Child support collection arrangements between the Australian Taxation Office and the Department of Human Services

ANAO report no. 50 2016–17

1 May 2017

The Child Support Scheme is governed by the Child Support (Registration 1. and Collection) Act 1988 and the Child Support (Assessment) Act 1989, and administered through the Department of Human Services (DHS). The scheme requires parents who do not have primary care of their children to make financial contributions to their children’s upbringing. In 2015–16, a total of $3.5 billion was transferred in child support payments, supporting approximately 1.2 million children.

Parents in the Child Support Scheme undertake an initial child support payment assessment, followed by periodic reassessments. Child support payment assessments are made using a formula that takes into account a range of factors including: each parent’s income; the percentage of care each parent provides; and the cost of raising children. Following an assessment, DHS determines a child support liability for the paying parent.

DHS has arrangements in place with the Australian Taxation Office (ATO) to help facilitate accurate assessment of Child Support Scheme parents’ income, as well as the collection of child support debts. To support the accurate assessment of child support parents’ incomes and child support payments, the ATO takes actions to promote the timely lodgement of tax returns by child support customers.3 To support the collection of child support debts, the ATO intercepts tax refunds of parents owing child support amounts, and exchanges income information with DHS. These arrangements are governed under a Head Agreement4, and subsidiary service agreements for the Lodgement Enforcement Program5 and the Tax Refund Intercept and Information Exchange Programs.

The audit objective was to assess the effectiveness of the child support collection arrangements between the Department of Human Services and the Australian Taxation Office. To form a conclusion against the audit objective, the ANAO adopted the following criteria:

• arrangements are in place between DHS and the ATO in support of accurate and timely child support payments;

• DHS and the ATO fulfil their agreed responsibilities in support of accurate and timely child support payments; and

• DHS and the ATO measure the performance of their cooperative child support collection activities and transparently report on outcomes.

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