Minimum annual rate to nil - Reducing child support assessments 277-03100000

An application to reduce a minimum assessment to nil (RMA) can be made orally, in writing or on an application to reduce minimum assessment to nil (all other parents) (RMA) form.

The RMA application must include:

• the nominated period for which a customer is seeking a reduction, which can be either:
• the whole of a child support period, including child support periods that are less than 2 months, or
• for periods on or after 6 January 2009, part of a child support period where that part is for at least 2 months
• income available to the customer in the relevant period
• expenses for taxation purposes in the relevant period

Note: if the application includes a period prior to 6 January 2009 different rules apply. For more information see Table 3.

Income for all RMA applications is not restricted to taxable income or adjusted taxable income and includes any money becoming available to the customer in the relevant period.

Possible sources of money or income available to the customer include:

• salary or wages, including allowances and bonuses
• payments for termination of employment
• superannuation payments. Amounts withdrawn under the First Home Super Saver (FHSS) Scheme are included in the definition of income for the purposes of an RMA application
• interest and dividends, business income, trust and partnership distribution
• access to a joint bank account or household money
• rental income or income from a property sale domestically or internationally
• investment income, including income received from share trading, managed funds, margin lending and share market speculation
• compensation or rehabilitation payments, including lump sum payments
• periodical gifts, including 'pocket money' from a partner or parent
• prisoner work or study payments
• any other income, for example lotto winnings
• Parental Leave Payments
• Centrelink payments, including Family Tax Benefit (FTB) payments
• Veterans' payments and other government pensions, benefits and allowances apart from the prescribed payments below
• Territories Stolen Generations Redress Scheme payments

The following types of prescribed payments are disregarded as income:

• Amenity allowances or gratuities paid to prisoners. Gratuities include incidental payments for personal items or other minor expenses but not payments for work, study or participation in approved programs
• Disability support pensions, pensions paid to veterans who are totally and permanently incapacitated and Special Rate Disability Pension for veterans, where at least 85% of the pension is paid to another person for the provision of ongoing care to the pension recipient

Note: payments (either ongoing or as a lump sum) received by customers under the National Disability Insurance Scheme (NDIS) or the National Redress Scheme are not considered as income for Child Support purposes. If a customer provides NDIS or National Redress Scheme payments as an income source, or otherwise establish the customer is receiving these payments, document for information only. Do not include in any income calculations. For more information, see National Disability Insurance Scheme or National Redress Scheme.

To assist in gathering information from the customer use the Application to reduce the Minimum Annual Rate (MAR) to nil macro.

An assessment can only be reduced to nil by an RMA application for all or part of a child support period if the customer is assessed to pay the minimum annual rate of child support during the nominated period.

Check the assessment details in the Case Liability Rates window to see if the minimum annual rate rule has been applied to the nominated period. Do not rely on the dollar value of the annual rate to determine if the minimum annual rate rule applies to the nominated period.

Note: a customer on the fixed annual rate cannot apply to have their fixed annual rate reduced to nil. The customer can apply for the fixed annual rate to not apply. If the application is successful, a minimum annual rate assessment will usually apply and the customer can then apply for the minimum annual rate to be reduced to nil. These applications (FAR to MAR and RMA) can be made and considered consecutively.

If a customer who has at least regular care applies for the fixed annual rate to not apply, and their application is successful, the minimum annual rate will not apply and their assessment will reduce to nil. They do not need to make a separate RMA application.

If the customer is liable to pay child support at the minimum annual rate for the nominated period, see Table 2.

If the customer is not assessed to pay child support at the minimum annual rate for the nominated period, see Step 3 in Table 4.

Gather all relevant information use the Application to reduce the Minimum Annual Rate (MAR) to nil macro.

