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7.5.2 Prescribed non-agency payments

Context

The Registrar can credit a limited range of prescribed payments that have been paid directly to a payee (1.1.P.30) or third party (CSRC Act section 71C). Child support (1.1.C.60) legislation does not require both parties to agree that these types of payments were made in lieu of child support.

On this page

  • What is a prescribed non-agency payment and when can it be credited?
  • Regular care (1.1.R.50) of children and/or liability being met by a lump sum credit at the time the prescribed payment was made
  • Discretion to refuse to credit an amount
  • How is a non-cash payment valued?
  • What happens to a credit if an assessment has ended or the enforceable maintenance liability (1.1.E.30) is no longer payable to the Registrar?
  • Objections (1.1.O.10)
  • Other options

What is a prescribed non-agency payment and when can it be credited?

The Registrar can credit the payment up to a maximum amount that is equal to 30% of the amount payable under the payer's (1.1.P.40) child support liability for the period, only if:

  • the payment was made in respect of an enforceable maintenance liability or a carer liability (1.1.C.30)
  • 70% of the child support liability is paid as it becomes due and payable
  • the payment is a payment of the kind specified in section 19 of the CSRC Regs
  • the sum of those payments exceeds the sum of all such payments previously credited under this section against the liability for all past periods
  • at the time the payment was made, the payer has less than 14% care of all of the children to whom the relevant administrative assessment (1.1.A.30) relates (CSRC Act section 71C(1)(d))
  • at the time the payment was made, the child support liability was not being fully or partially met by a lump sum credit (CSRC Act sections 69A, 71C(2) and 71C(5)(b)), and
  • the liability is not a recovery order (1.1.R.30) (8.4.7) or spousal and de facto maintenance order (CSRC Act section 71C(5)(a)), a registrable overseas maintenance liability (1.1.O.40) (CSRC Act section 71C(6)), or an agency reimbursement liability (1.1.A.60) (1.5.3.20) (CSRC Act sections 71(3) and 71A(4)).

The balance can be paid in cash or in the form of a non-agency payment credited under CSRC Act sections 71 or 71A, or from money credited from another source such as a tax refund or payment from a third party.

The Registrar can only credit amounts paid on or after 1 July 1999.

The types of payments that can be credited in this way are prescribed by regulation (CSRC Act section 71C(1)(b) and CSRC Regs section 19). They are:

  • child care costs for the child who is the subject of the enforceable maintenance liability
  • fees charged by a school or preschool for that child
  • amounts payable for uniforms and books required by a school or preschool for that child
  • fees for essential medical and dental services for that child
  • the payee's share of amounts payable for the payee's home, and
  • costs to the payee of obtaining and running a motor vehicle, including repairs and standing costs.

If the payer satisfies the conditions and the prescribed non-agency payment is accepted, the Registrar can credit up to 30% of the current liability from the date of notification of the payment. If the amount of the payment is more than 30% of the enforceable maintenance liability in a given month, the excess amount will be retained as an 'uncredited' amount. This uncredited amount can be applied against the payer's (1.1.P.40) enforceable maintenance liability in a later month provided the conditions for payment are again met, and can be carried over to a different child support enforcement period (1.1.C.100) as long as it relates to the same liability.

The Registrar cannot credit an uncredited amount towards any child support arrears (1.1.A.100) that accumulated prior to the payer notifying the Registrar of the prescribed payment. An uncredited amount can be applied to arrears that accumulate after the notification, but only when at least 70% of the liability is satisfied by cash or a non-agency payment credited under CSRC Act section 71 or 71A.

Example: A payer has a current liability of $100 per month and owes $3,000 in arrears.

In August 2013 the payer notifies the Registrar of a prescribed payment of $2,000 made that month, however, has not made any payments directly to the payee or to the Registrar.

As a result, the payer still owes $3,000 and has an uncredited amount of $2,000. This is because the prescribed payment cannot be applied to the arrears ($3,000), which accumulated prior to notification of the payment, and at least 70% of the current liability ($100) has not been paid.

If the payer pays $70 in cash (or has an equivalent amount credited as a non-agency payment under CSRC Act sections 71 or 71A) by the due date for August 2013 (7 September 2013), then $30 from the $2,000 uncredited amount is credited towards the current liability of $100. The arrears of $3,000 remain. The uncredited amount is reduced to $1,970.

