Phase 1 Report of Feasibility Study on New Hire Programs for Canada: New Hire Programs in the United States

VI. EMPLOYER REPORTING IN COMMONWEALTH COUNTRIES

VI. EMPLOYER REPORTING IN COMMONWEALTH COUNTRIES

United Kingdom

The enforcement activities of the United Kingdom Child Support Agency do not include accessing new hire information. The Department of Social Security (DSS) is one source of data on non-custodial parents and the child support agency has access to DSS files on unemployed persons, which can help locate payers. The agency also has access to one piece of information from Inland Revenue—the person's last known address—but has no access to details about earnings or other personal information.

Recent legislation enables DSS and Inland Revenue to share information, so DSS can use Revenue data to detect unemployment insurance, workers' compensation and welfare fraud. However, Parliament was concerned about privacy issues and, therefore, did not give the child support agency the same powers to obtain these data.

We spoke to one person who said that, as far as he was aware, the government had not considered establishing an employer reporting program. The two major disadvantages of such a program from his perspective would be the burden on employers and the privacy concerns, although the program would offer cost savings to the agency by placing the onus on employers. Such a program would enable the agency to spend less money on locating current payers, especially since current estimates suggest that the present caseload of 750,000 will double by 2004.

New Zealand

The child support agency, part of the Department of Inland Revenue, has access to data from the employer reporting program that began in the early 1990s. Each employer completes a monthly statement, which provides details on new and departing employees. The form, which employers complete whether or not there is any change in staff, was originally collected for tax purposes. However, its value in detecting public assistance fraud was subsequently realized. Child support has had access to these data for approximately the past five months. The information is provided to the child support agency every month and compared to the child support caseload.

There are approximately 150,000 to 160,000 employers in New Zealand, and many of them are small businesses with fewer than 10 employees. Employers can submit their monthly staffing reports either on paper or electronically. Large and medium-sized businesses are increasingly sending their data through an electronic process that meets the requirements of the government's computer system.

While developing the monthly staff report, the government consulted employers as much as possible to determine ways to minimize employers' compliance costs.

New Zealanders seem to feel that child support enforcement poses less of a privacy risk than does sharing information with social welfare, which is in another government department. The Privacy Act, 1993 and the Tax Administration Act, 1994 specify the type of information that Inland Revenue can exchange with other agencies. Such information exchanges are meant to detect fraud and, among other objectives, to help income support employees clear outstanding liable parent debt.

If someone applies for an income support benefit or workers' compensation, these agencies can request information from Inland Revenue on family support status and the employment start and finish date, as well as the name and address of the person's employer. All information is exchanged by magnetic tape, and the computer systems are not linked in any way.

Australia

In Australia, the collection component of the child support agency is located in the Australian Tax Office. As in New Zealand, that government department has required all employers to notify the tax office of new employees, through a program called the Employment Declaration System. New employees must fill out a form when they start work, to which the employer adds such details as its registered business name, address and payee account number, used for taxation purposes. The child support agency has access to the computer records generated by these forms and may use them to identify the employer of a non-custodial parent.

The child support agency can find out whether a non-custodial parent is unemployed by sharing information with the Department of Social Security. When the child support agency finds the employer of a payer, it writes to the employer,asking it to confirm employee details. Once these details are confirmed, the child support agency uses employer wage withholding, which allows child support payments to be deducted directly from the non-custodial parent's salary.

These payments are remitted to the Tax Office in the same way that income tax instalments are processed. Until recently, the child support legislation stated that if the payer was an employee, child support payments should be collected this way wherever practical. Recent changes to the law mean that payers can elect to make payments directly to the child support agency, rather than have their employer deduct them from their wages. The agency accepts an election if it is satisfied that the payer is likely to make timely payments.

If a payer is in arrears, the deduction can be increased to include an arrears component, the amount of which is negotiated with the child support agency.

Australian law requires employers to protect the privacy of payers when making deductions, and it is illegal for employers to discriminate against an employee because of child support obligations.


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