Sue Lines (WA, Deputy-President) Share this | Link to this | Hansard source

The question is that Senator Pratt's amendments (1) and (2) on sheet 8425 be agreed to.

Louise Pratt (WA, Australian Labor Party, Shadow Minister for Environment and Water (Senate)) Share this | Link to this | Hansard source

As I highlighted yesterday in the chamber, in relation to the need for these amendments on sheet 8425, our concern is that the retrospective application of amended child support assessments will have negative consequences. I take issue with what the minister said yesterday in reply to this concern, which was along the lines that it would only apply in the case of an actually accrued debt. I can't recall exactly how the minister framed it. But, in that context, I need to ask the minister this specifically: if someone is paid child support and they are on a low income, how would the problem of them acquiring a debt be addressed when it is unsustainable for them to pay it back to the person who paid the child support reasonably and it was received in good faith?

Concetta Fierravanti-Wells (NSW, Liberal Party, Minister for International Development and the Pacific) Share this | Link to this | Hansard source

Senator Pratt, can I just make one thing clear. This measure does not create debt. The debt already exists. Can I just underline that. The debt already exists, whether this measure passes or not. The important thing about this measure is that it provides a mechanism for people to identify the debt early rather than letting it mount while they go through the current lengthy process. So I underline: the debt already exists; this is about the process. This is about a mechanism for identification of that debt early in the piece, rather than letting it, as I said, mount up while you go through the current lengthy process. I add that the measure will allow overpayments or underpayments to be identified and addressed earlier. This means that the overpayment or underpayment would be less than under the current process, where debts can accrue while the lengthy assessment takes place. It will not change how these overpayments or underpayments are settled.

Louise Pratt (WA, Australian Labor Party, Shadow Minister for Environment and Water (Senate)) Share this | Link to this | Hansard source

Our concern, which I don't think the minister has addressed, highlights what happens when debt accrues. For example, the median income of child support recipients in Tasmania is only $22,195 a year. They have extremely low median incomes, whereas child support recipients in the ACT have, on average, $42,000 in median income. You can see that even a small reduction in child support or other payments can have a big impact on a family in terms of their cost of living. We believe it is unfair to place the child support recipient in an even more precarious financial situation because of another person's mistake, which is what we're talking about here.

We recognise that there is also a need for legislative change, but sometimes honest mistakes do happen, which is why we believe it's important that the Child Support Registrar can amend a child support assessment—and this is the effect of the amendments we will put in to follow these ones if we fail in knocking this out—so that it reflects the true financial situation of both parents. An example given to us was of someone who'd had an incorrect tax assessment.

We believe that the bill as currently drafted does not provide adequate protections to ensure that retrospective determinations cannot place a child support recipient and their children in a precarious situation. These are important and sensitive issues. This is why we have amendments before this place which would give the Senate more time to carefully consider the way to make this change. The amendment that we are debating removes schedule 1, part 2—which deals with changes to amended tax assessments—from the bill. Let's be clear: I would like the chamber to support this amendment.

The CHAIR: I'm going to put the question in two parts. The first question is that part 2 of schedule 1 stand as printed. That would mean that those opposing part 2 would vote against this question.

Concetta Fierravanti-Wells (NSW, Liberal Party, Minister for International Development and the Pacific) Share this | Link to this | Hansard source

Can I have a clarification? I thought that the question was going to be put on these two together. That was my understanding of what we decided yesterday. I'm happy to have clarification on that if you would kindly assist. I thought that the two questions would be put together.

The CHAIR: They have different outcomes, which is why they've been split. I think it might have been reported incorrectly yesterday.

If Senator Pratt is happy for that approach—

Louise Pratt (WA, Australian Labor Party, Shadow Minister for Environment and Water (Senate)) Share this | Link to this | Hansard source

I'm happy to have them put separately.

The CHAIR: I will repeat what we're doing here. We are splitting it into two parts. The first question is that part 2 of schedule 1 stand as printed. Those opposing part 2 would vote against this question. The question is that part 2 of schedule 1 stand as printed.

Louise Pratt (WA, Australian Labor Party, Shadow Minister for Environment and Water (Senate)) Share this | Link to this | Hansard source

I am very disappointed in the outcome of that amendment. What we see here is the capacity of this bill to now change child support assessments retrospectively, which is a ridiculous and appalling state of affairs. I am disappointed also in our crossbench colleagues for failing to take proper note of the importance of this issue. I implore you—there is yet another opportunity for you to fix this. Rather than giving this chamber time to go away and deal with this issue by splitting the bill, we are now forced to pursue substantive amendments to change the technical detail of how the registrar deals with these debts.

