances of the case. The factors include:
- the nature of the duty of a parent to maintain a child,
- the proper needs of the child,
- the income, earning capacity, property and financial resources of the child and of each parent,
- the commitments of each parent to support himself or herself, and any other child or person that they have a duty to maintain,
- the direct and indirect costs incurred by the carer entitled to child support in providing care for the child,
- any hardship that would be caused to the child, the parents or carers, or any other child or person that the liable parent has a duty to support, by the making of, or the refusal to make, a determination, and
- any other relevant matters.
The terms 'unjust and inequitable' and 'unfair' are associated with 3 of the reasons for a change of assessment (reason 4 (2.6.10), reason 5 (2.6.11) and reason 8 (2.6.14)). Before any of those reasons can be established, it must first be demonstrated that the administrative assessment results in an unfair level of child support. This may seem to be duplicated by the need to consider whether a decision is fair but it is necessary to establish that an assessment is unfair before considering whether a change to the assessment would be just and equitable.
Once a reason for changing the assessment has been established, the Registrar needs to then consider whether the proposed decision to change the assessment is both 'just and equitable' and 'otherwise proper'. Where parents have agreed on a particular child support liability, the Registrar is likely to be satisfied that a change to the assessment which reflects this agreement will be just and equitable. However, the Registrar must still decide whether the proposed change is 'otherwise proper'.
The duty of a parent to maintain a child & the proper needs of the child
In deciding whether it is appropriate to change an assessment the Registrar must consider the parent's duty to support their child.
The duty to support a child applies to all the children of a parent equally (see CSA Act paragraph 117(4)(e)). All the children of a parent have equal priority and the CSA Act does not discriminate between the children of different relationships.
The Registrar must consider the proper needs of the child and must have regard to 'the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained and any special needs of the child' (CSA Act section 117(6)). Not only are the basic costs of maintaining a child considered, the individual issues of the child are also taken into account.
Not all of the reasons for a change to an assessment are based on the needs of the child. However, in deciding whether a change is fair, the Registrar must consider the proper needs of the child in all cases even if the reason stated in the application is not based on the needs of the child.
Income, earning capacity, property & financial resources of the parents & the child
A formula assessment of child support is based on the adjusted taxable income (2.4.4) of the parents. A much wider examination of the financial resources of the individual is made when the Registrar considers whether to change an assessment. The income, earning capacity, property and financial resources of both parents and the child are taken into account when the Registrar considers if it would be fair to change the assessment. This includes any assets owned by or under the control of, or held on behalf of, either parent or the child, even where they do not produce income. See reason 8 (2.6.14) for more information. This means that, while the individual is entitled to arrange their financial affairs in any legal way, their obligation to pay child support or contribute to the care of their child might not be reduced as a result of those arrangements when considering if a change of assessment is fair.
Once the income, earning capacity, property and financial resources have been identified, the Registrar will consider the extent to which they should affect the assessment. When deciding whether a change to an assessment is fair, a parent's actual income in the relevant period is considered, as well as the child support income amount used in making the child support assessment. If a parent's income has changed significantly then this may be a factor in deciding whether a change should be made.
While a reduction of income of less than 15% of the adjusted taxable income would not alone constitute a special circumstance under Reason 8, if a ground to change the assessment has otherwise been established, the parent's reduced income should be considered as part of the just and equitable considerations and will be relevant in making the determination.
If the carer is not a parent of the child for whom child support is payable, that carer has no legal duty to support the child. The Registrar will therefore not take into account a non-parent carer's income, earning capacity, property or financial resources when considering whether a change to the assessment is fair.
Income that is not considered
In deciding whether a change to the assessment would be fair, the Registrar is required to disregard any entitlement of the child to an income tested pension, allowance or benefit. The Registrar also disregards any entitlement of the payee to an income tested pension, allowance or benefit except where the payment would form part of the payee's adjusted taxable income (2.4.4) in an ordinary formula assessment (sections 117(7) and 117(7A)).
Income-tested pension, allowance or benefit
The following payments are income-tested pensions, allowances or benefits (CSA Act section 5, FL Act section 4(1) and FL Regs regulation 12A).
- A service pension from the Department of Veterans' Affairs
- Social security payments that are defined as a 'social security pension' or a 'social security benefit' (2.4.11) by section 23(1) of the SSAct
- FTB except for the base rate of FTB Part A
- A means-tested ABSTUDY allowance
- A means-tested boarding allowance under the Assistance for Isolated Children Scheme
- A New Enterprise Incentive Scheme payment
Further information about the eligibility criteria and rates of these payments can be found in the Guide to Australian Government Payments Booklet.