Review the application and ensure:

• the customer has clearly identified the nominated period
• where the nominated period is for part of a child support period, the nominated period begins on or after 6 January 2009 and is at least 2 months
• the customer has provided income details for the relevant period, for more information about the relevant periods for retrospective applications see Table 3
• the customer has provided information about all sources of income that are known. For example, if money has been received in the past from a garnishee to a bank account, has the customer provided details about the income and expenses associated with that account?
• the customer’s income and expenses are consistent with their occupation and lifestyle. For example, are their day to day/recreational expenses consistent with their claimed income?
• the expenses claimed would be recognised for taxation purposes and they are realistic in relation to the stated income, and
• information has been provided to explain how the applicant meets basic living needs, such as accommodation and food

Investigate the customer's circumstances by checking:

• ATO systems, that is their most recent tax return, employment declarations, see the External Searches Guide
• Cuba notepads
• Payer Collection window, especially ALF forms, section 120/72A responses and payee contact
• External Information window on Cuba

Note: if the customer is in prison, investigate if they are in receipt of work or study allowances

Document the application in the Child Support Period window.

In rare circumstances it may be necessary to issue a section 161 notice for additional information. See Child Support's information gathering powers.

Contact the applicant to:

• acknowledge receipt of their application
• discuss the reasons why they applied to reduce their assessment to nil
• discuss the information they supplied
• discuss their circumstances for the relevant period

Confirm and discuss any information found during investigation and any questions there is from the analysis of the application. If necessary, request written evidence of income and expenses which are relevant for taxation purposes.

Document the conversation with the customer in a notepad in the Child Support Period window including details of requests for information and the dates the information is to be provided by.

Consider the appropriate rules that relate to the period the customer is applying to have reduced to nil:

• from 1 July 1999, when the minimum rate was introduced, until 30 June 2008 the customer's income for the first 12 months of the child support period is compared to the minimum rate for that child support period
• from 1 July 2008 until 5 January 2009 the customer's income for 12 months from the date of their application is compared to the minimum rate for the year in which they apply
• from 6 January 2009 to current, the customer's income in the nominated period is compared to the minimum rate for the nominated child support period.

If the customer is a WA ex-nuptial customer, go to Step 2.

If the nominated period:

• commences on or after 6 January 2009, go to Step 3
• commences prior to 6 January 2009 but after 1 July 2008, go to Step 4
• crosses 6 January 2009, go to Step 5
• commences prior to 1 July 2008, go to Step 6

Note: it is the customer's responsibility to provide evidence to support their application. If the customer refuses to provide evidence within a reasonable timeframe, the application should generally be refused.

WA ex nuptial customers may only nominate a period of less than 12 months if the application date and the nominated period begin on or after 3 March 2011. If the nominated period:

• commences on or after 3 March 2011, go to Step 3
• commences prior to 3 March 2011, go to Step 4
• crosses 3 March 2011, go to Step 5

If the nominated period commences on or after 6 January 2009 (or 3 March 2011 for WA ex nuptial customers):

• determine the applicant’s annualised income (income for the nominated period / number of days in the nominated period x 365)
• determine the RMA income test amount by multiplying the minimum annual rate (for the nominated child support period) by the customer's total number of cases (regardless of their role in those cases)

The Resources page contains a table with examples of calculations for this nominated period.

When the above calculations have been completed determine if:

• the customer's annualised income will be less than the RMA income test amount
• the parent’s current assessment is at the minimum annual rate, see Is the customer assessed to pay the minimum annual rate of child support?

Does the applicant satisfy these criteria?

• Yes, see Step 2 in Table 4
• No, see Step 3 in Table 4

If the application relates solely to a period between 1 July 2008 and 6 January 2009 (or 3 March 2011 for WA ex nuptial customers), the assessor must:

• determine the applicant’s income for 12 months from the date of application
• determine the RMA income test amount by multiplying the minimum annual rate for the year in which the application was made by the customer's total number of cases, regardless of their role in those cases

When the above calculations have been completed, determine if:

• the customer's income, for the 12 months from the date of application, will be less than the RMA income test amount

Note: for periods prior to 6 January 2009 (or 3 March 2011 for WA ex nuptial customers), the customer can only nominate a whole child support period, they cannot nominate part of a child support period.

The Resources page contains a table with examples of calculations for this nominated period.

Does the applicant satisfy these criteria?

