Effective until 30 June 2008
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| CSA's previous online law & policy guide Effective until 30 June 2008 |
5.3.1: Non-agency paymentsContext When CSA registers a child support liability for collection the amounts payable become a debt to the Commonwealth and are payable to the Child Support Registrar (section 30 Registration and Collection Act). In some circumstances CSA may credit payments made directly to a payee or to a third party against a child support liability that is registered for collection by CSA. CSA may also credit the value of non-cash payments or the provision of services in the same way. CSA refers to these credits as 'Non-agency payments' (NAPs). Legislative references Section 71, 71A, 71B, 71C and 71D Child Support (Registration and Collection) Act 1988 Regulation 5D Child Support (Registration and Collection) Regulations 1988 Explanation Was the payment in respect of an enforceable maintenance liability? How is a non-cash payment valued? Was the payment intended to be in lieu of child support? Credit against future liabilities Prescribed payments that can be credited against up to 30% of a child support liability. Discretion to refuse to credit an amount What happens to a credit if the liability is no longer payable to CSA or an assessment has ended? A non-agency payment is one of the following types of payment:
CSA can credit a non-agency payment to a child support debt if the payer and the payee both intended when the payment was made that it was a payment towards the 'enforceable maintenance liability'. If the payment was of a kind specified in regulation 5D (known as a 'prescribed payment') CSA can credit the payment at a maximum of 30% of the ongoing liability each pay period, providing the balance of the child support is paid as it is due and payable (section 71C). For prescribed payments, it is not necessary for the payer and the payee to have had a mutual intention that the amount be a payment towards the 'enforceable maintenance liability'. Was the payment in respect of an enforceable maintenance liability? CSA can only credit payments if the payment was made when there was an enforceable maintenance liability. This includes payments made for arrears on ended cases. It can also include payments made after the liability becomes enforceable but before an application is processed. Example M is liable to pay child support to CSA from 1 April 1999,
which is the date that F applied to CSA. M asks CSA to credit $200 paid
directly to F on 30 March 1999. M and F intended the payment to be for child
support for April. CSA cannot credit the payment under section 71. At the time
of payment there was no enforceable maintenance liability and the payment was a
private payment to the payee. CSA cannot backdate the liability to a date
before F's application.
Was a payment made? CSA can only credit a non-agency payment if the amount has actually been paid or transferred. CSA will not credit the value of goods that the payer intends to transfer at a later time, or where the payer has allowed the payee use of those items. Example M, the payer advises CSA that he has given F his car and that
he wants the value of the car to be credited against his child support
liability. F advises CSA that she agrees to the credit, but mentions that the
car is still registered in M's name because he cannot transfer the ownership
while he is paying it off. CSA does not credit the value of the car, because M
still owns it. CSA suggests that M and F discuss a value for the use of the car
and if they can reach agreement, ask CSA to credit this on an ongoing basis.
If a payer and payee disagree about whether a cash payment was made, or the amount of the payment, CSA will ask for evidence of the payment. CSA will decide, on the basis of all the evidence, whether or not a payment was made and the amount paid. Acceptable evidence includes bank statements, cheques or receipts. CSA will also consider oral or written statements provided by both parents. Example M, a payer, advises CSA that they paid $350 paid directly to
the payee, F. When CSA asks F to confirm the payment F denies receiving it. M
then supplies a bank statement, which shows a direct debit from M's account to
an account at the same branch. CSA contacts F to discuss this evidence. F
admits receiving the payment, but says they believed it was from Centrelink.
