Fixed annual rate not to apply applications 277-03090000

Child Support receive FAR not to apply applications verbally or in writing, including CSAOnline uploaded documents.

If verbally, complete the FAR not to apply application macro.

For verbal and written, pend the FAR not to apply application in Cuba, to generate the FAR Application Evidence Required in-tray. See Fixed annual rate (FAR) not to apply Cuba Process Help

Document the FAR not to apply application in the Child Support Period window notepad.

In their written application, the customer must indicate:

• the period of assessment they wish for the FAR not to apply, and
• their current income (annualised)

The customer may not know the exact period in their written application; however, this can be determined. Contact the customer to discuss their application and circumstances. See Contact with Child Support customers.

Is a Pending deemed FAR not to apply required?

• Yes, go to Step 2
• No, go to Step 3

The customer is taken to have made an application for the FAR not to apply in the next child support period if the:

• current FAR application is effective on the last day of the child support period
• assessment for the new child support period would also be the FAR

A Pending Deemed FAR not to Apply in-tray generates to ensure the application for the new child support period is considered. See Contact with Child Support customers.

Go to Step 3.

Check the customer's income details to ensure the customer is assessed to pay the FAR correctly.

Update income details

Where possible, update any incomes relevant to the nominated period that have a status of 'Currently Used'. For assistance with updating an income, see Income Processing for Child Support customers.

If the customer received an income support payment (ISP) for any period within the last relevant year of income (LRYI), Cuba does not automatically create a FAR of child support. The References page contains a link to the Child Support Guide 2.4.11: Fixed Annual Rate of child support for certain low income parents.

If the customer received an ISP for any period during the LRYI, ensure the ISP box for the relevant income record on the Client Income window is checked. This will automatically amend the assessment so the FAR is not applied. Check the assessment rate for the relevant period to see if the FAR is no longer present. If so, advise the customer the FAR is no longer relevant.

Check the Client Benefits window, Client Income window and Income Details window:

• if no ISP details can be found and the customer stated they received an ISP during the relevant year
• complete the CLNK Refresh and the Centrelink/Child support information exchange macro
• shows ISP or the Centrelink/Child support information exchange confirms ISP
• if the ISP box does not automatically populate there may be a data integrity issue with the Centrelink exchange of information. Escalate the issue to Staff Facing Products – Cuba and Plute via the SSO network

Parental Leave Pay (PLP) is not an ISP. Therefore, if the customer only received PLP in the LRYI, do not check the ISP box in the Client Income window.

If the customer is still assessed to pay the FAR, go to Step 4.

The FAR applies per child (the rate payable is capped at 3 times the FAR) and will not apply for any child where the parent has at least shared care of that child.

Confirm the care the applicant has for each child of the assessment. If the customer advises of a different care level, determine whether the care in the assessment should be changed. See Change in child support care levels from 1 July 2018 (15 May 2019 for WA Ex-nuptial cases).

If the care arrangements are up to date, and the customer now has at least shared care of all children they are assessed to pay child support for, the application may not need to proceed.

Note: a change to the care percentage will only apply from the date of notification or the date of the change in care, if the customer notifies within 28 days of the change. The FAR may still apply for the period prior to the relevant date. If the FAR remains in place for part of the child support period (or a previous child support period), go to Step 3.

If the customer is still assessed to pay the FAR for any child/ren of the assessment, the application for the FAR not to apply must be considered

If the income and care changes removed the FAR, their FAR not to apply application is no longer considered.

Where there is a pending FAR not to apply in Cuba, that is no longer considered, see Apply FAR not to apply decision table of Fixed annual rate (FAR) not to apply Cuba Process Help.

To determine whether the FAR will no longer apply to an assessment the customer must show, and Child Support must be satisfied:

• their current income (annualised) is equal to or less than the single parent pension maximum basic rate (PPS), and
• it would be unjust and inequitable for the customer to pay the FAR

Discuss and consider the customer's application and circumstances to determine the progress of the application.

The customer must show their current income (annualised) will be equal to or less than the single parent pension, maximum basic rate.

The Basic Values for Case dialogue box will give the correct single parent pension (PPS) maximum basic rate amount. To find this:

• open the customer's Involvement List window
• select the case where the customer has been assessed to pay the fixed annual rate (FAR)
• open the Case Liability Rates window and select the period where the customer has been assessed to pay the FAR
• from the Assessment Details for Case dialogue box, select the Basic Values button

When determining a customer's current income (annualised), consider the income likely to be received by the customer in the 12 month period. Start on the date the customer applied for the FAR not to apply.

Discuss with the customer the income they are likely to receive during the relevant 12 month period. The customer needs to advise of all income they expect to earn or receive in the 12 month period.

