Retrospective child support assessments and Family Tax Benefit (FTB) 277-51130010

If the retrospective child support assessment is for a period:

• between 1 July 2006 and 30 June 2011, go to Step 2
• that starts before and ends after 1 July 2011, go to Step 3
• on or after 1 July 2011, go to Step 4

The system calculates an adjustment but does not apply it.

For backdated periods between 1 July 2006 up until 30 June 2011, it is assumed that the customer is collecting the new assessment amount from date paid to plus one (DPT + 1) and that they have not collected child support arrears or repaid child support in relation to the retrospective child support assessment. See Centrelink action when Child Support collection customer is owed or receives child support arrears.

When the child support entitlement load is received via the data exchange, the system calculates the net variation between the old and new assessments from the start date of the new assessment up to and including 30 June 2011 at the latest. The details can be viewed on the Child Support Assessments (MNGR) screen.

A letter is sent to the customer asking them to advise Centrelink if they collect child support arrears they are owed, or if they repay any child support.

The letter advises the customer that if they would like to request a review of their FTB entitlement as a result of the backdated assessment, they should contact Centrelink within 13 weeks of the date the notification was received from Child Support.

If the customer contacts, go to Step 5.

Where the retrospective assessment is completed after 1 July 2011 for a period that starts before and finishes after 1 July 2011, date paid to plus one is not used as this is in the past. Instead, the retrospective reassessment is applied from 1 July 2011 at the earliest as this is when the rules change.

Go to Step 5.

The assessment is automatically applied.

From 1 July 2011, it is assumed that the customer is collecting the amount as assessed by Child Support. If the customer has a retrospective:

• decrease to their child support assessment and the customer is private collect, the customer's FTB will be assessed on the lower child support assessment and they may receive a top-up at reconciliation
• increase to their child support assessment and the customer is private collect, the customer's FTB will be assessed on the higher child support assessment. Mandatory Continuous Adjustment (MCA) may be invoked to reduce the customer's ongoing payment to offset any potential reconciliation debt identified as a result of the increased assessment

For both increases and decreases, no debts/arrears are raised/paid during the financial year due to maintenance income changes. However, MCA may be invoked to offset any potential overpayment identified as a result of the change.

Even though the customer is sent a letter asking them to advise Centrelink if they collect child support arrears or repay any child support, no action is required as the customer is automatically assessed based on the new information from Child Support.

The customer may however, request a review of the decision to:

• use a backdated higher assessment as this could have a significant impact on their ongoing rate and reconciliation outcome, or
• apply a backdated decrease to their child support assessment where they are required to repay child support

Note: if the customer wants to apply for a formal review of the actual increase or decrease in their child support assessment, they will need to contact Child Support.

If the child support assessment has been retrospectively increased and the customer advises that the liable parent is not going to pay the child support arrears, it may appropriate for the customer to seek legal advice about enforcing the payment.

Is the customer contacting as a result of their retrospective child support assessment and the effect on their FTB?

• Yes, go to Step 5
• No, procedure ends here

Has the customer contacted within 13 weeks of the date they received notification from Child Support or within 52 weeks of the original decision being made?

• Yes, go to Step 6
• No, the date of effect for the decision is limited to 1 July of the income year before the income year in which the application for a formal review was made. Go to Step 6

If the customer is registered for:

• private collection, and the case relates to:
• a period before 1 July 2011, go to Step 7
• the 2011-12 financial year, go to Step 8
• a period after 1 July 2012, go to Step 9
• collection by Child Support, and the customer advises:
• they have to repay child support due to the retrospective child support assessment, and
• they would like to apply for a formal review of an FTB decision, see Step 1 in Table 2
• they do not have to repay child support due to the retrospective child support assessment and they would like to apply for a formal review of the FTB decision, see Initial contact about a decision and the review of decision process

Before 1 July 2011, maintenance income was not adjusted for the past period unless the customer confirmed an arrangement to collect the arrears or to repay child support.

If the customer was privately collecting their new ongoing child support assessment, they were considered to have satisfied the Maintenance Action Test (MAT) for the past period, regardless of the amount of arrears they were able to collect. The customer was not required to transfer from private collect to Child Support collect if they could not collect arrears resulting from a backdated increase as long as they were collecting the increased amount ongoing.