If the payer does not pay for the months of August, September, October and November but pays $280 on 7 December 2013 (being 70% of the liabilities for August, September, October and November 2013), then $120 of the uncredited amount can be credited (that is, 4 × $30, leaving a balance of $1,880) and the arrears remain at $3,000.

If the payer instead pays $1,000 on 7 December 2013, $280 of the cash payment (70% of the liability) is applied to the liabilities raised for August, September, October and November (that is, $400) and $120 of the uncredited prescribed payment would be credited to the account. This leaves an uncredited balance of $1,880 and the cash payment in excess of 70% of the liabilities, being $720, is credited against the original arrears of $3,000.

If a retrospective variation is made to a liability, whether it results in an increase or a decrease, the amount credited from a prescribed payment remains unchanged despite the fact that the percentage of the prescribed payment has changed.

If the Registrar is collecting child support through employer withholding (1.1.E.20), the amount deducted will be adjusted to take into account the prescribed payments. If the prescribed payment constitutes 30% of the payer's liability for 2 months or less then the excess cash will be refunded. If the prescribed payment constitutes 30% of the liability for a period greater than 2 months, the payer will be given the option of having their deductions reduced or given a cash refund.

Payees who are in receipt of FTB Part A above the base rate need to be made aware that when the Registrar notifies the Secretary of a prescribed payment, the payment will be included in the MIT used to calculate FTB, even though it remains 'uncredited' for the Registrar's purposes. The whole amount will be assessed on the day that the payment was made to the third party or received by the payee.

Child care costs for the child who is the subject of the enforceable maintenance liability

A payer can claim credit for amounts paid for child care, less any child care subsidy or additional child care subsidy that is deducted from the child care fees.

Fees charged by a school or preschool for a child who is the subject of an enforceable maintenance liability

This can include school fees and levies, but not payment for non-compulsory camps, excursions, additional tuition or boarding costs. A school is an institution that mainly provides primary or secondary education.

It includes an institution providing technical and further education where the payment is for a course of secondary education.

Amounts payable for uniforms & books required by a school or preschool for a child who is the subject of an enforceable maintenance liability

From 12 April 2001, a payer can claim credit for books and uniforms required by a school that the payer has obtained from any source. (The Registrar could previously only credit an amount paid for uniforms and books that the payer purchased from the child's school or preschool.) Amounts payable for books includes textbooks and exercise books but not stationery, computers, etc. Amounts payable for uniforms includes a school bag if prescribed by the school.

Fees for essential medical & dental services for a child who is the subject of an enforceable maintenance liability

Essential medical and dental services are not limited to those services provided in an emergency.

A payer can claim only their actual costs. The Registrar will credit only the net amount after any rebate the person can claim from Medicare or a health insurance fund.

Prescribed payments include essential consultation fees for services provided by medical and dental practitioners, treatment by specialists, eye testing, X-rays, pathology tests, examinations and certain 'out-of-hospital' surgical procedures by Medicare approved practitioners. The cost of medication associated with essential treatment is also included, as well as equipment such as crutches or a vaporiser.

Prescribed payments include 'in-hospital' costs either as a public patient, or as a private patient in a public or private hospital. Costs can include accommodation and items such as theatre fees, anaesthetist costs, pathology, X-rays and medicines.

Prescribed payments may also include fees for medical or dental services not covered by Medicare, if they are essential for the child in the opinion of a practitioner approved by private health funds. These services include:

  • emergency ambulance services
  • physiotherapy
  • speech and eye therapy
  • chiropractic services
  • podiatry
  • psychological services
  • optometry and repairs.

The Registrar will not allow a credit for fees for surgery or dentistry performed solely for cosmetic reasons. Where there is doubt, a parent can ask the service provider for more information.

Example: The cost of a nose reconstruction carried out by a cosmetic surgeon purely for cosmetic reasons would not be acceptable as a 'prescribed' payment. However, the cost of a nose reconstruction which alleviated a breathing difficulty or was performed following an accident would qualify.

Example: The cost of orthodontic work performed solely for cosmetic reasons will not qualify as a prescribed payment. However, if a general practitioner or orthodontist indicated that the work was necessary for the child's psychological wellbeing or essential dental health, it may be justified.

