Media Release: Ombudsman

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Wednesday, August 25, 2010
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MEDIA RELEASE

Capacity to Pay Child Support Under Spotlight

The even-handedness of Child Support Agency (CSA) investigations into whether parents are paying and receiving the right amount, must target both the paying and receiving parents in a fair and evenhanded manner, according to the most recent report released by the Acting Commonwealth Ombudsman Mr Ron Brent.

The report looks into the CSA's power to go beyond a parent's taxable income to assess child support obligations. The CSA does this through its 'Capacity to pay' (CTP) investigations which typically target parents who are self-employed or run a business through a corporate structure. A CSA capacity to pay investigation may look into such things as property holdings, tax minimisation arrangements, income which is not taxable or lump sum payments received.

'We examined 34 cases where child support had been reassessed and in almost every case the amount that had to be paid increased. The CSA has prioritised cases that increase child support liabilities, whereas their advertising suggested targeting both payer and payee parents that is, that they would investigate both those parents suspected of understating their incomes in order to pay less and those understating their incomes to receive more,' said Mr Brent.

In practice, the majority of investigations targeted only those suspected of paying too little. He suggested that the CSA change its case selection procedures, to be more even-handed in its approach to the two parties.

'It is also important that investigations are carried out with sensitivity and without implying that all investigated parents are trying to avoid child support obligations,' Mr Brent said.

While the Ombudsman recognised the need for the CSA to look more broadly at a person's total financial situation, the majority of cases examined were in fact people with legitimate taxation arrangements. On the other hand it is important that the CSA deals appropriately with cases of deliberate fraud or evasion when it finds them.

The report also calls attention to the intrusive nature of Capacity to pay investigations and that they have the potential to damage the relationship between parents, for example, when financial information about a new partner is requested unnecessarily.

Other recommendations were directed at ensuring:

*adequate information is provided to parents about the investigation process itself, what information is required or what factors are taken into account

*the accuracy of the CSA's decisions, and that they are based on complete information

*training and support for the CSA's investigation officers is of a high standard

*quality assurance, data collection, record keeping and procedural matters are appropriately rigorous.

The CSA responded positively to the report's 14 recommendations when it considered them in draft form, and indeed have already moved to address many of the issues raised. Mr Brent praised CSA's responsiveness and commitment to fair and accountable administration.

The Ombudsman's report is entitled Child Support Agency, Department of Human Services; Investigation of a Parent's 'Capacity to pay', August 201011|2010, is available from http://www.ombudsman.gov.au/reports/investigation/2010

Media contact:

Shaun Rohrlach, Director of Public Affairs

0408 861 803

SOURCE: Ombudsman

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