Sunday, 5 February 2012

Child Support Agency- Pay too little; We’ll garnish your tax return. Pay too much; Bad luck.

In Australia, the payment of Child Support is a person’s highest mandatory financial obligation, second only to the payment of Income Tax.

It seems however, with my own personal dealings and speaking to several other “customers” of Child Support Agency (CSA), that they are hardly a flagship Government Department second to the Australian Tax Office (ATO). So many complaints, so many issues, which all seem to be falling on deaf ears.

I personally agree with the Government recouping money from the parents to support their own children. Centrelink is more than stretched and burdened, and the last thing we need is even more pressure being put on our already suffering welfare system.

One thing we do need though (especially considering that it’s a mandatory requirement) is equality within the system. Recently I was introduced to one disparity, which in my opinion is a no-brainer on getting changed.

After verbal confirmation from three Customer Service Officers at CSA, I contacted them once again and they put me in touch with Janet Stodulka, Manager of the Family and Child Support Policy Branch at the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA).

As you may be aware, a parent’s child support assessment is usually based on their taxable income for the most recently completed financial year”, said Ms Stodulka. “However, where a parent’s income changes, specifically where a parent’s income reduces by 15 per cent or more than the income used in the assessment, certain flexibility is provided.  This flexibility allows customers to ask the Child Support Agency to base their child support assessment on an estimated adjusted taxable income.”

This allows for seasonal workers, casual workers, and basically anyone whose income may reduce by more than 15%, to lodge a change of income assessment with CSA. I personally think this is great. Everyone is feeling the pinch of the ever increasing cost of living and the last thing payees need is to have to wait until the next financial year before their Child Support payment amount is reduced.

Once you lodge your Tax Return with the ATO this is cross referenced with your income estimate. If you have under estimated your income and haven’t paid enough Child Support, CSA will impose arrears and if you are entitled to a tax refund they will intercept it and garnish any outstanding amount.

So, you can estimate your income for the current financial year rather than having it based on your last lodged Tax Return. If you under estimate your income Child Support CSA will impose arrears for the difference. Great news so far. So the question you are all asking is; what's the problem?

Well, and this is the stupid part, if it turns out you have OVER estimated your income and paid too much it’s, quoting a Customer Service Officer from the CSA call centre, simply “bad luck”.

Now I know it’s hard to recover the money from the receiving parent, as it will have already been given to them, yet what stops CSA from applying a “credit” to your Child Support account and spreading it out over the next 12 months?

It seems that CSA want both parents to notify them of any change of income within 14 days, however make the system unfairly biased at the same time.

“Where a parent over-estimates their income for the estimate period, the child support legislation does not provide for a retrospective adjustment of that estimate”, said Ms Stodulka, “Instead, parents are required to notify the Child Support Agency within 14 days of any change that could affect the accuracy of their estimate.  This rule applies to both receiving and paying parents. This approach ensures that parents remain responsible for the accuracy of their information”.

Any income the payee over estimates is going to be lost out of their pocket. Once again, with the cost of living increasing and many payees of Child Support needing to also fork out the expense of high court and legal costs to gain access to their own child, they too need the maximum amount of money in their pocket. The money can also be spent on their child when they have access to them. Parents which receive Child Support also need the maximum amount of money to support their children.

So, why is CSA encouraging payees to purposely under estimate their income on the chance that they might pay too much? After all, CSA is going to charge you for any unpaid amount anyway, so why would you try and correctly estimate it if any overpaid amounts are going to be lost? Ms Stodulka did however acknowledge the Department does listen to the feedback of their Customers.

While there is currently no plan to alter this approach, the Department values input from parents about their experiences of the Child Support Scheme.  The Department continues to monitor the effect of the legislation and comments received from yourself and others are taken into consideration as we regularly review the performance of the Child Support Scheme.”

I personally would prefer to have a system which is fair on both CSA and the customers which have to deal with them. I’m sure all single parents would love to have a fair system to work with, and I would imagine CSA would prefer that everyone works together, rather than having people abusing a biased system continually chasing them for outstanding money.

Remember, the squeaky wheel always get the grease, and this is one wheel that cannot be simply replaced. There will always be parents CSA have to deal with.

Reform to the current system is needed and in numbers we CAN bring change.