The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia.

8.3.2.10 Notices to third parties to deduct child support

Context

The Registrar can collect a relevant debt from a third party by issuing a CSRC Act section 72A notice or a section 72B notice.

See 8.3.1 for the definitions of 'relevant debt' and 'relevant debtor'. See 8.3.2.20 for more information on what funds which may be identified (or not) as owed to a relevant debtor.

Act reference: CSRC Act section 72A Registrar may collect debts from a third person, section 72B Person receiving or …

On this page

  • What is a section 72A notice?
  • Which debts can be recovered?
  • Effect of compliance or non-compliance
  • Requirements of a section 72A notice
  • Service of notices
  • Payment made by relevant debtor
  • Third party obligations when more than one notice received
  • Collection within Australia where relevant debtor is outside Australia

What is a section 72A notice?

The Registrar can issue a section 72A notice to any person who holds money for, or on behalf of, a relevant debtor, or to any person who may hold money for the relevant debtor in the future. A section 72A notice requires that person to pay the money to the Registrar. Notices are commonly used to collect money held in bank accounts and for the proceeds of property settlements (that is, house sale) which become due to the relevant debtor. The maximum notified deduction total is an amount specified in a section 72A notice that does not exceed the relevant debt of the relevant debtor to whom the notice relates.

A section 72A notice is similar to a garnishee (1.1.G.10) order obtained from a court by a creditor who has obtained judgment against a debtor. However, the Registrar does not need the approval of a court or to have obtained judgment prior to issuing a notice under section 72A. Notices under section 72A should not be issued on a speculative or 'fishing' basis.

A section 72A notice will require a third party to pay to the Registrar:

  • an amount equal to the maximum notified deduction total (if a person holds more than the amount specified in the notice
  • the amount of money being held (if the person holds an amount equal to, or less than, the maximum notified deduction total specified in the notice
  • specified ongoing payments (if the person becomes liable, from time to time, to make payments to the debtor and the notice specifies an amount until the maximum notified deduction total is satisfied This allows the Registrar to collect from contractors who make payments to a subcontractor in a manner similar to a garnishee order made by a court.

A section 72A notice remains in force until complied with in full or it is withdrawn by the Registrar in writing.

Act reference: CSRC Act section 72A Registrar may collect debts from a third person

Which debts can be recovered?

The Registrar can issue a section 72A notice to recover:

  • an overdue child support debt (1.1.C.90), including an amount equivalent to any child support (1.1.C.60) that the Registrar has already paid to the payee (1.1.P.30) from consolidated revenue because it was expected to have been remitted by the child support debtor's employer, but was not in fact deducted from the child support debtor's salary
  • arrears (1.1.A.100) of child support that the Registrar has assessed for a prior period, but which are payable in the future
  • carer debts (1.1.C.30) (see 8.1.1 for further information)
  • a LPP (1.1.L.20) (see 8.2 for further information)
  • an estimate penalty (2.5.1.40)
  • any court-ordered costs payable to the Commonwealth in respect of an offence committed by a person under the CSRC Act or the CSA Act
  • any amount ordered by a court, upon the conviction of a person for an offence against the CSRC Act or CSA Act, payable to the Registrar
  • a recovery order (1.1.R.30) (8.4.7) which the Registrar has registered for collection as a child support debt.

The Registrar can also issue a section 72A notice to recover any child support due but not yet payable, however, the Registrar will only do so in special circumstances.

A section 72A notice cannot be used to recover other types of debts, such as:

  • amounts of child support that may become due and payable in the future
  • an employer's LPP (see 7.4.3.20 for further information)
  • an employer's penalty for failure to make a deduction (see 7.4.3.20 for further information)
  • employer penalties for unexplained remittances
  • amounts under section 47(1) of the CSRC Act that have not been remitted by the employer by the due date.

Act reference: CSRC Act section 72A Registrar may collect debts from a third person

Effect of compliance or non-compliance

Any person who pays money to the Registrar as required by a notice under section 72A is taken to be acting under the authority of the relevant debtor and is indemnified for any monies paid to the Registrar.

A person who refuses or fails to comply with a notice without reasonable excuse is guilty of an offence and can be prosecuted. A fine up to 10 penalty units (see 6.8.7 for penalty unit amount) can be imposed on prosecution. 'Refuses or fails' simply means that a prosecution can commence if the person did not comply with the requirement after being served (or deemed to be served in the case of postal service). The offence occurs regardless of the intention of the person.

If a person is convicted of an offence under section 72A(2) of the CSRC Act, the court may also order the person convicted to pay the amount which the person refused or failed to pay under the notice. This has the dual purpose of encouraging compliance and protecting the interests of the receiving parent (1.1.P.10) entitled to the payment of the relevant debt.