How is a non-cash payment valued? Where parents agree about the value of a non-cash payment (e.g. a transfer of property or a service provided) CSA will use this agreed value (section 71B(2)(a)). Where parents cannot agree about a value CSA will decide an amount (section 71B(2)(b)). CSA will first try to negotiate an agreed amount with both parents. If this fails, CSA will request further information from the parents to determine a value. Further information could include an independent valuation from a professional valuer (for real estate, etc.), or a letter from a local real estate agent estimating the market value of the property when it was transferred, or a local council valuation. Where the non-cash payment involves the transfer of a motor vehicle the information sought could include a valuation from a car yard or local garage, or a list of prices showing the approximate value of an equivalent model. CSA can seek a receipt for items recently purchased. Was the payment intended to be in lieu of child support? CSA will accept a payee's advice that a payment, or the value of goods or services was intended as child support. Where the parents disagree, CSA will seek evidence from both parents and decide on the basis of that evidence whether the relevant intention existed when the payment was made. CSA will seek oral statements (or written, if either parent cannot be contacted by telephone) from both parents about their intention at the time the payment was made and the circumstances surrounding the payment. Before making a decision CSA will discuss the evidence with both parents, so that they have an opportunity to respond or expand on their statements. If CSA cannot obtain a statement from one of the parents, it will consider a statement made by the other parent and any other available evidence. In making a decision CSA will take into account the following factors.
Example A payer M advises of payments of $2500 for school fees and
clothing. M claims a credit for that amount under section 71A.
Scenario 1: The payee F agrees that the amounts were paid with the intention that they be credited against M's child support liability. CSA credits the total amount of $2500. Scenario 2: F states that only an agreed amount of $2000 was intended to be credited against M's child support liability. F says that M agreed to pay $500 to cover half the cost of school uniforms and that this amount was in addition to M's usual child support. CSA contacts M, who confirms that arrangement. CSA credits an amount of $2000, a partial credit of the original $2500 claimed. Scenario 3: The payee F states that the amount should not be credited, as the payments were additional to M's ongoing child support liability. F claims that there was no agreement or intention on F's part that the school fees and clothing would be in lieu of child support payments to CSA. F later sends in a copy of their property settlement which included a clause that M would pay all school fees and associated costs until their child turns 18 years of age. The amount is not credited. (Note: CSA would also exercise its discretion to refuse to credit this as a prescribed payment). Example The payer F asks for payments totalling $300 be credited. The
total is made up of several amounts including a trip to the zoo, lunch at
McDonalds, Nintendo games and a pair of sports shoes.
The payee M states that the payments were not intended as child support payments and that the child already had a perfectly good pair of sports shoes. M states that there has been no discussion regarding footwear and the child has said that the shoes were a birthday present from F. M contends that the trip to the zoo and computer games were also birthday presents. F then agrees that some items were for the child's birthday but contends that the cost of the shoes ($150) should be credited as the child needed them. There is no evidence that M intended that the shoes were to be credited as child support. The amount claimed is not credited. F is advised that M's agreement should be sought before purchasing similar items in the future. Credit against future liabilities Once a liability becomes an enforceable maintenance liability and an amount, whether cash, property, or the provision of services, is credited as satisfying a child support liability, it will be applied against any future amounts payable. An intention to credit against future liabilities is not required. Prescribed non-agency payments CSA can credit certain payments towards a payer's child support liability regardless of the intention of the parents at the time the payment was made (section 71C). Credit can be given up to a maximum of 30% of the ongoing liability, provided that the balance of child support is paid as it becomes due and payable. The balance can be paid in cash or in the form of a non-agency payment credited under s71 or s71A, or from money credited from another source such as a tax refund or payment from a third party. CSA can only credit amounts paid on or after 1 July 1999. Prescribed payments can only be credited against a child support liability and not a liability for spousal maintenance. The types of payments that can be credited in this way are listed or 'prescribed' by regulation (regulation 5D). They are:
The date of notification of the payment is the trigger for commencing to credit up to 30% towards the current liability. If a payer satisfies the conditions and the amount of the payment is more than 30% of the enforceable maintenance liability in a given month, the payer will be said to have an 'uncredited' amount. This uncredited amount can be applied against the payer's enforceable maintenance liability in a later month provided the conditions for payment are again met. CSA cannot credit an uncredited amount towards any child support arrears that accumulated prior to the payer notifying CSA 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 s71 or s71A. Example A payer has a current liability of $100 per month and owes
$3000 in arrears.
