5.2.2 Payer Election to Pay DHS Directly

Context

The Registrar is required to collect registered maintenance liabilities by deductions from the payer's wage or salary if it is practicable to do so. However, the Registrar can accept a payer's election to make payments directly if the Registrar is satisfied the payments will be made on time.

Act references

CSRC Act sections 43, section 44

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Payments made directly to DHS

A payer can elect to make payments directly to the department. If the Registrar is satisfied that timely payments will be made, the particulars of the Child Support Register can be varied to include a statement that employer withholding doesn't apply. The Registrar can revoke the payer's election if the payer does not make their payments on time.

An election for employer withholding not to apply

The Registrar is required to collect child support payments from a payer's salary or wages, if it is practicable to do so (section 43(1)). This does not apply if a payer elects that employer withholding should not apply. If the Registrar is satisfied that a payer who makes an election is likely to make timely payments the Registrar must accept the election (section 43(2)& 44(1),(2)).

For existing payers the Registrar does this by varying the Register to contain a statement that employer withholding does not apply (section 44(1)). For new cases, the Registrar includes a statement in the Register at the time the liability is registered (section 44(2)).

If the Registrar accepts the payer's election, the payer should make payments directly to DHS rather than payments being deducted from the payer's salary or wages.

If the Registrar refuses a payer's election, the payer may not make a further election for another 2 months (section 44(7C)).

If the Registrar revoked an earlier election because the payer did not pay on time, the payer cannot make another election for 6 months.

If a payer who pays more than one payee makes an election, that election will apply to all the liabilities, unless the payer specifies otherwise. Where a payer makes an election which does not apply to all their liabilities, the Registrar will still consider whether the payer is likely to make timely payments for all their liabilities. Thus, the Registrar will take into account the payer's payment pattern in relation to all their existing liabilities when deciding whether the payer is likely to make timely payments for a new liability, in which the first payment is not yet due.

Payer likely to make timely payments

If a payer makes an election for Employer Withholding not to apply and the Registrar is satisfied that the payer is likely to make timely payments, the Registrar must accept the payer's election.

To determine whether a payer is likely to make timely payments, payers can be divided into 5 groups:

First election by new payers before any payments due

Includes payers who:

  • are a payer of child support for the first time, and
  • are not yet due to make the first payment, and
  • have not previously made an election.

Whenever possible the department discusses payment options with a prospective payer before registration. If a payer elects for withholding not to apply, the election will often be made before any payment is due. There is no payment pattern which might help indicate whether the payer is likely to make timely payments.

In the absence of a payment pattern, the Registrar will determine whether the payer is likely to make timely payments on the basis of the preliminary discussions or correspondence with the payer. The Registrar will be satisfied that the payer is likely to make timely payments, except where the payer has expressly indicated an intention to avoid paying as required.

A payer may claim that they cannot make the entire first payment on time because it includes amounts for a period prior to them knowing of the liability (known as 'start-up arrears'). The Registrar will be satisfied that the payer is likely to make timely payments even if it is unlikely that all the first payment will be paid on time, provided that the payer:

  • did not expressly indicate an intention to avoid paying as required, and
  • made a reasonable proposal for paying off the start-up arrears which the Registrar has accepted, and
  • undertook to pay the normal monthly amount (that is, the monthly amount after excluding start-up arrears) when it falls due.

When there are no start-up arrears or minimal amounts owed, the payer may still claim that he or she will not be able to make all the first payment on time because notice of the liability did not allow sufficient time for the arrangement of their financial affairs. The Registrar will be satisfied that a payer who makes this claim is likely to make timely payments even if it is unlikely that all the first payment will be paid on time, provided that the payer:

  • had less than 21 days notice of the first payment, and
  • did not expressly indicate an intention to avoid paying as required, and
  • undertook to make the first payment as soon as possible after the due date, but no later than the due date for the second payment.

First election by payers, other than new payers, who do not have arrears

Includes payers, whether or not already linked to employer withholding, who:

  • have not previously made an election, and
  • were due to start making payments by a date which has already passed, either for this liability or for any other current or previous liability, and
  • do not have any arrears.

The Registrar will be satisfied that a payer who does not have arrears is likely to make timely payments, unless the payer has expressly indicated an intention to avoid paying as required.

Example: The Registrar will not be satisfied that payments are likely to be timely if collection of arrears has been enforced through either employer withholding, a tax refund intercept, or from a third party.

