(23k)Media Release
12 November 2009
Child Support investigations uncover $18 million for kids
Child Support Agency (CSA) investigations have resulted in a 50 per cent increase in child support payments during the 2008-09 financial year from parents who had understated their capacity to financially support their children.
Minister for Human Services, Chris Bowen MP, said income minimisation investigations look at separated parents who are suspected of having a greater capacity to pay child support than their taxable income indicates and are therefore paying less than the appropriate amount of child support.
“In the past financial year there has been almost $18.7 million in child support payments transferred which would have otherwise been withheld. This includes money from 3,500 investigations during that time which resulted in a change to the child support assessment,” Mr Bowen said.
This is an increase on the $12.5 million transferred during the previous financial year.
“The majority of separated parents do the right thing by their children, but the CSA has a responsibility to ensure that those who are deliberately understating their financial resources or unknowingly doing the wrong thing pay the right level of support to their children,” Mr Bowen said.
“Getting the payment amount right is only fair to the children involved, the other parent, and taxpayers who contribute to the financial support of children through increased family tax benefits.”
The CSA’s financial investigators look at incomes through data matches across a variety of sources, such as bank statements and tax records, along with doing cross agency checks. Parents who are found to have a greater capacity to pay receive a new child support assessment.
The CSA may also add back salary-sacrificed superannuation contributions and net losses from financial investments to a parent’s adjusted taxable income to establish a more accurate child support assessment.
Anyone who suspects a child support customer of under reporting their income to unfairly advantage themselves for child support purposes can report it to the CSA on 131 272.
Attachment
Case Study A
In September 2008, the CSA received information about a customer with overdue child support of $95,000.
All attempts by the CSA to contact and work with the customer to pay this outstanding amount had failed. The customer was believed to be working for a relative and earning a higher income than declared in their child support assessment. The customer and the employer had on a number of occasions denied that the customer worked for the employer. CSA suspected that the customer and employer were not being frank in their responses regarding the customer’s employment.
Optical surveillance was used to assist in gathering information about the customer’s employment. As a result of the surveillance the CSA was able to confirm the customer’s employment with the business. $3,500 was initially obtained through regular payments by the customer’s employer. Additionally, the customer agreed to a lump sum payment to clear all outstanding child support and this has now been paid.
Through the investigation CSA was also able to obtain accurate income information that enabled a Capacity to Pay investigation to occur. The customer agreed with the CSA view that the current assessment income of $12,000 be increased to $30,000. Child support is now being paid through ongoing employer deductions.
Case Study B
The CSA commenced a financial investigation into Mr A and Mrs B, who have two dependent children, following anomalies in their income information. Both parents owned and operated their own businesses and declared they were receiving minimal direct wages.
The CSA requested they provide financial details about all businesses as part of the investigation. It was found that Mr A retained all profits from his business by not paying a wage. His income wasn’t accurately reflected in the child support assessment and so was revised up to $55,000 annually.
Mrs B indicated that she was the sole director and shareholder of two companies. Information she provided showed a salary of $30,000. However, the CSA uncovered that she was making weekly $1,000 mortgage repayments. This resulted in a recalculation of child support income to $100,000 annually. As a result, Mr A’s child support liability decreased, with both parents accepting this outcome.
Following this decision, care arrangements changed, with one of the two children living with Mrs B moving in with Mr A. A reassessment was undertaken and Mrs B became the paying parent, but refused to pay child support to Mr A. The CSA then instigated and successfully enforced Employer Withholdings from wages through one of Mrs B’s businesses.
Case Study C
Child support assessments are routinely checked by the CSA against parents’ income claims and other sources such as tax returns. In 2009, a financial investigator reviewed a child support case and determined that a parent had underpaid child support by $10,000.
Due to the reassessment with the paying parent’s newly determined income, the CSA attempted to negotiate a voluntary payment arrangement and an increase to ongoing child support payments. However, the paying parent refused to make any payments to address current overdue child support or future payments.
The CSA subsequently received information that the paying parent was selling an investment property. As part of the CSA’s power to recover payments, a notice was issued by the CSA to the paying parent’s solicitor to intercept funds to clear all outstanding child support. This action was successful and following the sale of the property the CSA received a lump sum payment for the overdue child support.
The receiving parent was then contacted by the CSA and the outstanding child support was transferred. The receiving parent indicated that it had been 18 months since they had received child support from the paying parent and were relieved with the outcome.
The separated parents are now using a mediation service in their community. They are attempting to agree care arrangements for their children and privately arrange financial payments such as medical and education expenses. Mediation may help address concerns by the paying parent that their child support payments are inappropriately used by the other parent and encourage future compliance.
Case Study D
In 2009, a financial investigator reviewed the information in a child support case and determined that a parent had underpaid child support by $10,000. The paying parent refused to address outstanding child support of $10,000 and to meet their reassessed child support assessment.
The CSA soon learnt that the parent’s investment property was to be sold and legally staked a claim over part of the asset for overdue child support. Following this action, the parent made a one-off payment to the CSA and now utilises a mediation service with the other parent to better balance care arrangements between them.
Media Contact
Laura Stevens — 0432 833 769
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