In August 2006 the payer notifies CSA of a prescribed payment of $2000 made that month, however, no payments were made direct to the payee, or to CSA. As a result the payer still owes $3000 and has an uncredited amount of $2000. If the payer pays $70 in cash (or with a non-agency payment under s71 or s71A) by the due date for August 2006 (7 September 2006) then $30 from the $2000 uncredited amount is credited. The arrears of $3000 remain. The uncredited amount is reduced to $1970. If the payer does not pay for the months of September and October but pays $210 for November, $90 of the uncredited amount can be credited (balance is $1880) and the arrears remain at $3000. If the payer pays $1000 instead of $210 for November the additional amount of $790 would be credited against the original arrears of $3000. The payment in excess of 70% of the liability can be credited against existing arrears. 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 payee of a private collect case later applies for registration of the maintenance liability and collection of arrears, CSA will calculate the unpaid amounts by taking into account any credit for prescribed payments that would have been available if the case were registered with CSA for collection. If CSA is collecting child support through employer withholding, it will adjust the amount deducted 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 should be given the option of having their deductions reduced or given a cash refund. Payees who are in receipt of more than base rate Family Tax Benefit need to be made aware that when a prescribed payment is notified to Centrelink it will be assessed under the maintenance income test by Centrelink even though 'uncredited' for CSA purposes. The whole amount will be assessed on the day that the payment was made to a 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 amount that is refundable by the Family Assistance Office. The possibility of receiving a child care rebate in the future will not be taken into account in calculating the amount that can be credited. 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 which 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 and books prescribed 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 prescribed by a school which they have obtained from any source. (CSA 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 text books 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 and 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. CSA 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, Xrays, 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, Xrays 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:
CSA will not allow a credit for fees for surgery or dentistry performed solely for cosmetic reasons. Where there is a doubt a parent could ask the service provider for more information. Examples The cost of a nose reconstruction carried out by a cosmetic
surgeon purely for cosmetic reasons would not be acceptable as a 'prescribed'
payment. But the cost of a nose reconstruction which alleviated a breathing
difficulty or was performed following an accident would qualify.
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, a security bond and utilities (such as gas, electricity, telephone and water). Where the payer makes payments for which they and the payee are jointly responsible, CSA will credit only the payee's share. In the absence of evidence to the contrary, this will be half the total amount. Prescribed payments can only include those for a home in which the payee lives however the bill does not need to be in the payees name. Example A payee and payer separate in March 2007 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 (that is in the payer's name) of
$500 in November 2007 which covers the period from 1 July 2007 until 30
September 2007. At the time of payment the payee was the only party residing in
the home and was thus solely responsible for the payment of the gas bill, this
is regardless of the fact that the bill was in the payers' name. The payer
applies for credit of this $500 as a prescribed non - agency payment. CSA will
credit this amount.
Costs to the payee of obtaining and running a motor vehicle, including repairs and standing costs This only includes payments that are necessary to keep the vehicle on the road and to maintain its safety. They can include car loan repayments or the payee's share of joint car loan repayments. They can also include non-compulsory insurance premiums where the payee is an existing contributor. Discretion to refuse to credit an amount CSA can refuse to credit a non-agency payment claimed under sections 71, 71A or 71C if satisfied that, in the circumstances of the particular case, the amount ought not to be credited (section 71D). CSA may refuse to credit an amount in certain circumstances, including the following:
A payee can object to CSA's decision to credit a non-agency payment (s80). A payer can object to CSA's decisions to refuse to credit a non-agency payment (section 80). If a non-agency payment is not credited there may be other options available such as:
What happens to a credit if the liability is no longer payable to CSA or an assessment has ended? Court order or child support assessment ends If a liability or assessment ends with an uncredited non-agency payment amount, CSA will reduce the NAP amount to nil. Child support no longer payable to CSA When CSA receives an election to end CSA collection it will notify the parents of any uncredited non-agency payments on the child support account. Similarly, CSA will notify the parents of any uncredited non-agency payments on the child support account when it requires the payee to make private arrangements to collect their child support. The payer and payee will then have the option of:
Version 1.5 Issued 23 January 2008 |
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