4.1.2 Protection of payment
Legal basis for protection of payment
The FA(Admin)Act states that the following FA payments are absolutely inalienable, or protected:
- family tax benefit,
- FTB advances,
- stillborn baby payment,
- child care subsidy,
- additional child care subsidy,
- single income family supplement,
- payments under section 67EB (fee reduction amounts),
- payments under section 205A (business continuity payments),
- one off payment to families,
- economic security strategy payment to families,
- back to school bonus or single income family bonus,
- clean energy advance, and
- education tax refund payment.
Act reference: FA(Admin)Act section 66 Protection of payments under this Part, section 67GB Protection of payments in relation to CCS and ACCS, section 67EB Payments to providers of individuals' entitlements to CCS or ACCS by fee reduction, section 67GC Effect of garnishee etc. order, section 205A Business Continuity Payments
Payment to a third party
Under the 'nominee' provisions in the FA(Admin)Act, the Secretary may direct that a payment be made to another party, after considering the wishes of the individual receiving the payment. The individual's consent may not be required.
The Secretary may direct that payments be made to a third party, including Centrepay, but only with the individual's consent.
Maintaining protection of payment
There are 3 circumstances in which, although an individual does not directly receive their payment, they do not transfer their right to that payment because they still benefit from it. Those circumstances are when a payment is:
- voluntarily directed by the individual to a third party, or
- withheld by the Commonwealth to repay a debt (1.1.D.60) to the Commonwealth or to repay the debt of another person, or
- subject to a garnishee order (1.1.G.10) on the account to which the payment is made.
These are explained in the rest of this topic.
Individual directing payment to another party
An individual must agree before any payments can be paid to a third party. This is usually done by appointing a nominee (1.1.N.20), by using the relevant form.
Example: An individual may direct their payments to:
- a nominee who:
- exercises power of attorney for all the individual's financial affairs, or
- simply operates a bank account on the individual's behalf, into which the individual's payments are made.
- an institution, or ACO through a group payment arrangement.
Commonwealth recovering overpayments or tax
The Commonwealth has the right, and the obligation, to recover:
- overpayments, under FA(Admin)Act Part 9,
- tax liability under Income Tax Assessment Act 1936 section 218,
- child support debt, under FA(Admin)Act section 227 and section 228.
Act reference: FA(Admin)Act section 70 Debts due to the Commonwealth, Part 9 Other matters, section 225 Payment of deductions to Commissioner of Taxation, section 226 Setting off family assistance entitlement against tax liability, section 227 Payment of deductions to Child Support Registrar, section 228 Maximum deduction
Policy reference: FA Guide 4.1.3 Nominees
Once a payment has been paid into an individual's bank account it becomes part of the person's funds. A garnishee order on the account, equal to the amount of the individual's payment, is not affected by a person's inalienable rights to payments. The FA(Admin)Act, however, provides for a saved amount to which the garnishee order cannot apply. The saved amount is equal to the following:
- the total amount of the individual's payment, including advances, paid into the account in the 4 week period immediately before the order, minus
- the total amount withdrawn from the account in the same period.
Example 1: Simone is receiving an ongoing fortnightly FTB benefit of $164.64. On 20 September a garnishee order comes into force regarding the account. In the previous 4 week period an amount of FTB equalling $329.28 FTB was paid into the account. Simone had withdrawn $160.00 during the 4 week period. The saved amount is $169.28 ($329.28 - $160.00). This amount is exempt from any garnishee conditions.
Example 2: Bronwyn is receiving an ongoing fortnightly FTB benefit of $378.70. On 15 November a garnishee order comes into force for the account. In the previous 4 week period an amount of FTB equalling $757.40 FTB was paid into the account. Bronwyn had withdrawn $800.00 from her account during the 4 week period. The saved amount is nil.
Policy reference: FA Guide 18.104.22.168 Court orders & registered agreements