3.1.5.55 Reasonable maintenance action completed - private collect

Summary

This topic provides information about satisfying the MAT (3.1.5) in the context of private collection of maintenance (1.1.M.10). Topics discussed include:

• maintenance action completed
• taking effective action to collect arrears of maintenance
• partial exemptions from the maintenance action test, and
• non-payment of child support arrears following a retrospective reassessment of child support.

This topic does not discuss notional assessments. Please refer to topics 1.1.N.45 and 3.1.7.14 for discussion of notional assessments.

For guidance on collection of maintenance from a payer who is a resident overseas, refer to 3.1.5.80.

Maintenance action completed

Maintenance action has been completed when the individual:

• has a registered child support assessment with Child Support (3.1.5.50), or
• has a registered child support agreement with Child Support, or
• has taken appropriate court action in a reciprocating jurisdiction to obtain maintenance.

For guidance on whether maintenance action has been completed where an individual has a child support agreement in relation to which there is a notional assessment, refer to 3.1.7.14.

Individuals privately collecting child support

Individuals who are privately collecting child support are deemed to have received the full child support entitlement for the purposes of the maintenance income test (MIT) (3.1.7) if it is reasonable for the individual to take action to collect their full entitlement. The deemed amount still applies even if the amount collected by the payee is more or less than the entitlement.

Prior to 1 July 2012, an individual who chose to collect their child support privately was assumed to be collecting 100% of their child support assessment or registered agreement. The amount of the assessment or agreement was taken to be the received amount and used when applying the MIT, unless the individual advised the Secretary otherwise. Where the amount received was less than the assessed amount, failure of the MAT could have resulted.

Taking effective action to privately collect arrears of maintenance

From 1 July 2012, an individual who has not privately collected 100% of the amount assessed by the Registrar is deemed to receive their full child support entitlement for the MIT, if it is reasonable for the individual to take action to collect their full entitlement.

If the individual is deemed to receive their full entitlement but actually receives less than their full entitlement, any arrears received that relate to the deemed period are not counted when they are actually received. This is because they have already been deemed to have been received in the income year to which they relate.

However, privately collected arrears of child support that relate to a period that a deemed amount did not apply will be included in the MIT when they are received. This includes privately collected child support arrears relating to a period before 1 July 2012.

In some cases, a full or partial exemption from the maintenance action test (3.1.5.70) may be granted, which may affect the amount of maintenance included in the MIT, depending on the amount that is privately collected.

Non-payment of child support arrears following a retrospective reassessment of child support - for periods post 1 July 2012

If, following a retrospective reassessment of child support, the individual advises that the liable parent is not going to pay the arrears owed, the individual should be advised that it may be in their interest to seek legal advice about enforcing the payment. If there are special reasons that make it unreasonable for the individual to collect the arrears, consideration can be given as to whether a retrospective partial exemption from the MAT would be appropriate.

If a retrospective assessment affects a past period where a deemed amount applied, FTB entitlements for that past period will be recalculated using the entitlement amount for that period as varied by the retrospective assessment.

However, where the individual had a partial exemption and was collecting less than their full entitlement, child support arrears that become payable for a past period as a result of the retrospective assessment will be counted in the year that they are actually received.

Non-payment of child support arrears following a retrospective reassessment of child support - for periods pre 1 July 2012

If, following a retrospective reassessment of child support, the individual advises that the liable parent is not going to pay the arrears owed:

• the non-paid arrears are to be taken out of the FTB assessment, and
• the individual should be advised that it may be in their interest to seek legal advice about enforcing the payment, and
• if payment is later made the individual must notify the Secretary.

For MAT purposes, the individual will continue to satisfy the requirements as long as they are collecting 100% of their ongoing entitlement.

For all periods the individual is not required to transfer to Child Support collect. However, if the arrears relate to an immediate past period, the individual can swap to Child Support collection to have the Registrar collect up to 3 months arrears on their behalf.