5.3.2: Offsetting debts between payees and payers

Context

CSA can offset the child support debts owed by two payers if CSA would be obliged to pay the amounts collected from one to the other.

Legislative references

Sections 17, 17A and 71AA Child Support (Registration and Collection) Act 1988

Explanation

CSA has a discretion to offset debts between two payers who each have a child support debt due to the Commonwealth if those debts arise under.

• a child support assessment (section 17(2));
• a liability to pay periodic child maintenance arising from a court order or court-registered maintenance agreement or a collection agency maintenance liability (section 17(1)); or
• a parentage overpayment order (section 17A) ; not a spousal maintenance liability).

If two child support debts are offset, the payer with the larger debt is required to pay the net amount to CSA. Debts can be offset by deducting the whole amount, or part of an amount, of the smaller debt from the larger debt.

CSA will take into account the circumstances of each individual case when considering whether to offset debts and determining how much to offset. CSA will negotiate with both customers and will aim to reach a mutually acceptable arrangement that takes into account the ongoing needs of the parent with care of the children and the past and present obligations of both parents to pay child support when due. If one of the debts arises from a parentage overpayment order, CSA will consider the terms of that order and in particular any repayment schedule specified in the order. CSA will confirm that the debts are accurate before commencing any negotiation.

What kinds of debts can be offset?

Where the debts are of equal amounts

Where the amounts owed are not equal

Offsetting a debt against an ongoing liability

Effect of offsetting a debt

When a liability is later varied

Notification

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What kinds of debts can be offset?

Only child support debts arising from a liability referred to in sections 17 and 17A of the Registration and Collection Act can be offset.. Debts due to spousal maintenance and penalties are not included.

In the case of amounts due under a child support assessment; child maintenance order ; court registered agreement, or a collection agency liability, CSA can only offset these if they relate to a child of whom both customers are the parents (section 71AA(1)(c)).

Where the debts are of equal amounts

If the debts are equal CSA may offset one against the other and the Commonwealth is taken to have recovered both of the debts in full (Sub-section 71AA(2)). In most cases where the debt is equal this is the desirable outcome.

Where the amounts owed are not equal

If CSA offsets debts for different amounts, then the Commonwealth is taken to have recovered the amount of the smaller debt that is offset and an equal amount of the larger debt (section 71AA(3)). Where the amounts are not equal it is desirable to offset the full amount of the smaller debt against an equal amount of the larger debt.

Offsetting a debt against an ongoing liability

Where CSA offsets unequal debts, the remaining amount of the larger debt is still a debt due to the Commonwealth. If the debtor with the larger debt is entitled to future child support payable by the other parent, CSA may offset the remaining debt against the parent's ongoing child support entitlement as it becomes due and payable each month.

CSA can offset the parent's debt against part or all of that parent's child support entitlement each month. Where the debt is offset in part, the balance of the month's child support liability is due and payable in the normal fashion. CSA officers will seek an offsetting arrangement that will not disadvantage the child(ren) by minimising ongoing child support and which also reflects the size of the debt and a reasonable repayment period

Effect of offsetting a debt

Any amount recovered by way of offset is taken to be paid by the payer to CSA and paid to the payee as provided for under the Registration and Collection Act (section 71AA(4)).

When a liability is later varied

Where CSA offsets a parent's child support debt (as payer) against that parent's entitlement to receive child support from the other parent (as payee) and their entitlement as payee is later reduced, the person will be required to repay the amount of the overpayment to CSA as if they had received the offset amount (section 79(1)).

Where a variation alters the basis of an offset arrangement affecting amounts to be offset in the future, CSA will reconsider those arrangements.

Notification

CSA will confirm any offset arrangements in writing with both parents. However, neither parent has the right to object against CSA's decision to offset, or refuse to offset, a debt.

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Version 1.2

Issued 1 January 2007

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