It is simply unfair, from Labor's perspective, that child support assessments not be based on an accurate reflection of the income and financial circumstances of both parents. That is what the bill before us does. The legislation allows the registrar to change child support assessments retrospectively. If, for example, a tax assessment is changed, that creates a retrospective debt which can put undue financial hardship on either of the two parties in such circumstances. What we are asking for with this amendment is to allow the registrar to consider hardship in those circumstances so that, if a retrospective debt is indeed raised, the historical overpayment is reassessed and is able to be a hardship provision so that neither parent is put under undue stress.

As I said before, we know parents who receive child support can be on very low incomes. If a child support assessment changes and the family that has been paid money because of a tax assessment needs to pay back money to the payer, it can place very much undue hardship on that household. It is simply not fair for a parent who has received child support in good faith and has spent it on their children to find out that, through no fault of their own, that money must now be repaid. It is simply unsustainable for us to consider having such a big impact on a family's ability to meet the cost of living. This is why we are moving this amendment today to part 2 of schedule 1 of the bill to attempt to deal with this issue. Rather than giving the Senate and the government time to go away and deal with this issue, in this amendment we've thought carefully about how we should go about fixing this. This amendment permits the Child Support Registrar to change a child support assessment, following the amendment of an income tax assessment, prospectively and retrospectively in limited circumstances. A child support assessment can only be made retrospective if either the amendment was due to fraud or evasion or the registrar is satisfied that changing the administrative assessment retrospectively would not cause the parent unjustified financial hardship, having regard to the financial situation of the other parent.

We think this is a reasonable way forward. It specifies that the registrar must amend an administrative assessment in order to take account of an amended tax assessment. We're also seeking to insert a provision that specifies that the Commissioner of Taxation must inform the Child Support Registrar of an amended tax assessment as soon as practicable after it is made.

I ask our friends on the crossbench to have some regard to the circumstances of families who may find themselves in the dire situation of needing to pay back money that they thought they had legitimately received. I understand that there's unfairness in this for both parties, but it has to be done properly with consideration for the financial hardship and the financial burden on those households. Think about the fact that we are creating retrospective debts here. I ask the chamber for some consideration on behalf of those families.

Accordingly, I seek leave to move opposition amendments (1) to (7) together on sheet 8397.

The CHAIR: Leave is granted.

I move amendments (1) to (7) on sheet 8397:

(1) Schedule 1, item 40, page 35 (line 5), omit "When amended tax assessment may", substitute "Amended tax assessment to".

(2) Schedule 1, item 40, page 35 (line 9), omit "may", substitute "must".

(3) Schedule 1, item 40, page 35 (line 16) to page 36 (line 6), omit paragraphs 56(2A) (a) to (c), substitute:

(a) the amendment to the tax assessment is made under item 5 of the table in subsection 170(1) of the Income Tax Assessment Act 1936 (amendment due to fraud or evasion); or

(b) both of the following apply:

  (i) the parent's adjusted taxable income worked out as a result of the amended tax assessment is higher than the parent's previous adjusted taxable income;

  (ii) the Registrar is satisfied that the amendment of the administrative assessment would not cause the parent unjustified financial hardship, having regard to the financial situation of the other parent; or

(c) both of the following apply:

  (i) the parent satisfies the condition specified in subsection (2AA) in relation to the amended tax assessment;

  (ii) the Registrar is satisfied that the amendment of the administrative assessment would not cause the other parent unjustified financial hardship; or

(d) all of the following apply:

  (i) the parent does not satisfy the condition specified in subsection (2AA) in relation to the amended tax assessment;

  (ii) the Registrar is satisfied that the amendment of the administrative assessment would not cause the other parent unjustified financial hardship;

  (iii) the Registrar is satisfied that special circumstances exist.

(2AA) A parent satisfies the condition in this subsection in relation to an amended tax assessment if the parent applied for the amendment of the tax assessment on or before:

(a) the day by which the parent was required to lodge his or her income tax return for that year of income with the Commissioner of Taxation (taking into account any deferral under section 388-55 in Schedule 1 to the Taxation Administration Act 1953); or

(b) the end of 28 days after the parent was given the tax assessment (including an amended tax assessment) by the Commissioner of Taxation; or

(c) the end of 28 days after the parent becomes aware that the tax assessment is not correct if the parent did not apply for the amendment on or before a day referred to in paragraph (a) or (b) because of circumstances beyond the knowledge or control of the parent.

(4) Schedule 1, item 42, page 36 (after line 25), after subsection 57(7), insert:

(7A) However, the Registrar must not amend an administrative assessment of child support under subsection (7) unless:

(a) the amendment to the tax assessment is made under item 5 of the table in subsection 170(1) of the Income Tax Assessment Act 1936 (amendment due to fraud or evasion); or

(b) paragraph (a) of this subsection does not apply and the Registrar is satisfied that the amendment of the administrative assessment would not cause the parent unjustified financial hardship, having regard to the financial situation of the other parent.