• Yes, see Step 2 in Table 4
• No, see Step 3 in Table 4

If the nominated period crosses 6 January 2009 (or 3 March 2011 for WA ex nuptial customers), make 2 separate decisions, 1 for each period.

For the period prior to 06 January 2009 (or 3 March 2011 for WA ex nuptial customers):

• determine the applicant’s income for 12 months from the date of application. The period prior to 6 January 2009 must be calculated for a full child support period. The calculations used prior to 6 January 2009 are as per Step 4. Go to Step 4

Resources has example 2 between July 2008 and January 2009 and example 1 for the period after January 2009

• determine the RMA income test amount by multiplying the minimum annual rate for the year in which the application was made by the customer's total number of cases (regardless of their role in those cases)

For this period, the customer must satisfy that their income for the 12 months from the date of application, was less that the RMA income test amount.

For the period from 6 January 2009 (or 3 March 2011 for WA ex nuptial customers):

• determine the applicant’s annualised income (income for the nominated period / number of days in the nominated period x 365).
• determine the RMA income test amount by multiplying the minimum annual rate for the nominated child support period by the customer's total number of cases regardless of their role in those cases

For this period, the customer must demonstrate that their annualised income (relevant to the nominated period) is less than the RMA income test amount.

The Resources page contains a table with examples of calculations for this nominated period.

Does the applicant satisfy these criteria?

• Yes, see Step 2 in Table 4
• No, see Step 3 in Table 4

If the application relates solely to a period between 1 July 1999 and 30 June 2008, the assessor must determine:

• the applicant's income for the first 12 month of the child support period
• the RMA income test amount. This is the minimum annual rate for the child support period

When the above calculations have been completed, determine if:

• the customer's income, for the first 12 months of the child support period, will be less than the RMA income test amount.

Note: for periods prior to 6 January 2009 (or 3 March 2011 for WA ex nuptial customers), the customer can only nominate a whole child support period, they cannot nominate part of a child support period.

Resources has a table with examples of calculations for this nominated period.

Does the applicant satisfy these criteria?

• Yes, see Step 2 in Table 4
• No, see Step 3 in Table 4

If the customer's application is accepted to reduce the assessment to nil, go to Step 2

If the customer’s application is not accepted to reduce the assessment to nil, go to Step 3

Contact the applicant to advise the assessment will be reduced to nil and the reasons for this decision.

The reduction will apply to the nominated period, or where the application relates to a period before 6 January 2009 (or 3 March 2011 for WA ex nuptial customers), to the part of the child support period where a minimum assessment was in place. See Contact with Child Support customers.

Advise the customer:

• payment of any arrears or recovery/gifting of overpayments is required. For more information see Debt repayment
• when the reduction to nil will end:
• that is end of the nominated period or
• 28 days after the last day on which the person would otherwise have been assessed to pay less than the minimum rate
• that a new application will be required at the end of the nominated period if their circumstances have not altered (the decision to reduce an assessment to nil cannot be extended)

To process the decision to accept the application see Reduce a Minimum Annual Rate (MAR) to nil Cuba Process Help.

Note: an issue has been identified where the minimum annual rate has been calculated incorrectly for some parents with 4 cases or more.

Does the customer have 4 or more child support cases?

• Yes, see Table 5
• No:
• Document the conversation with the customer and the reasons for the decision in the Child Support Period window
• Document any discussion regarding payments and collection in the Payer Collection window. See Documenting Child Support information in Cuba

If the nominated period relates to the whole of a child support period which is less than 2 months, the application cannot be processed in the Child Support Period window. See Agreements Cuba Process Help– use REQUIRES MANUAL in the Type field and key an annual rate of $0.

Go to Step 5.

Contact the applicant and discuss the decision not to reduce the assessment to nil and the reasons for this decision. See Contact with Child Support customers.

Advise the customer of:

• their objection rights
• the requirement to pay ongoing child support
• the need to make an arrangement to pay any arrears. See Debt repayment.

To process the decision to refuse the application, see Reduce a Minimum Annual Rate (MAR) to nil Cuba Process Help.

Document the reasons for the decision and the conversation with the customer on a notepad in the Child Support Period window. See Documenting Child Support information.