Income is not restricted to taxable income and includes any money coming into the hands of the customer. The References page contains a link to the Child Support Guide 2.5.3: Application to have the Fixed Annual Rate of child support not used.

Possible sources of 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 for the purpose of this application
• interest and dividends, business income, trust and partnership distribution
• 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
• tax free payments, for example Defence Force Reserve payments, scholarship payments or tax-free superannuation payments
• any other income, for example lotto winnings
• Parental Leave Payments
• Centrelink payments, including Family Tax Benefit (FTB) payment(s)
• Veterans' payments and other government pensions, benefits and allowances (apart from the incomes prescribed below), and
• Prisoner study, work or program participation allowance/payments
• Territories Stolen Generations Redress Scheme payments

Discuss with the customer whether they are likely to receive money or income from any of these sources.

Note: amounts of capital, for example, savings in a term deposit or bank account, are not included in a consideration of income. Interest earned on any capital must be included.

Go to Income processing for Child Support customers (International parents) if:

• the parent is residing overseas, or
• staff have reason to believe the customer may be receiving income from in another country

The following prescribed payments are not regarded as income:

• prisoner amenity allowances

and

• disability support pension (DSP)
• total and permanent incapacitated (TPI) pension from Department of Veterans' Affairs, and
• Special Rate Disability Pension (Military Rehabilitation and Compensation)

where at least 85% of the pension is paid by, or on behalf of, the pension recipient to another person and that other person provides ongoing care to the pension recipient in return for that payment. Ensure the customer has not included any of these payments in the income amount they are likely to receive.

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 income for Child Support purposes. For more information, see References for a link to The Child Support Guide 2.4.4: and 2.6.14: Reason 8 - a Parent's Income, Property, Financial Resources, or Earning Capacity. If a customer provides NDIS or National Redress Scheme payment(s) as an income source, or it is established the customer is receiving these payments, document for information only. Do not include in any income calculations. For more information, the Resources page contains links to the National Disability Insurance Scheme and National Redress Scheme web pages.

If the customer advises their current income (annualised) is:

• greater than the Parenting Payment - single maximum basic amount the application must be refused. No further investigation is required, see Table 4
• equal to or less than the Parenting Payment - single maximum basic amount investigate the accuracy of the income information they have supplied

The Service Officer must be satisfied a parent's current income (annualised) is equal to or less than the Parenting Payment - single maximum basic amount.

Check the following sources of information about a customer's past income for indications of the income currently available to them:

• ATO systems, for example most recent tax return or employment declarations, see the External Searches Guide
• Cuba notepads (estimate, COA and objection notepads may provide information about the customer's current or recent income)
• The Payer Collection window, especially ALF forms, section 120 and section 72A responses or payee contacts
• The External Information window on Cuba

If previous income is identified from these sources, check the customer has included any ongoing amounts in their calculation of current income (annualised).

If the customer operates a business, examine the kinds of expenses incurred and deductions claimed.

When looking at current income (annualised):

• depreciation claims should not be deducted from income, unless the customer is actually incurring depreciation costs in the current period
• carried forward losses should not be deducted from income

There may be other deductions claimed by the customer that should not be deducted from income. Some examples of deductions that should be scrutinised are loans to directors where the customer is the only director of the company and office rental deductions where the customer is working from home.

Note: in rare circumstances it may be necessary to issue a section 161 notice for additional information about a customer's current income (annualised). For more information see Child Support's information gathering powers.

The Service Officer must be satisfied a parent's current income (annualised) is equal to or less than the Parenting Payment - single maximum basic amount.

This can be satisfied if searches do not locate:

• information that contradicts the information provided by the customer, and
• additional information indicates the customer is likely to receive income above the Parenting Payment - single amount

Document the income information obtained from the customer and the searches in a notepad on the Child Support Period window.

If additional information is located that means a customer is likely to receive more than the Parenting Payment - single maximum basic amount or contradicts the information provided by the customer, go to Step 6.

If the customer operates a business, determine whether sufficient information is available to determine their current income (annualised). If not satisfied that sufficient information about their current circumstances is available, go to Step 6.

If satisfied the customer's current income (annualised) is likely to be equal to or less than the Parenting Payment - single maximum basic amount it must now be considered whether it would be unjust and inequitable for the customer to pay the FAR. See Table 3.

If help is required in determining the customer's current income (annualised), seek assistance from an SSO.

If additional information is required from the customer and contact has not already been made, contact the customer to discuss:

• reasons for their application
• information they supplied with their application
• additional or contradictory information located
• current circumstances, and
• evidence to support the application, if required. For example a profit and loss statement

See Contact with Child Support customers.

