Devious fathers dodging child payments

Paul Bibby
May 26, 2008

A GROWING number of separated parents are using complex financial
arrangements to misrepresent their incomes in an effort to minimise their
child support payments, the Federal Government's Child Support Agency says.

In the 10 months to May 22, investigators from the agency's minimisation
program identified 4186 parents ‹ mainly fathers ‹ who were not paying the
right amount of child support because their incomes had not been calculated
correctly.

This was more than double the 1858 cases discovered in the entire 2006-07
financial year and far more than the 880 cases discovered in 2005-06.

Over the same 10-month period, the program has found that the parents
underestimating their incomes were short-changing their child-support pay
ments by nearly $20 million, compared with $9.1 million in 2006-07 and $4.2
million in 2005-06.

The agency's national compliance manager, Bruce Young, said that while the
increase in the number of parents found to be misrepresenting their income
was partly due to greater scrutiny by the agency, the practice was becoming
more common.

He said that this included a growing number of parents engaging in
sophisticated minimisation schemes involving trusts and negative gearing.

"There have been more people engaging in sophisticated arrangements to
reduce the amount of tax they pay and the amount of child support," Mr Young
said. "In some cases there are quite legitimate reasons for reducing the
taxable income and in other cases it is the result of an unintentional
error, but we're also seeing an added level of complexity in the income
minimisation schemes some parents are using."

He said that in one case a NSW father had minimised his taxable income by
$65,000 a year to reduce his child support by $16,000.

"(The) dad had entered a business partnership with a family member," Mr
Young said. "Our investigators found his income had increased to more than
$100,000. His new child support payments were increased to more than $300 a
week."

The number of parents targeted by the child support agency for continually
refusing to pay any child support at all has also increased. At the end of
April the agency's litigation program had collected over $13 million in
outstanding child support from 512 cases nationally, compared to $12 million
from 479 cases in the whole of 2006-07.

Litigation is pursued only after the agency has made significant attempts to
use other enforcement options such as garnishing wages, intercepting tax
refunds, and refusing to allow habitual offenders to travel overseas.

The Minister for Human Services, Senator Joe Ludwig, said the Government was
in the process of developing an even more effective strategy to make sure
separated parents met their obligations to their children.

Announcement of the new strategy is expected next month.