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Lump Sum child support 277-02030000

Frequently Asked Questions about lump sum Child Support

Table 1: this table provide questions and answers relating to lump sum child support payments.

Item	Description
1	Question: What happens if the case is private collect? Answer: The lump sum binding agreement or court order will be administered irrespective of whether the case is collectible or not.
2	Question: What is the difference between a lump sum credit and a non-agency payment (NAP)? Answer: A lump sum payment provision must be included in a binding agreement or a section 123A court order and must be at least the annual rate of child support payable. A NAP is a separate type of payment; see Child Support Guide 7.5.1 Non-agency payments and 7.5.2 Prescribed non-agency payments.
3	Question: What happens to the lump sum balance if an event such as change of care or the child turning 18 occurs? Answer: A lump sum payment is credited against the amount payable under the liable parent’s liability. When a lump sum binding agreement or a court order under section 123A or if there has been a change of circumstances (for example, a change of care or income) and the parent who paid the lump sum is now entitled to receive child support under the administrative assessment, any remaining lump sum will not be credited unless and until the person again has a child support liability.
4	Question: What happens to the lump sum balance if it is a lump sum binding agreement, and the agreement ends or is suspended due to a care change? Answer: Although the agreement is suspended or ended, a lump sum payment will continue to be credited against the amount payable if the liable parent has an ongoing child support liability, now or in the future.
5	Question: Can Child Support accept an agreement for more than one lump sum? Answer: Yes, provided the agreement meets all the conditions applicable to lump sums.
6	Question: Does Child Support need 'proof' or 'notification' that the lump sum has actually been paid or transferred before we accept the agreement? Answer: Child Support must be notified that the lump sum payment has been paid in accordance with the lump sum binding agreement or court order under s123A before it can be credited against the amount payable. If Child Support has not been notified that the lump sum has been transferred in accordance with the agreement or court order, we will not credit the lump sum payment against the parent’s child support liability.
7	Question: What happens if the payee disputes the receipt of the lump sum? Answer: If the payment of the lump sum is reported by the payer, we should confirm receipt with the payee before crediting the lump sum against the amount payable. The agreement or court order must be accepted but can have no effect on the assessment until the payment is confirmed.
8	Question: Can the lump sum be credited against arrears that exist on the same case? Answer: No, a lump sum can only be credited against an ongoing child support liability.
9	Question: Do we need to generate a Provisional Notional Assessment (PNA) if a lump sum binding agreement is accepted? Answer: Where the agreement provides only for a lump sum payment provision a notional assessment will not be made as the annual rate of child support is not affected. If the agreement also includes periodic payment provisions a PNA.

Examples of lump sum credits

Table 2: this table describes how lump sums are credited against a child support liability.

Item	Example
1	Lump sum credited at 100% of liability payable If the lump sum amount is $1500 to be credited at the rate of 100% of the child support payable and the payer’s monthly liability is $100, on 30 June $1200 of the lump sum will have been used: $100 X 12 months =$1200 Balance = $1500 -$1200 =$300 The CPI index is applied to the balance of the lump sum ($300). After approximately 15 months the lump sum credit will have been fully applied against the amount payable, and the payer will then be liable to pay child support to the payee from that point on.
2	Lump sum credited at 50% of liability payable If the lump sum is to be credited at a rate less than 100% of the child support payable, the remaining liability not credited by the lump sum will raise as an amount payable on the Payer Account Summary each month. The payer will need to make regular payments to the payee. If the lump sum amount is $5000 to be credited at the rate of 50% of the child support payable and the payer’s monthly liability is $150, each month a liability of $75 will be raised on the Payer Account Summary and is payable by the payer. The remaining $75 is credited from the lump sum amount. Lump sum application is $75 X 12 months = $900 Balance of lump sum = $5000 - $900 = $4100
3	Adding an inflation factor to remaining credit At the end of each financial year, Cuba will reduce the lump sum credit by the amount of the annual liability payable for the previous year that the agreement specified was to be met by the lump sum. 100% of the liability will be met by an agreement unless another amount is specified in the agreement. On 1 July, any remaining lump sum balance will be indexed in accordance with the Consumer Price Index (CPI). If the lump sum is $1500 that is to meet 100% of the child support liability and the payers’ monthly liability is $100, at the end of the financial year a balance of $300 will remain and will be inflated by CPI. $1500 - (12 months X $100 or $1200) = $300. This is the balance at the end of the financial year. The CPI is applied to the balance of $300. Using Melbourne data as an example: March 2007 CPI factor = 153.8 and March 2008 CPI factor = 160.6 $300 X (160.6 /153.8) = $313.26 This is the amount that will form the new balance for the subsequent year. As the liability rate is $100 per month, the payer will become liable to begin actual payments to the payee sometime during the 4th month of that year.