Procedure ends here.

Child support assessment retrospectively increased - customer owed arrears by the payer

If the customer advises that the liable parent is not going to pay the child support arrears owed as a result of the retrospective increased assessment:

• the non-paid arrears can be taken out of the FTB assessment
• advise the customer that it may be in their interest to seek legal advice about enforcing the payment, and
• if payment is later made, the customer must tell Centrelink. The amount will be included in the Maintenance Income Test for the financial year in which it is received, in addition to child support for the relevant year

Does the customer advise that the liable parent is not going to pay the child support arrears owed in relation to the retrospective child support assessment for the 2011-12 financial year?

• Yes, refer details to Child Support Unit (CSJ). See Step 1 in Table 2. The customer should be advised to contact again if any arrangement is made in future to collect the child support arrears.
• No, procedure ends here

If the customer later advises that a child support arrears payment has been made in relation to the retrospective child support assessment for the 2011-12 financial year, refer details to Child Support Unit (CSJ). See Step 1 in Table 2.

Child support assessment retrospectively decreased - customer is required to repay money to the payer

If a customer is required to repay child support due to a backdated decreased reassessment, they may be able to receive arrears of FTB for the financial year(s) that the child support overpayment covers. For arrears to be payable, customers generally must apply for a formal review within the specified timeframe. The time limit for customers to apply for a formal review is the later of 13 weeks after they receive notification of the review by Child Support, or 52 weeks after the original decision was made. Refer to customer initiated review of decision for further details on timeframes

If the customer advises that they are required to repay child support as a result of a retrospective decreased assessment:

• Where the 'payee' is required to repay any amount of child support, the amounts repaid need to be removed from the MIT calculation in order for the FTB to be reassessed for the relevant financial year(s)
• The Child Support Unit (CSJ) will need to confirm with Child Support whether the 'payee' is required to repay the debt to the 'payer' before reassessing the FTB entitlement
• Refer details to Child Support Unit (CSJ). See Step 1 in Table 2.

From 1 July 2012, private collect customers are deemed to receive 100% of their assessed amount, regardless of how much they are actually collecting.

If the customer receives less than their full entitlement, any arrears received at a later date that relate to the deemed period are not counted when they are actually received. This is because the arrears have been deemed to have been received in the income year to which they relate.

From 1 July 2012, if the customer advises they are unable to privately collect an arrears amount accrued as a result of a backdated child support assessment which applies to a period commencing on or after 1 July 2012, the unpaid amount, in most cases, cannot be adjusted (see Exception below):

• if the customer is not able to collect the new higher assessment ongoing, they may wish to consider changing from Private to Child Support collect
• advise the customer that it may be appropriate to seek legal advice about enforcing the unpaid child support arrears
• if the customer provides a letter from a Legal Practitioner stating they are not able to assist, as it would not be cost effective to do so, refer the customer to a Social Worker to consider a partial maintenance exemption for the relevant financial years (which would allow the unpaid arrears to be removed from the MIT). See Exemptions from seeking child support for Family Tax Benefit (FTB) customers

Exception: When a customer has a private collect child support case and there are family and domestic violence circumstances present, the customer may have been underpaid or not paid child support at all. In these cases, it may be appropriate to backdate the exemption. The backdating of the exemption is to offset the effect of child support that the customer was deemed to have received in these circumstances. This allows Centrelink to re-assess their FTB entitlement based on the actual amount of child support they received during this period. This may be relevant in the following customer scenarios:

• It may be appropriate to have a social worker assess an exemption for the retrospective period if the customer advises that they attempted to collect the arrears and the attempt created a situation where there is now a fear of family and domestic violence as a result. See Exemptions from seeking child support for Family Tax Benefits (FTB) customers
• Alternatively, the customer may have already been granted a family and domestic violence exemption and the backdated re-assessment is now impacting their FTB rate for the current financial year. See Step 7 in the Recording private maintenance income table for more details of how to code the actual income received by these customers
• In some cases, customers who have been granted an exemption may have elected to 'opt out' of child support collection from a date in the past. Retrospectively changing the collection method to private collect will mean that the full Child Support assessment will be deemed as received for FTB purposes and this may generate FTB debts. See Step 7 in the Recording private maintenance income table for details of how to code the actual income received by these customers
• If the customer elects to change from private collect to Child Support collect, they can request collection of unpaid child support for up to three months immediately before the transfer (up to 9 months in exceptional circumstances). See Applying for Child Support collection and effect on Family Tax Benefit (FTB)

Send a Fast Note to the Child Support Unit to follow up the details with Child Support select Auto text, use Families > Updates > Retrospective Child Support.