The Registrar will normally take into account the payer's payment pattern in relation to any previous liability, whether or not the payee of that liability is the payee of the current liability. The extent to which this will be a factor in determining whether the payer is likely to make timely payments will depend on:

  • how long ago the previous liability ceased,
  • the reasons for any arrears which may have arisen in relation to the previous liability,
  • whether the reasons for any arrears in relation to the previous liability indicate that the payer may again not make timely payments,
  • any circumstances in relation to the previous liability which distinguish it from the current liability.

First election by payers, other than new payers, who have arrears

Includes payers, whether or not already linked to employer withholding, who:

  • have not previously made an election, and
  • were due to start making payments by a date which has already occurred, either for this liability or any other current or previous liability, and
  • have arrears.

The Registrar will be satisfied that a payer who has arrears is nevertheless likely to make timely payments, if the payer:

  • made a reasonable proposal for paying off the arrears and the payer is keeping to the agreed arrangement, and
  • is paying the normal monthly amount (that is, the monthly amount after excluding arrears) when each falls due.

Subsequent election where previous election revoked because payer did not make timely payments

Includes payers who:

  • previously made an election but did not make timely payments, and
  • had the election revoked because the Registrar was not satisfied that timely payments were likely to resume in the near future, and
  • made another election, after waiting the required 6 months.

If a payer again elects for employer withholding not to apply, the Registrar will not give effect to the payer's subsequent election unless the payer can demonstrate that the circumstances that led to the previous election being revoked no longer exist.

In considering a subsequent election, the Registrar will require more substantial indicators that payments will be timely than were required when deciding whether to allow the previous election. The kinds of more substantial indicators include:

  • the payer offers to be permanently in advance by at least one month's payment,
  • the monthly liability has reduced because of a court order or change of assessment decision made after collection resumed, and the Registrar is satisfied the payer had in fact been making a genuine effort to pay, and that they will be likely to make the new monthly payments in full and on time.

Subsequent election where the Registrar rejected the previous election

The Registrar will consider subsequent elections by payers whose previous election was rejected using the same tests that apply to first elections.

Determining whether to revoke an election where a payer does not make timely payments

If a payer does not make timely payments, the election will be revoked unless the Registrar is satisfied that:

  • the payer is likely to resume making timely payments in the near future, or
  • employer withholding is not an efficient method of collection.

In considering whether the payer is likely to resume making timely payments, the Registrar will first determine whether one of the following special circumstances caused the payer not to pay on time:

  • the circumstances causing the failure to make timely payments were beyond the payer's control, and
    • the circumstances existed for the one month only, or
    • if the circumstances will continue beyond the one month, the payer has taken reasonable action to minimise their effect in the future.
  • the payer advised that an unexpected temporary drop in income or an urgent and necessary expense caused the late payment, but for the one month only,
  • the amount payable for a particular month is abnormally high because it includes additional amounts for previous months caused by a retrospective variation to the liability, and the payer cannot afford to pay the additional amount by the due date.

If any of these special circumstances apply, the Registrar will then require the payer to have:

  • made a reasonable proposal for paying off the arrears which has been accepted, and
  • undertaken to pay the normal monthly amount (that is, the monthly amount after excluding arrears) when each falls due, and
  • established a payment pattern which indicates that, under normal circumstances, he or she makes timely payments,

before being satisfied that the payer is likely to resume making timely payments in the near future.

The election will be revoked if the Registrar is not satisfied that the payer is likely to resume making timely payments in the near future.

Determining whether to revoke an election where the payer has not kept to an arrangement to pay off arrears

Where a payer does not keep to an arrangement to pay off arrears, the Registrar will consider whether to revoke their election. The Registrar will use the same tests that apply when it considers whether to revoke an election where a payer does not make timely payments (see above).

The payer's failure to keep to the payment arrangement indicates that the special circumstances that led to the arrears in the first place will continue to have an effect. The Registrar will require the payer to demonstrate that this is not the case.

Payers who make an election but subsequently do not make timely payments

If a payer does not make timely payments, the Registrar must vary the Register entry so that employer withholding applies (section 44(5)) unless the Registrar is satisfied that:

  • deduction from salary or wages would not be an efficient method of collection, or
  • the payer is likely to resume making timely payments in the near future (section 44(5A)).

If the Registrar revokes a payer's election because the payer did not make timely payments, that payer cannot make another election for 6 months from the date the election is revoked (section 44(7B)).

If no election made

If a payer who is an employee does not make an election, the Registrar will collect the payments by employer withholding, unless this would not be an efficient method of collection.

Last reviewed: 8 May 2017