The Registrar will credit any amount received from a third party in restitution for that third party's failure to comply with a section 72A notice to the relevant debtor's child support account. The Registrar will do so regardless of whether the third party makes this payment voluntarily, or in accordance with a court order. The Registrar will disburse to the receiving parent any amount of that restitution payment that represents unpaid relevant debts (but not LPPs or court costs) as if the relevant debtor paid the amount.

Act reference: CSRC Act section 72A Registrar may collect debts from a third person

Requirements of a section 72A notice

A section 72A notice must be in writing and specify a day by which the payment is to be made. The due date cannot be a date before the person holds money for a relevant debtor. This is a practical limitation on the power as although the Registrar can issue a notice to a person before they hold money for the relevant debtor, the Registrar cannot require the person to pay it before they actually hold it.

A section 72A notice is valid even if, at the time it is issued, no funds are held by the third party.

Example: The Registrar may be aware that a payment is expected to be deposited into a particular bank account. A notice issued to the bank should specify a date by which the payment must be made (usually within 7 days of the money becoming due to the debtor or held for the debtor). The notice is valid until this day, even though the bank cannot comply with the notice when it is issued because the account is empty. The bank is under an obligation to monitor that account until the date for payment arrives, any deposits to the account before that date are subject to the payment order in the notice, up to a maximum notified deduction total stated in the notice.

If the Registrar wants to extend the date by which payment is to be made under a section 72A notice, the previous notice should be withdrawn in writing and a new notice issued showing the new date, and an update of the amount payable if necessary.

A section 72A notice for wages or contract payments must not require deductions to the extent that they prevent the relevant debtor from meeting reasonable living expenses (Geoffrey Walter Edelsten v Charles Robert Wilcox and Commissioner of Taxation (1988) FCA 204). The Registrar must consider the whole of the debtor's financial position and make an allowance for the debtor's ordinary living expenses, unless there are extraordinary circumstances.

The Registrar must give a copy of a section 72A notice to the relevant debtor. The Registrar will do this by posting a copy of the notice to the relevant debtor at their last known address.

Act reference: CSRC Act section 72A Registrar may collect debts from a third person

CSRC Regs section 31 to section 35 Service of notices etc.

Service of notices

The Registrar must serve the notice on the third party. The requirements for service are discussed in 6.7.

Payment made by relevant debtor

If a relevant debtor pays their relevant debt after the Registrar serves a section 72A notice upon a person, the Registrar must give immediate written notice of the payment to the person served with the notice.

Third party obligations when more than one notice received

If a person receives a section 72A notice from the Registrar and a statutory notice from another Commonwealth, state or territory authority, both instructing the person to pay an amount of money they are holding for or on behalf of the debtor, the general rule is that notices are complied with in the order they were received by the person. If a statutory notice issued to the person is later varied, for example, by instructing the person to pay a different amount, the priority given to each notice will not change.

If a person receives a section 72A notice from the Registrar and a Commonwealth, state or territory court order, both instructing the person to pay an amount of money they are holding for or on behalf of the debtor, the notice from the Registrar will take priority over the court order, regardless of the order in which the person receives the garnishee order or notice.

Third parties should contact Services Australia for advice if they are unsure of their obligations in relation to multiple garnishee notices.

Act reference: CSRC Act section 72A Registrar may collect debts from a third person

Collection within Australia where relevant debtor is outside Australia

The Registrar can serve a section 72A notice upon a person within Australia who controls money for a relevant debtor outside Australia. However, section 72A notices are restricted in their operation and only apply to amounts already due to the Registrar.

The Registrar also can issue a notice under section 72B of the CSRC Act upon a person within Australia who controls money for a relevant debtor outside Australia. However, a section 72B notice can be used to collect current amounts of child support before they become overdue.

A section 72B notice can be issued when the relevant debtor is not physically present in Australia and:

  • derives income, profit or capital gains from a source in Australia, or
  • is a shareholder, debenture holder or depositor in a company that derives income, profit or capital gains from a source in Australia.

If these criteria apply, the Registrar can serve a section 72B notice upon any third person who receives, controls or disposes of any of the relevant debtor's money.

When issued with a section 72B notice by the Registrar, the person must pay the relevant debt of the relevant debtor. Further, the section 72B notice may require the person to retain enough money, that comes to them on behalf of the relevant debtor, to pay the relevant debt or any amount that may become payable by the debtor as a child support debt.

A section 72B notice is not effective against money derived from certain natural resource payments or royalty payments.

Like a section 72A notice, a section 72B notice must specify the amount the person is required to retain and send to the Registrar, and the due date for payment.

Act reference: CSRC Act section 72A Registrar may collect debts from a third person, section 72B Person receiving or …

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