Document any discussion regarding payments and collection in the Payer Collection window.

Note: if the nominated period relates to the whole of a child support period which is less than 2 months, refusing the application cannot be processed in the Child Support Period window. Document the reasons for the decision and the conversation with the customer on a notepad in the Case window – eligibility is not required. To create a manually generated system letter advising the payer that their application has been rejected see Letters for Child Support customers.

Go to Step 5.

Run eligibility to give effect to the update. If there are unexpected changes do not save eligibility until this is corrected. See Eligibility Window Help to correct incorrect changes and if necessary seek help from a Service Support Officer (SSO).

The following letters generate after eligibility is saved:

• MAC 1-4 – Generic assessment variation notice to both customers when an application is accepted
• MLA 1-3 - Letter to the applicant to advise that Child Support has rejected an RMA application, or
• NOA-01 – Letter to both parents. Sometimes the system:
• suppresses the Cuba letters, and
• issues a NOA-01 CS Notice of Assessment and Covering page consolidating the decision letters. Consider when NOA-01 letters issue

Check each letter to ensure it is correct and appropriate to the customer's circumstances. See the Letters Cuba process help.

If a customer is assessed for child support for 4 or more cases, including cases where they are not liable to pay child support, the total amount payable is capped at 3 times the minimum annual rates (MAR) and shared between all cases.

When determining if the total amount payable should be capped, Cuba is failing to include cases where the customer who is not liable to pay child support is the payee. As a result, some parents are incorrectly assessed to pay the full MAR on each case where they are the paying parent.

For example, a customer has 4 child support cases, one case as the payer and the other 3 as the payee. For the case as payer the customer is assessed to pay the MAR (annual rate of $399).

This is incorrect because the annual rate should be calculated as:

• 3 x $399 (MAR) / 4 cases
• the payer’s annual rate should be $299

Calculate the amount payable for each case where the MAR is applicable using the formula in section 66(6):

• 3 x MAR / number of cases = annual rate for each case

In the Formula Modification window of each case apply the MAR:

• From Date: the commencement date of the MAR calculation
• Type: requires manual
• Set To: the MAR amount applicable to the individual case
• To Date: end date of case:
• to determine the correct end date, go to Step 4

If there is a known future date where MAR will no longer be applicable the 'To Date' should be this known future event date.

Possible known future end dates:

• A child support period (CSP) will commence soon using a new income making MAR no longer applicable
• The MAR amount will change, for example one of the cases is due to end on a known future date and therefore the MAR apportionment needs to be recalculated

If MAR will be applicable in the future and no known event will end or vary the MAR apportionment calculation:

Record the 'To Date' as the end date of the case, not the end date of the current CSP

Note: when an event that would usually change the MAR assessment amount occurs and eligibility needs to be saved, Cuba will display the manual assessment in the pre-confirmation window to prompt this manual assessment to be reviewed and updated if necessary. See Formula Modification Window Help

Run eligibility

Future assessment changes

If an event that usually changes the assessment amount occurs, this manual MAR apportionment calculation must be reviewed.

Examples of these events are:

• new child support period
• new income
• care change, or
• one of the paying parent's MAR cases ends

The eligibility window will indicate this manual assessment with the following 'W' (warning) message 'Manual Assessment found'.

Note: do not save eligibility. Seek help from an SSO

In the Client Profile window:

• add the following Special Contact Details 'Manual Asst Workaround Notes DD/MM/YYYY'

In the Formula Modification window:

• document the reason for the workaround, cut and paste the following template into a word document

Complete the template and save in the notepad

• Subject: MAR MANUAL ASST. WORKAROUND - DD/MM/YYYY
• Body of text: MAR manual assessment workaround
• 'A manual MAR apportionment calculation has been applied to this case via the formula modification window due to Cuba functionality limitations. Payer (name) has (number of cases) cases where MAR is to apply.'
• The following calculation has been used: 3 x minimum annual rate / number of cases = annual rate for this case
• From Date: (Add start date)
• To Date: (Add end date)
• Type: Requires Manual
• Adjust by: Amount
• Set To: (Add manual MAR amount)

Request an SSO log a Cuba Service and Business Request form.