The payee's share of amounts payable for the payee's home

This includes:

  • the payee's share of amounts payable for rent or a security bond for the payee's home
  • the payee's share of amounts payable for utilities, rates or body corporate charges for the payee's home, and
  • the payee's share of repayments on a loan that financed the payee's home.

Payments for utilities include gas, electricity, water and telephone, including the home phone portion of any phone / internet / mobile package.

Prescribed payments can only be made in relation to a home in which the payee lives and for which the payee is jointly or solely responsible. However, a bill for utilities does not need to be in the payee's name.

Prescribed payments can only be made for repayments on a loan that financed the payee's home where the payee is named on the mortgage documents and is liable for repayments on the loan.

Where the payer makes payments for the payee's home, for which they and the payee are jointly responsible, the Registrar will credit only the payee's share. In the absence of evidence to the contrary, this will be half the total amount.

Example: The parents separate in March 2019 and the payee continues to live in the home they shared. The home has gas connected, which is in the payer's name because the payer had originally organised the connection when they had moved into the home. The payer pays a gas account (which is in the payer's name) of $500 in November 2019, which covers the period from 1 July 2019 until 30 September 2019. The payee and children were residing in the home and thus solely benefited from the payment of the gas bill. The payer applies for credit of this $500 as a prescribed non-agency payment. The Registrar will credit this amount.

Example: Payer Theo and payee Nenne hold equal shares in the home in which Nenne continues to live. Theo applies to have payments for electricity and council rates credited as prescribed non-agency payments. Both bills have been issued in Theo's name. As Theo and Nenne are jointly liable for payment of council rates, the Registrar will credit 50% of the payment, being Nenne's share of the payment. As Nenne is solely liable for payment of the electricity account, the Registrar will credit 100% of the account as a prescribed payment.

The Registrar can only credit a prescribed non-agency payment if the amount has actually been paid or transferred. If a payer and payee disagree about whether a payment was made, or the amount of the payment, the Registrar will ask for evidence of the payment. The Registrar will decide, on the basis of all the evidence, whether or not a payment was made and the amount paid.

Example: Caspar, a payer, advises that they are paying monthly repayments of $500 on a mortgage for the home in which the payee Ariel lives. As Ariel is named on the mortgage documents as having an equal share in the property, the Registrar agrees to credit the payee's share of the loan repayments ($250) as prescribed non-agency payments. Ariel then supplies a bank statement and advises that Caspar has been regularly redrawing funds of $200 per month from their mortgage account. The Registrar contacts Caspar who agrees that payments have been withdrawn. The Registrar determines that payments of only $300 per month have been made and will credit the payee's share ($150).

Costs to the payee of obtaining & running a motor vehicle, including repairs & standing costs

For vehicle costs to be considered as prescribed non-agency payments, the payee must have an obligation to pay the costs of obtaining and running the motor vehicle. This includes payments that are necessary to keep the vehicle on the road and to maintain its safety. For example, for service, repairs, tyres, registration and compulsory insurance premiums, as well as non-compulsory insurance premiums where the payee is an existing contributor. If the payee is a party to a loan or lease agreement for a vehicle, the costs may include the payee's share of lease payments or loan repayments.

Example: Goran, the payer, pays leasing costs for a leased car that is used by Riley, the payee. The lease agreement is between Goran and the lease company. As Riley is not a party to the lease agreement, they have no legal obligation for the leasing costs of the car. Goran's costs cannot be a prescribed non-agency payment because Riley has no legal obligation to pay for the costs of obtaining the motor vehicle.

Example: Blake, the payer, lets Skye, the payee, use one of his cars to shuttle their children to and from school, after school activities, medical appointments and other day-to-day activities. Blake owns the car and it is registered and insured in his name. Blake's costs of running the motor vehicle cannot be a prescribed non-agency payment because Skye has no legal obligation to pay those costs.

Regular care of children and/or liability being met by a lump sum credit at the time the prescribed payment was made

A payer cannot claim a credit under CSRC Act section 71C when, at the time the payment was made:

  • they had at least 14% care (more than below regular care (1.1.B.20)) of any of the children to whom the administrative assessment relates, and/or
  • the child support liability is being fully or partially met by a lump sum credit (7.5.3).

