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- What is a parent's earning capacity
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CSA may inquire as to the 'ability of' and 'opportunity for' that person to seek employment
In respect of the earning capacity of the unemployed or under-employed parent, CSA may inquire as to the 'ability of' and 'opportunity for' that person to seek and gain employment (DJM and JLM (1998) FLC 92-816).
CSA will consider the parent's qualifications, skills, age and employment history.
Examples
A parent who has been caring for children and has not been in the paid workforce for many years may have difficulty entering the workforce.
A parent who has been in the same job for 20 years, and is made redundant, may have a similar difficulty.
On the other hand, a parent who is qualified in an occupation in high demand would be expected to enjoy considerable flexibility in their choice of employment.
The other relevant consideration is whether or not there are any special, local or other factors that affect a parent's capacity to secure employment. Opportunities for employment vary from place to place and between occupational groups.
In determining the extent of the parent's earning capacity, CSA may consider the following (Scott and Scott (1994) FLC 92-457):
- the circumstances in which the parent became unemployed or without income;
- the reasons for the unemployment or loss of income;
- the nature of the parent's previous employment;
- the efforts which they have subsequently made to obtain employment; and
- the property or financial resources that are, or should reasonably be, available to the parent.
CSA must weigh up the individual factors of each case in deciding whether a parent who has ceased work or reduced his or her hours, has the ability and opportunity to earn a greater amount and whether that additional earning capacity makes the child support assessment unfair.