Collection by Private Arrangement
The Department of Human Services – Child Support encourages parents to make their own arrangements for collection of payments. It is recommended that a reliable record of payments is maintained in the form of a regular bank transaction.
Private collection is only recommended in cases where the payer is likely to pay or has a good payment history, and where the child support assessments are based on reliable incomes that are not likely to be changed in the future.
Parents contemplating changing from DHS-Child Support collection to a private collection arrangement should seek legal advice about the possible implications of taking this step.
Private Collection and Family Tax Benefit(A)
If a case is privately collected between the parties, Centrelink assumes that the full payment is being transferred to the payee, and Family Tax Benefit (A) will be calculated on the amount stated in the assessment.
If a payee is receiving less than the amount calculated in the assessment, s/he can ask DHS-Child Support to commence collection of the liability. The Department can usually only backdate collection three months, so it is important to take action promptly if payments are not being made.
If a payee is receiving less than the assessed rate of child support and is fearful of asking the Department to collect because of threats or coercive behaviour from the payer, s/he can make an appointment to speak to a Centrelink Social Worker about obtaining a partial exemption from the Maintenance Action Test.
Private Collection and FTB(A) Overpayments
A child support assessment can be changed retrospectively to increase the amount of child support payable during past periods. This can occur as a result of late lodgement of tax returns which result in a higher rate of child support, or where an Estimate of Income is reconciled and replaced with a higher income. If a case was privately collected during these periods, the payee may be notified that s/he has been overpaid Family Tax Benefit (A), because Centrelink will automatically assume that the payee has received the amount s/he was supposed to receive pursuant to the (updated) assessment. If the debt of child support is not paid, parents can ask Centrelink to review the decision to create an overpayment.
Private Enforcement of Child Support Debts
Payees can personally make an application to a court to enforce collection of outstanding payments of child support. If the case is also registered for collection with the Department of Human Services – Child Support, payees are required to advise the Department in writing of their intention to take private enforcement action. The Department must also be notified of any orders made by the court in relation to the debt. Legal advice should be sought before taking enforcement action.
Collection by Department of Human Services – Child Support
DHS-Child Support can register and collect periodic payments of child support or maintenance which are due pursuant to the following:
- child support assessments;
- child support agreements;
- court orders for adult child maintenance;
- court orders for spousal maintenance;
- overseas maintenance orders from reciprocating countries.
Once the liability is registered for collection with DHS-Child Support, the debt becomes a debt to the Commonwealth, and the Department becomes responsible for collection of the debt.
Agreements for non-periodic payments (such as school fees) cannot be enforced by DHS-Child Support.
There are many options for a payer to make voluntary payments of child support or maintenance to the Department of Human Services – Child Support. These include payment by bank transfer, BPay, Billpay at Australia Post, employer deductions or by online card payment using the Government EasyPay system.
If payments of child support are not made voluntarily, DHS-Child Support can collect payments from wages, bank accounts, tax refunds, compensation or insurance payments, Centrelink benefits, or any other source of available funds that can be identified. The Department has broad powers of enquiry to ascertain whether a payer has any such financial resources, particularly if arrears are accruing.
If a payer is failing to make payments and the debt is escalating, the Department can bring a court application seeking orders that assets be sold to pay child support or maintenance arrears.
The Department can also issue a Departure Prohibition Order to prevent a payer from leaving Australia until the outstanding arrears are paid or an acceptable payment arrangement is entered into.
Non-Agency Payments apply to cases that are being collected by the Department of Human Services – Child Support. The payer can seek credit for in-kind or cash payments made in lieu of child support by advising the Department. If the payee agrees that such amounts were intended to be payments in lieu of child support, they will be fully credited against the payer’s child support liability.
However, if the payee does not agree, there are only very limited circumstances in which Non-Agency Payments can be credited. These are called Prescribed Non-Agency Payments (PNAPS) and primarily relate to:
- various educational expenses;
- essential medical and dental treatment; and
- payments towards accommodation, utilities and vehicle expenses of the payee.
Note: Prescribed Non-Agency Payments cannot be claimed by a payer who has at least Regular Care (14%) because the formula recognises that parents with regular care or shared care pay a reduced rate of child support on the basis that they are already contributing directly to these costs for the children.
Advice should be sought before making Prescribed Non-Agency Payments as the payer will only be able to receive a maximum credit of 30% of the future monthly liability, with any unused credit being carried over to the following months. The remaining 70% of the liability is required to be paid by the due date in order to be eligible for the 30% credit.
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.