(5) Schedule 1, page 36 (before line 26), before item 43, insert:

42A Paragraph 58A(2 ) ( b)

Repeal the paragraph, substitute:

(b) all of the following apply:

  (i) paragraph (a) of this subsection does not apply;

  (ii) the amount subsequently ascertained, as mentioned in subparagraph (1) (b) (i), is higher than the amount that was determined under section 58;

  (iii) the Registrar is satisfied that the amendment of the administrative assessment would not cause the parent unjustified financial hardship, having regard to the financial situation of the other parent; or

(ba) all of the following apply:

  (i) paragraph (a) of this subsection does not apply;

  (ii) the later amount that the Registrar determines, as mentioned in subparagraph (1) (b) (ii), is higher than the earlier amount determined under section 58;

  (iii) the Registrar is satisfied that the amendment of the administrative assessment would not cause the parent unjustified financial hardship, having regard to the financial situation of the other parent; or

42B Paragraph 58A(2 ) ( c)

Omit "neither paragraph (a) nor (b) applies", substitute "none of paragraphs (a) to (ba) apply".

(6) Schedule 1, item 43, page 37 (lines 8 to 35), omit paragraphs 58A(3B) (a) and (b), substitute:

(a) both of the following apply:

  (i) the parent's adjusted taxable income worked out as a result of the amended tax assessment is higher than the amount determined under section 58;

  (ii) the Registrar is satisfied that the amendment of the administrative assessment would not cause the parent unjustified financial hardship, having regard to the financial situation of the other parent; or

(b) all of the following apply:

  (i) the parent lodged his or her income tax return for that year of income with the Commissioner of Taxation on or before the day by which the parent was required to lodge the income tax return for that year (taking into account any deferral under section 388-55 in Schedule 1 to the Taxation Administration Act 1953);

  (ii) the parent satisfies the condition specified in subsection (3BA) in relation to the amended tax assessment;

  (iii) the Registrar is satisfied that the amendment of the administrative assessment would not cause the other parent unjustified financial hardship.

(3BA) A parent satisfies the condition in this subsection in relation an amended tax assessment if:

(a) the parent applied for the amendment of the tax assessment on or before the day by which the parent was required to lodge his or her income tax return for that year; or

(b) the parent applied for the amendment of the tax assessment before the end of 28 days after the parent was given the tax assessment (including an amended tax assessment) by the Commissioner of Taxation; or

(c) the parent applied for the amendment of the tax assessment before the end of 28 days after the parent becomes aware that the tax assessment is not correct if the parent did not apply for the amendment on or before a day referred to in paragraph (a) or (b) because of circumstances beyond the knowledge or control of the parent; or

(d) the parent did not apply for the amendment of the tax assessment on or before any of the days referred to in paragraph (a), (b) or (c), but the Registrar is satisfied that special circumstances exist.

(7) Schedule 1, page 39 (after line 7), after item 43, insert:

43A At the end of Subdivision B of Division 7 of Part 5

Add:

58BA Commissioner to inform Registrar of amended tax assessments

If the assessment of a parent's taxable income for a relevant year of income in relation to a child support period is amended (whether or not because of an objection, appeal or review), the Commissioner of Taxation must inform the Registrar of the amended assessment as soon as practicable after it is made.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

The Greens will support these amendments. As we indicated, and as I indicated on behalf of the Greens in my second contribution, we are deeply concerned about the impact of this particular part and we share the concern about the fact that the previous amendments were not supported. We think it would have been better to have taken this particular part out of this bill and dealt with it separately when we had had proper time to consider the amendments. However, that was not the will of the chamber, so we think this is the next best option—that is, that we support these amendments and move to protect those people who are accidentally caught up in this through no fault of their own. This is not about the payees. It's not their potential mistake. We think that these are practical, sensible measures that will provide that measure of protection for those people who are in fact innocently caught up in this and who may potentially end up with a debt which they are not responsible for.

Let me remind people about the facts as I articulated them yesterday. The majority of the people we are talking about are on a relatively low income. Single mothers—let's name it—will be caught up in these changes. These people, by the way, have been ignored in the budget. A large number of them are on income support, as we also heard yesterday. These are the real live people that we are seeking to protect in supporting these amendments so that they are not caught up in dealing with the impact of a debt through no fault of their own. We will be supporting these amendments that offer a level of protection to those people.

Concetta Fierravanti-Wells (NSW, Liberal Party, Minister for International Development and the Pacific) Share this | Link to this | Hansard source

The government will be opposing these amendments, as I said. Can I repeat this point: this measure does not create debt; the debt already exists. Whether this measure passes or not, the important thing is to provide a mechanism for people to identify that debt early rather than letting it mount while going through the current lengthy process. The measure will allow overpayments or underpayments to be identified and addressed earlier, and this will mean that the overpayment or underpayment would be less than under the current process, where debts can accrue while lengthy assessments take place. It will not change how these overpayments or underpayments are settled.

Sue Lines (WA, Deputy-President) Share this | Link to this | Hansard source

The question is that the amendments as moved by Senator Pratt on sheet 8397 be agreed to.