When requesting evidence about their income from a customer who operates a business, remember to look at the non-cash benefits they may receive from the business under the unjust and inequitable consideration. When evidence is required, ensure sufficient evidence is requested to address both questions, to avoid the need to later ask for additional evidence.

If the customer operates a business, ask whether their previous pattern of business operations is continuing. If they respond yes, ask whether the kind and amounts of expenses incurred and deductions claimed in the examined tax return, have been included in their calculation of their current income (annualised). If they respond yes then this is sufficient information to be satisfied about their current income (annualised).

If their response indicates the historic information is not relevant to their current circumstances then request current documentation including a profit and loss statement. The customer should be able to provide documentation such as the most recent BAS or financial statement or current budget to support the calculation of their current income (annualised).

If the customer operates a business and the system searches were unable to locate any information at Step 2, request the customer provide documentation to explain the calculation of their current income (annualised).

If necessary, request the customer provide written evidence of their income such as a profit and loss statement. Give the customer 7 days to provide evidence. Advise if evidence is not provided within the given timeframes, a decision will be made based on the information available and the application may be refused.

Where information indicates the customer's current income (annualised) may be higher than the Parenting Payment - single maximum basic amount, it is the customer's responsibility to satisfy they will not receive income above this amount, not for Child Support to prove their income is higher.

Is the customer's income equal to or less than the Parenting Payment - single maximum basic amount?

• Yes, the Service Officer is satisfied, consider whether it would be unjust and inequitable for them to pay the FAR. See Table 3
• No, the Service Officer is not satisfied, refuse the application. No further investigation is required, see Table 4

When a customer's income is equal to or less than the Parenting Payment - single maximum basic amount, Services Australia can accept the customer's application if it is also determined that it is unjust and inequitable for the customer to pay the FAR.

This means considering whether the parent has access to additional resources not considered in their income. The References page contains a link to the Child Support Guide 2.5.3: Application to have the Fixed Annual Rate of child support not used.

Consider whether the applicant has provided a plausible reason for their income being low, such as they are:

• supported by current partner
• a full-time student in high school
• a full-time university student
• under 25 and supported by their family
• in receipt of worker's compensation
• a prisoner (application for reducing a minimum assessment to nil can be considered at the same time)
• estimating and they are currently on income support, and
• on FAR due to low income (no income support) in the previous year but are currently on income support

Also consider whether the applicant:

• has an active ABN or links to partnerships, companies, trusts or any investment properties
• has substantial funds in cash savings or assets
• is meeting expenses that exceed their reported income

If the customer:

• has provided a plausible reason and none of the above circumstances apply, it would generally be unjust and inequitable for them to pay the FAR. Go to Step 3
• has any of the circumstances listed above, and/or the reason they provide for their low income is not included in the above list, go to Step 2

Note: the customer may have discretionary (disposable) assets, which means it would not be unjust or inequitable for them to pay the FAR. Significant cash savings, extensive investment portfolios, multiple rental properties, etc. might indicate the parent could afford to pay the FAR.

If a parent has such assets, determine whether the assets produce income. If the assets do, that income should be included in the calculation of the parent's current income (annualised). If the assets are not income producing, carefully consider whether they could be disposed of or drawn upon by the parent to release funds to pay the FAR. For example, if the parent has significant money in the bank, the parent could withdraw some of it to pay the FAR, if there are multiple rental properties, one could be sold and the funds used to pay the FAR.

Ask the customer the following questions:

• Why are you not in receipt of an ISP?
• How do you support yourself financially?
• Do you own any assets worth at least the current FAR amount? If so, what sort and what is their value?
• Do you have any money saved or invested, for at least the current FAR amount?
• What kind of accommodation do you live in?
• How much do you pay for accommodation costs?
• How do you meet these costs?
• Do you own a car or other vehicle, such as a motorbike or boat? If so, what sort?
• How do you pay for expenses associated with the vehicle?
• How do you pay utilities?
• How do you meet your daily living expenses (groceries, clothes, etc.)?

If the customer's answers to these questions suggests their expenses outweigh their reported income, or their lifestyle is beyond the means of their reported income, it may be decided it would not be unjust and inequitable for them to pay the FAR, despite their current income (annualised) being low. Similarly, if the customer has substantial funds that could be used to pay the FAR, it may not be unjust and inequitable.

Where a customer has received a lump sum payment, such as because of a compensation or disability settlement, consider whether this amount has already been counted in their ATI. Also consider the purpose of the payment and the customer's reasonable expenses. For example, if a customer received a redundancy payout and chooses not to find new employment until those funds are depleted, it may not be unjust and inequitable to expect them to still pay the FAR. Whereas, if a customer was injured and received a payment to cover their expenses for the rest of their working life, as they will never be able to work again, it likely would be unjust and inequitable for them to pay the FAR.