Procedure ends here.

CSJ staff:

• For private collect customers, code the Override Maintenance Income (MNOI) screen to adjust maintenance income details for years before 1 July 2012 only. Maintenance income can generally not be manually adjusted for periods on/after 1 July 2012 unless the customer is granted a full maintenance exemption or is granted a partial exemption following a letter from a Legal Practitioner that it would not be cost effective to assist the customer. See Exemptions from seeking child support for Family Tax Benefit (FTB) customers. Procedure ends here

• For Child Support collect customers, go to Step 2

CSJ staff

Child Support collect - Fast Note received

When a Fast Note is received advising a Child Support collect payee has to repay money to the payer:

• Make sure the customer is on the Entitlement Method rather than the Disbursement Method. If the customer is on the Disbursement Method, change them to the Entitlement Method ongoing
• Complete the Income Estimate Excel template to Child Support for determination with the following information:
• the amount of the payee's debt by financial year
• the method the overpayment will be recovered, e.g., the Overpayment (OVP) method
• the date the overpayment is expected to be repaid in full
• Email the CSJ Income Estimate Excel template to Child Support's positional mailbox only for this purpose. The Resources page contains a link to the template. Child Support will be reporting back any inappropriate emails sent
• Once the template is returned to the CSJ by Child Support, use the information to adjust the customer's FTB accordingly:
• information in columns G and H of the 'Overpayments' page is used to reduce the received amount of maintenance income for previous financial year/s
• record the new 'received' amount on the Override Maintenance Income (MNOI) screen which will cause re-reconciliation to occur
• If Child Support indicate in column I that the debt is being recovered via the Overpayment (OVP) method, go to Step 3

CSJ staff

Overpayment (OVP) method

The amount of the debt will be left as an overpayment owed by the payee to the payer. If there is an ongoing liability between the two parties, this will reduce the amount of the overpayment by 100%. The payer will not make any payments to the payee until the value of the overpayment has been offset by what should have been paid. The amount that is being offset against the payee's overpayment is considered received maintenance income for Maintenance Income Test (MIT) purposes.

The Resources page contains an example of calculating the OVP method.

Go to Step 4.

CSJ staff

If the child support debt is being recovered by the Overpayment Method, the customer needs to be put on the Entitlement Method as the amounts drawn down against the debt each month will not be received via the data exchange. Therefore it will appear that the payee is not receiving any child support (for the Overpayment Method) until the full amount of the debt has been drawn down

Record a Display on Access DOC on the customer’s record to advise that the Entitlement Method has been coded and must be maintained for the financial years the child support debt is being repaid. If the customer insists on changing to the Disbursement Method, tell the customer, they will incur a reconciliation debt, as the total amount drawn down against the debt will only be assessed at reconciliation.

Create a Fast Note - select Auto text, use Families >Updates > MNOI coding. Put the Fast Note on hold with a resub date of 1st July. The Fast Note is allocated via WLM as a high priority from 1st July to allow coding to be updated before reconciliation occurs.

Referral to Manual Intervention Team

Use Fast Note - select Auto text, use Families > Reconciliation > MIV - FFMI Coding required to request a flag of manual intervention for reconciliation.

When the MNOI coding doc is allocated, CSJ staff need to review and code the MNOI screen with the total amount of maintenance income to be used in reconciliation. This amount will include the total of:

• all amounts drawn down against the child support debts during the relevant year
• any deemed amount for any private collect periods, and
• any/all disbursements received during the relevant financial year

Note: where the debt will continue to be repaid in the next financial year, record another Fast Note for review in the next financial year.

Check result before finalising activity on the Assessment Results (AR) screen.

Record details in a DOC.