National Disability Insurance Scheme (NDIS) payments are not 'taxable income' (section 52-180 Income Tax Assessment Act 1997) and are not part of a person's adjusted taxable income for general child support purposes. The Registrar may consider payments or financial assistance received by a parent under the NDIS as part of the parent's or their child's support package, in deciding whether a change to the assessment would be fair. Such payments or financial assistance should only be taken into account when determining the net expenses incurred by a parent in relation to their disability, or their child's disability.
National Redress Scheme payments are not included in a parent's adjusted taxable income for general child support purposes. The Registrar will generally not take into consideration any payments received by a parent under the National Redress Scheme, in deciding whether a change to the assessment would be fair. However, a payment received by a parent under the National Redress Scheme as part of their overall circumstances may be relevant to consideration of their earning capacity under reason 8 (specifically the third criterion, see 'Purpose of the parent's decision about working arrangements' in topic 2.6.14 for more information).
Direct & indirect costs of providing care for the child & other considerations
In deciding whether a change to an assessment would be fair, the Registrar must consider the direct and indirect costs incurred by the parents in providing care for the child (CSA Act section 117(4)(f)). In most cases, direct costs can be identified and can be independently confirmed.
Indirect costs in providing care are more difficult to evaluate. The earning capacity of a carer may be restricted by the need to provide care for a child. Issues such as missed overtime, additional hours of potential employment outside school attendance or inability to undertake required travel in a better paid job may be identified.
Once costs have been determined, the Registrar will consider to what extent the costs affect the ability of the parent to support the child.
Example: If a parent's direct and indirect costs are low, they might not be considered to significantly affect the parent and, therefore, not result in a decision to change the assessment.
The Registrar may also consider other relevant matters apart from those listed in CSA Act subsections 117(4) to 117(8) (CSA Act section 117(9)). These other matters are not set out in the legislation but should be consistent with the objects of the CSA Act (1.3.1).
Example: If other court proceedings likely to affect child support have been, or are likely to be, commenced e.g. property settlement proceedings, the Registrar may decide that it would not be fair to change the assessment if such proceedings are in progress.
Example: Since 1 July 2008, changes to the child support scheme have enabled parents earning money after separation that they would not have earned, derived or received in the normal course of events, to request that this extra income be excluded from their income for the purposes of the child support assessment. This provision is available to parents up to 3 years after separation.
This post-separation income (2.5.2) provision does not fall within the change of assessment process and only 30% of the parent's total income can be excluded. If post-separation income has already been excluded from a person's income for child support purposes, this will be relevant when balancing whether it is just and equitable to reduce the income taken into account even further, or to further adjust the child support amount in favour of that parent.
If post-separation income has not already been excluded, the Registrar can take this into account in deciding whether it would be fair to change the assessment. If the Registrar considers it would be fair to reduce a person's income by excluding post-separation income during the change of assessment process, the income must not be reduced by more than 30% (section 44).
Hardship caused by the making or refusing to make a change to the assessment
The Registrar must consider any potential hardship that would be caused to the child and either parent, as well as any resident child of either parent, when deciding if a change to an assessment, or a refusal to make a change to an assessment, would be fair (section 117(4)(g)).
The Registrar will consider whether the decision limits the capacity to provide necessities for general living or to meet the proper needs of all parties individually and in the family situation.
If the carer is not a parent of the child for whom child support is payable, that person has no duty to support that child. The Registrar will not collect information about that person's income, earning capacity, property or financial resources, and will not consider whether a change or refusal to change the assessment would cause that person hardship.
Date of effect
When making a change of assessment decision, the Registrar may not vary the rate of child support payable for a day earlier than 18 months before the date upon which the application was lodged (if the payer or payee applied for the change of assessment) or the date upon which the Registrar notified the payer and payee in writing of its intention to change the assessment (in the case of a Registrar-initiated change of assessment (2.6.6) (CSA Act section 98S(3B))). The exception is where a court has granted leave under CSA Act section 112 (4.3.2) for the Registrar to make a retrospective change to the assessment for the period specified by the court in the order granting leave (CSA Act sections 98S(3C) and 112(6)). However, the Registrar is not obliged to make a change to the assessment for the period the court has granted leave (CSA Act section 112(8)).
Apart from this limitation on backdating a decision, the Registrar has a wide discretion to specify the date of effect of that change. Backdating a decision for any period could result in an overpayment to the payee or arrears payable by the payer. This could cause hardship to that person and may put the ongoing financial support of the child in jeopardy.
When considering whether to backdate a change of assessment decision, the Registrar will consider the circumstances of the parties involved. These include, but are not limited to:
- the payer's capacity to pay any arrears in addition to their ongoing assessment, or
- the payee's capacity to repay any overpaid child support.
The Registrar will also consider the circumstances that led to the application, for example:
- whether the application arose from a parent's misstatement of his or her income, or
- whether the parent unduly delayed making his or her application for a change of assessment.