7.3.1.10 Opting out to private collect
Changing from agency to private collect
If a child support liability has an agency collect (1.1.A.50) arrangement, the payee (1.1.P.30) (or payee and payer (1.1.P.40) jointly) can make an election to opt out to private collect (1.1.P.110).
An election to change from agency collect to private collect does not end the payer's liability to pay child support (1.1.C.60). Any amounts payable under an administrative assessment (1.1.A.30) or court order continue to be payable, but they become payable to the payee rather than the Commonwealth.
The payee may also elect for the Registrar to not collect any arrears (1.1.A.100) of child support.
Information on when private collect is an appropriate option is provided in 7.4.1.40.
Making an election
A payee can make an election to change from agency to private collect. The payee and payer can make a joint election to change from agency to private collect. A payer cannot make an election to change from agency collect to private collect unless the payee also agrees.
An election to change collection methods can be made in writing, on an approved form or by phone. The election must specifically indicate that the payee (or the payer and payee jointly) chooses for the Registrar to stop collecting child support. The election may specify a date from which the Registrar should cease to collect the child support but this is not a requirement.
The payee making the election can also elect for the Registrar not to collect any arrears of child support.
Act reference: CSRC Act section 24A Registrar to register liability in Child Support Register on making of child support assessment, section 30 Effect of registration, section 38 Variation of Register to have enforceable maintenance liability no longer enforced under Act, section 38A Election by payee or by payee and payer jointly
Agency collect ceases from a specified terminating day
The Registrar must accept an election to change from agency collect to private collect. The Registrar will vary the particulars in the Child Support Register (1.2.1.10) to show that the liability ceased to be enforceable by the Registrar from a specified terminating day. The Registrar must specify a terminating day that is no more than 60 days after the election was received. The terminating day cannot be a day in a low income non-enforcement period.
If the election:
- nominated a date for the Registrar to end collection, the Registrar will use that date
- did not nominate a date for the Registrar to end collection, the Registrar will use the date that the election was received as the terminating date.
The Registrar will check whether the proposed terminating day would result in any overpayment (1.1.O.20) to the payee. If so, the Registrar will discuss options with the payee including delaying the start date of the election until no overpayment is created.
Act reference: CSRC Act section 24A Registrar to register liability in Child Support Register on making of child support assessment, section 30 Effect of registration, section 38 Variation of Register to have enforceable maintenance liability no longer enforced under Act, section 38A Election by payee or by payee and payer jointly
Effect of an election to end collection when there is a role reversal
There are certain circumstances (for example, a change in care) which create a role reversal. A role reversal results in the former payee now becoming the new payer, and the former payer now becoming the new payee. A liability as a result of a role reversal creates a new registrable maintenance liability (1.1.R.40) which the Registrar must register for collection. The new payee (or the payee and payer jointly) can elect for the Registrar to end agency collect. Any previous election made by the payer or payee to end agency collect will not apply to the new liability created as a result of the role reversal.
Act reference: CSRC Act section 24A Registrar to register liability in Child Support Register on making of child support assessment, section 30 Effect of registration, section 38 Variation of Register to have enforceable maintenance liability no longer enforced under Act, section 38A Election by payee or by payee and payer jointly
Election for the Registrar to end collection of arrears
When a payee (or payer and payee jointly) elects to change from agency collect to private collect, they can also elect for the Registrar not to collect any arrears. This election does not change how much child support is assessed to be paid, but means the Registrar is not required to collect the unpaid child support and instead the money is payable to the payee.
If the payee is currently in receipt of more than the base rate of FTB Part A, the payee should consider the implications for FTB if they change from agency collect to private collect and/or if they elect for the Registrar to not collect any child support arrears. This is because the assessed amount of child support will be applied to the MIT, even if the payee has agreed the Registrar is not required to collect this amount.
Act reference: CSRC Act section 24A Registrar to register liability in Child Support Register on making of child support assessment, section 25 Application for registration of registrable maintenance liability, section 30 Effect of registration, section 38 Variation of Register to have enforceable maintenance liability no longer enforced under Act, section 38A Election by payee or by payee and payer jointly
Policy references: FA Guide 3.1.7 Maintenance income test
Changes to the liability after an election to end agency collect
The Registrar may vary a child support liability after that liability has ended or ceased to be enforced (agency collect). This may occur when a parent (1.1.P.10) lodges their tax return and the Registrar uses this information to reconcile the parent's income estimate (2.5.1) or to replace a provisional income (1.1.P.130).
If the Registrar varies a liability that accrued during an agency collect period, this can result in further unpaid amounts for that period. Child support arrears for an agency collect past period will be payable to the Registrar. However, the payee can elect for the Registrar not to collect any arrears arising from subsequent changes to the liability. The Registrar will explain to the payee the possible consequences of an election to end collection of amounts payable under a child support assessment based on a default income or estimate.
If the payee is in receipt of more than the base rate of FTB Part A, the payee should consider the implications for FTB of their election for the Registrar to end collection of arrears. See FA Guide 3.1.6.70.
Example: Samuel and Madina, a payer and payee, jointly elect for the Registrar to end collection of child support. At the same time, they elect for the Registrar not to collect unpaid amounts. Samuel and Madina's assessment is based upon Samuel's estimate of taxable income. The Registrar gives effect to Samuel and Madina's election by specifying a terminating day, which is the date of Samuel and Madina's election, and varies the Register to show that the overdue amounts are no longer payable to the Registrar.
Three months later, Samuel lodges his tax return. It shows that Samuel's actual taxable income was higher than his estimated income. The Registrar reconciles Samuel's estimate and increases Samuel and Madina's child support assessment. Samuel must pay extra child support to the Registrar for the days before the specified terminating day. Samuel and Madina can make their own arrangements for paying the extra child support for the specified terminating day and all subsequent days.