184.108.40.206 Reasonable Maintenance Action Completed - Private Collect
- 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.
For guidance on collection of maintenance from a payer who is a resident overseas, refer to 220.127.116.11.
Maintenance action completed
Maintenance action has been completed when the individual:
- has a registered child support assessment with DHS (18.104.22.168), or
- has a registered child support agreement with DHS, 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 22.214.171.124.
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.
Example: Since 2009 Tracey has a private collect child support entitlement of $10,000 per financial year. In 2012-13 Tracey collected $10,500 in child support payments. As Tracey is a private collect individual she is deemed to have received $10,000 which is applied to the MIT. If the $500 is related to arrears from before 1 July 2012, this amount would be included as part of the MIT.
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.
Act reference: FAAct Schedule 1 clause 20D Working out amounts of child maintenance for administrative assessments privately collected
Policy reference: FA Guide 126.96.36.199 Child Support Collection
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.
Example: Amanda has a child support entitlement of $5,000 for both 2012-13 and 2013-14. Amanda advises the Secretary that she received only $4,000 in 2012-13. However, it is determined that it is reasonable for Amanda to take action to collect her full entitlement and therefore it is deemed that Amanda has received $5,000 for 2012-13. During 2013-14 she advises the Secretary that she has privately collected the $1,000 outstanding from 2012-13. This $1,000 arrears from 2012-13 is not counted as maintenance income for 2013-14 as it has already been included in the deemed amount for 2012-13. The Secretary deems that Amanda received $5,000 in 2012-13 and $5,000 in 2013-14 in the MIT and Amanda does not fail the MAT.
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.
Example: Justine was privately collecting from 2009-10 until December 2012 and has $13,000 of outstanding arrears from the payer from 1 July 2009 to 30 June 2012. In October 2012 Justine was successful in obtaining $6,000 of the $13,000 in arrears. As the arrears amount applies to a non-deemed period Centrelink will determine that Justine has received $6,000 in addition to her full child support entitlements in the 2012-13 maintenance income year.
In some cases, a full or partial exemption from the maintenance action test (188.8.131.52) 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.
Explanation: An individual who privately collects child support is not required to take court action to collect arrears from a retrospective reassessment to satisfy the MAT. If the individual transferred from private collect to Child Support collect, the Registrar generally could only collect any child support liability not met for the period 3 months immediately prior to the transfer.
For retrospective reassessment cases, this means that the Registrar cannot assist with any child support arrears that were incurred during periods prior to the 3 month limitation (unless exceptional circumstances apply). In practical terms this means that the Registrar is not in a position to collect any of the arrears for private collect retrospective reassessment individuals.
Act reference: FAAct Schedule 1 clause 10 Effect of certain maintenance rights
Child Support (Registration and Collection) Act 1988 section 28A Reversal of subsection 23(3) or 24A(2) election…, section 39A Reversal of section 38A election or 38B decision…