Child Support (Assessment) Amendment Regulations 2002 (No. 1) 2002 No. 340
EXPLANATORY STATEMENT
Statutory Rules 2002 No. 340
Issued by the Authority of the Minister for Children and Youth Affairs
Child Support (Assessment) Act 1989
Child Support (Assessment) Amendment Regulations 2002 (No. 1)
Section 164 of the Child Support (Assessment) Act 1989 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The Australian Taxation Office (ATO) has reassessed the taxable incomes of about 60,000 taxpayers involved in more than 260 variations of tax effective schemes. Child support assessments based on taxable incomes amended by the ATO were reassessed retrospectively under subsection 56(3) of the Act using the amended taxable incomes.
On 14 February 2002 the Commissioner of Taxation announced a final settlement offer to investors in these tax effective schemes. These investors may have large taxation liabilities to meet, even after accepting the Commissioner's offer and some of these investors are also child support payers with large child support debts. The ATO's approach to tax deductions claimed by investors in some tax effective schemes has been affirmed by the Federal Court. Other decisions of that court are imminent.
The purpose of the proposed Regulations is to amend the Child Support (Assessment) Regulations 1989 by prescribing particular circumstances in Regulation 7 requiring the Child Support Registrar (´the Registrar' who is the General Manager of the Child Support Agency) to use an amended taxable income of taxpayers involved in a mass marketed tax effective scheme to calculate both the amount of child support payable by a liable parent and the amount which an eligible carer maybe entitled to receive.
The Registrar cannot, under current legislative arrangements, reassess the child support assessment of investors who settle with the ATO when the ATO makes an amendment reducing the investor's taxable income (although the Registrar is obliged to reassess child support following an ATO amendment increasing the taxable income due to avoidance of tax). The proposed Regulations rectify this situation, and allow the child support assessment to be correspondingly reduced.
The proposed Regulations are retrospective in effect in order to apply equally to all investors who have settled with the ATO regardless of the date since 14 February 2002 that the consequential amendment to their taxable income has been or will be effected by the ATO. Retrospective operation of the proposed Regulations satisfies the requirements of subsection 48(2) of the Acts Interpretation Act 1901 in that no disadvantage to the rights of the investors results and reduced child support liability applies to the investors.
The proposed Regulations are taken to have commenced on 14 February 2002.
Overview
The Child Support (Assessment) Amendment Regulations 2002 (No. 1) were enacted to address the need for a more equitable reassessment of child support obligations in light of amended taxable incomes. These regulations were issued under the authority of the Minister for Children and Youth Affairs, amending the Child Support (Assessment) Regulations 1989. The primary objective of these regulations is to ensure that child support assessments are aligned with the Australian Taxation Office’s (ATO) reassessments of taxable incomes, particularly in cases involving tax effective schemes. This legislative change aims to provide a fair outcome by allowing the Child Support Registrar to reduce child support assessments when the ATO reduces a taxpayer’s taxable income, thereby addressing an inconsistency in the current legislative framework. The retrospective application of these regulations ensures that all affected investors are treated equally, irrespective of when their taxable income was amended by the ATO.
Scope and Application
The Child Support (Assessment) Amendment Regulations 2002 (No. 1) apply to the Child Support Registrar, who is the General Manager of the Child Support Agency, and specifically address the reassessment of child support obligations in relation to taxpayers involved in mass marketed tax effective schemes. These Regulations amend the Child Support (Assessment) Regulations 1989 to allow the Registrar to utilise amended taxable incomes determined by the Australian Taxation Office (ATO) when calculating child support liabilities. This applies to both the amount of child support payable by a liable parent and the amount which an eligible carer may be entitled to receive. The Regulations are triggered by the ATO’s reassessment of the taxable incomes of approximately 60,000 taxpayers, which has led to variations in tax effective schemes. Importantly, the Regulations are retrospective, applying to all investors who have settled with the ATO since 14 February 2002, ensuring that no investor is disadvantaged by the changes. The scope of these Regulations extends to ensuring that child support assessments are adjusted to reflect the ATO's amended taxable incomes, thereby aligning child support liabilities with the taxpayers’ adjusted financial circumstances.
Key Provisions
The Child Support (Assessment) Amendment Regulations 2002 (No. 1) provide specific amendments to the Child Support (Assessment) Regulations 1989, particularly in relation to Regulation 7. These amendments enable the Child Support Registrar to utilise an amended taxable income of taxpayers who are involved in mass-marketed tax effective schemes when calculating the amount of child support payable by a liable parent and the amount an eligible carer may receive. This adjustment is made to reflect the changes in taxable income that have been determined by the Australian Taxation Office (ATO) following the reassessment of tax effective schemes. Section 56(3) of the Child Support (Assessment) Act 1989 allows for retrospective reassessment of child support using the amended taxable incomes, ensuring that the child support obligations are aligned with the taxpayer's revised financial situation.
Under these new regulations, the Child Support Registrar is required to reassess child support payments for individuals involved in tax effective schemes, irrespective of the date on which the ATO made the amendment to their taxable income. This obligation extends to all taxpayers who have settled with the ATO since the announcement of the final settlement offer on 14 February 2002. The Registrar must consider the amended taxable income to ensure that the child support assessment is fair and reflective of the individual's current financial capacity. This requirement ensures that the child support obligations are not only up-to-date but also equitable for all parties involved.
The regulations impose a clear obligation on the Child Support Registrar to reassess child support payments in accordance with the amended taxable incomes provided by the ATO. This reassessment must be conducted retrospectively, applying equally to all taxpayers who have settled with the ATO regardless of the timing of the ATO's amendment. This requirement ensures that all affected taxpayers are treated consistently and that child support assessments are adjusted to reflect the true financial circumstances of the parties involved.
Breach of these regulations could lead to significant consequences for both the Child Support Registrar and the affected taxpayers. The Registrar must adhere strictly to the amended provisions to avoid any potential legal repercussions. Failure to reassess child support payments correctly could result in either over or underpayment of child support, leading to potential disputes and further legal action. Additionally, non-compliance with the Act and these regulations could result in penalties under the Acts Interpretation Act 1901, which may include fines or other sanctions as deemed necessary by the relevant authorities.