If a parent applies to have a prescribed non-agency payment credited, and the above circumstances did not exist at the time the payment was made but exist at the time of the application, the application will be accepted. However, the payer will not receive the benefit of the 30% credit against their monthly liability until those circumstances again cease to exist.

Example: The payer Samuel asks for a payment of $1,000 to be credited as a prescribed non-agency payment on 20 November 2019. The payment was for school fees for Samuel and Yuki's children and was made on 8 July 2019, at which time Samuel had below regular care of both children. Samuel currently has below regular care of one of the children and regular care of the other child.

The amount claimed is accepted as a prescribed non-agency payment, as Samuel had below regular care of both children at the time the payment was made. However, Samuel will not currently receive the 30% credit against his ongoing liability as he now has regular care of one of the children. If, in the future, Samuel again has below regular care of both children he will start to receive the 30% credit against his ongoing liability.

Payments made prior to 1 July 2008 but advised to the Registrar on or after 1 July 2008 will be accepted and credited, regardless of the level of care the payer has of any of the children at the time of applying for the prescribed non-agency payment to be accepted.

Discretion to refuse to credit an amount

The Registrar can refuse to credit a non-agency payment claimed under CSRC Act section 71C if the Registrar is satisfied that, in the circumstances of the particular case, the amount ought not to be credited (CSRC Act section 71D).

The Registrar may refuse to credit an amount in certain circumstances, including, but not limited to, the following:

  • The payer is claiming a credit under CSRC Act section 71C for an expense they regularly meet that was taken into account in a COA (1.1.C.50) decision. For example, the Registrar or a court has reduced the annual rate (1.1.A.70) (or refused to increase it) because the payer usually pays school fees, medical expenses for the child, mortgage or rent payments or any other prescribed payments.
  • The payer is claiming credit under CSRC Act section 71C for an expense which they have undertaken to pay in addition to their liability as specified in an agreement between the parents (this does not have to be a child support agreement).
  • The payer is claiming credit under CSRC Act section 71C for an expense that they are responsible to pay under the terms of a court order.
  • The payer is claiming credit under CSRC Act section 71C for expenses for the child for which they are separately responsible. For example, the payer claims credit for child care costs for the days when the child resides with the payer. If the payer claims credit for a payment for which they and the payee are jointly responsible, and the amount does not relate to the payee's home, the Registrar has no basis of apportioning the payment and must credit the full amount. However, if there is evidence that the parents have explicitly agreed about how much each party will pay, the Registrar will apportion responsibility according to their agreement.
  • The payer is claiming a credit under CSRC Act section 71C for loan repayments and they have a history of regularly withdrawing funds from the loan account using its redraw facility.

Example: Oliver, a payer, advises that they have recently paid $2000 towards private school fees for the child. Annalise does not agree that the parties intended this payment to be in lieu of child support. The Registrar agrees to credit this as a prescribed non-agency payment. Annalise then supplies emails in which Oliver agreed to take over payment of the private school fees in full. Oliver confirms the arrangement was made because Annalise could no longer afford to pay the fees and was going to remove the child from private education. The Registrar determines that in the circumstances Oliver is separately responsible for payment of the school fees and refuses to credit the amount.

Example: Basil, a payer, advises that they have paid $1,000 in orthodontic expenses for essential dental treatment for the child. Rodya does not agree that the parties intended the payment to be in lieu of child support. The Registrar agrees to credit the entire amount as a prescribed non-agency payment. Rodya then supplies a written payment plan which shows the parties agreed for Basil to pay 60% and Rodya to pay 40% of the orthodontic costs, and receipts showing that $1,000 was the total out-of-pocket expense. The Registrar determines that payment of only $400 should be credited, as Basil was responsible for payment of the other $600.

Was a payment made?

See 7.5.1.

How is a non-cash payment valued?

See 7.5.1.

What happens to a credit if an assessment has ended or the enforceable maintenance liability is no longer payable to the Registrar?

Prescribed non-agency payments can be carried over to a new child support enforcement period for the same liability.

Objections

A payee can object to the Registrar's decision to credit a non-agency payment under CSRC Act section 71, 71A or 71C (CSRC Act section 80).

A payer and a payee can object to the Registrar's decisions to refuse to credit all or part of a non-agency payment under CSRC Act section 71, 71A or 71C (CSRC Act section 80).

Other options

See 7.5.1 for information on available options to the payer if a non-agency payment is not credited.

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