Note: the SSO should quote PM62507 in the Brief description about the incident field.

If a parent is assessed to pay MAR in a case with more than one carer (a parent and a NPC, or multiple NPCs), the MAR is paid to the carer with the most care, or shared between the carers if they have equal care.

Cuba occasionally:

• applies MAR per child, instead of recognising all of the children of the relationship as being part of the same case
• does not correctly determine whether the total amount payable should be paid to just one of the carers or shared between them

As a result, some parents are incorrectly assessed to pay the full MAR to each carer in the same case, or to pay MAR despite having at least regular care of at least one child of the case, or to pay incorrect portions of MAR to one or more carers.

Calculate the amount payable for each case where the MAR is applicable using the formula in section 66(7).

Do 2 carers have an equal percentage of care of the children and that percentage is the highest percentage of care for the children?

• Yes, each person is entitled to receive half of the amount that is payable by the parent
• No, only the carer with the highest percentage of care for the children is entitled to be paid the minimum annual rate of child support payable by the parent

To apply the MAR, see Steps 3 – 5 in the Applying minimum annual rate (MAR) where a parent has 4 or more cases table

For examples of how to apportion MAR where there is more than one carer see the Resources page in Correcting errors on Child Support cases.

In the Client Profile window, under Special Contact Details:

• add 'Manual Asst Workaround Notes DD/MM/YYYY'

In the Formula Modification window:

• document the reason for the workaround
• create a notepad entitled ‘Reason for the workaround’ using the information below:
• fill in the brackets
• add the text from relevant bullet points

Reason for the workaround

Payer (name) has (number of carers) carers potentially entitled to a share of the MAR payable for one overall case that is recorded over several Cuba cases

Calculation

If the payee has equal most care and is entitled to an equal share of MAR

• ‘The correct share of MAR payable to payee (name) is MAR/number of carers entitled to an equal share of MAR payable for the overall case = entitlement for this carer within the case = $ pa’

If the payee has higher overall care than all the other carers in the case, and they are entitled to all of the MAR

• ‘Payee (name) has the most care of the children of the case, and is entitled to the full amount of MAR with no apportionment = $ pa’

If the payee does not have the most care, or equal most care, of the children of the case, and they are not entitled to any portion of the MAR

• ‘Payee (name) has less care than the other payees, that is they:
• do not have the most care, or
• equal most care, and
• they are not entitled to any share of the amount of MAR = $0 pa’

From Date: (Add start date)

To Date: (Add end date)

Type: Requires Manual

Adjust by: Amount

Set To: (Add manual MAR amount)

Review the manual MAR apportionment calculation if an event that would ordinarily change the assessment amount occurs, for example:

• new child support period
• new income
• care changes
• one of the payer's cases ends

Do not save eligibility

• If eligibility is run the eligibility window will indicate the manual assessment with the following 'W' (warning) message: 'Manual Assessment found
• Before saving eligibility escalate the manual assessment to an SSO for investigation

From 1 July 2008 an assessment where a decision to reduce a minimum annual rate to nil was made can be amended if the department is later satisfied the customer's income is greater than the relevant RMA income test amount.

The assessment would be amended from either:

• the date of the change in circumstances that led to the RMA requirements no longer being satisfied, or
• the date the minimum assessment was first reduced, if the RMA requirements were in fact never satisfied

Note: amend an assessment where a decision to reduce a minimum annual rate to nil was made for any day after 1 July 2008, even if the RMA decision was made prior to 1 July 2008.

Contact the customer and discuss the decision to amend the assessment. Advise the customer of their objection rights. Ensure the following information is documented in the Child Support Period window:

• decision
• reasons for the decision
• any conversations with the customer

Document any discussion regarding payments and collection in the Payer Collection window.

To process the decision to amend the application see Reduce a Minimum Annual Rate (MAR) to nil Cuba Process Help.

To amend an RMA decision if the nominated period relates to the whole of a child support period that is less than 2 months see Agreements Cuba Process Help.