A customer may also receive non-cash benefits through their association with partnerships, trusts or businesses.

A self-employed person may have nil or minimal expenditure because all their personal expenses are met through their business.

Some people may be able to structure their income so their personal expenses are met through salary packaging, trusts, or other financial structures, such they report a low income.

People may also claim tax deductions which can be considered as non-cash benefits. For example, a self-employed person who has a home office can claim deductions relating to the family home. If these deductions are higher than what could reasonably be associated with the business, then these non-cash benefits must be included in the consideration of whether it would be unjust and inequitable for the customer to pay the FAR.

If the customer receives substantial benefits from structuring their affairs through their business, salary packaging, or financial structures, then it may not be unjust and inequitable for the customer to pay the FAR.

For example, if a customer's entire mortgage repayments are paid by their business, it is not unjust and inequitable for them to be assessed on the FAR because their reported income does not reflect the benefit they receive by structuring their affairs through their business. Another example could be where a customer's business pays 10% of their electricity bill because they operate a home office 5 days a week.

Farmers will usually have a link to a company or ABN, and should be treated in the same way as other small businesses. However, farmers may be drawing on different forms of income assistance that indicate they have genuinely limited resources. For example, they may be in receipt of Drought Relief or may be drawing on a Farm Management Deposit (FMD, formerly known as an Income Equalisation Deposit). A farmer may also be supported by their partner or may be increasing their indebtedness, and it may be unjust and inequitable for them to pay the FAR.

A customer, such as a self-funded retiree, may advise they have arranged their affairs so they can meet their living expenses from a very modest income. They may own their house and car and have limited expenses for those items. If a self-funded retiree is not using any income minimisation to report an artificially low income then it would likely be unjust and inequitable for them to pay the FAR.

If help is required to determine if it would be unjust and inequitable for the customer to pay the FAR, seek assistance from a SSO. Where a customer's financial resources are difficult to determine, a referral to CTP may also be appropriate.

If it is determined that it would not be unjust and inequitable for the customer to pay the FAR, refuse the application. See Table 4.

Contact with the other parent is not required.

When accepting an application for the FAR not to apply determine the date the FAR ceases to apply. This is normally from the first (even if this was in a previous child support period) unless:

• there was a specific event that caused the parent's income to drop below the Parenting Payment - single maximum basic amount, for example stopped work to start full time study, or
• there was a specific event that made it no longer just and equitable to apply the FAR, for example due to changed circumstances, customer sold their business that had been paying the mortgage and became eligible for income support, or
• using a date in the past would create an overpayment for the payee and the payer's failure to contact Child Support in a timely way means that it is not unjust and inequitable for the FAR to continue to apply, go to Step 5

Generally, a parent who meets the requirements for FAR not to apply to them will contact Child Support to discuss the amount they are required to pay, rather than paying the FAR. This is because they are unlikely to have sufficient income. Determining a date in the past for FAR to cease to apply will rarely create an overpayment.

However, in some cases the parent may not have been aware they could apply for the FAR not to apply, and/or enforcement action may have been taken to collect the amounts. For example, a parent may not have received income support in the last relevant year of income, but they now receive Centrelink benefits. Child Support may have been collecting up to 3 times the minimum payment from the parent's Centrelink benefits. This may occur if the parent was assessed to pay the FAR, and the parent may not have known to apply for the FAR not to apply (or may not even have known they were being assessed to pay the FAR).

If it is determined the FAR should cease to apply from a date in the past and this would cause an overpayment, consider whether the parent could have been expected to contact Child Support earlier. Consider whether:

• the parent was aware they were assessed to pay the FAR
• the parent understood they could apply for FAR not to apply to them
• there were any circumstances that made it difficult for the parent to contact us, for example extremely remote areas or incarceration

Previous letters and notices of assessment sent to the parent, as well as documented communication, may indicate whether or not the parent should have been aware of their options. If the parent was aware of their options and could have contacted Child Support but did not, then select a date that will not create an overpayment. If the parent was not aware of their options and/or could not reasonably have been expected to contact us, it will normally be appropriate to backdate the decision for FAR not to apply, even if this will cause an overpayment.

If help is required to determine the date from which the parent should cease to be assessed to pay the FAR, seek assistance from a SSO.

Document the decision in the Child Support Period window.

Document the decision using the FAR not to apply decision macro and copy it into a notepad on the Child Support Period window.

Note: the document reason must include the legislative reference used to make the decision.

For more detail about what to document see the Documenting Child Support information in Cuba.

Is the decision to accept the customer's application?

• Yes, go to Step 2
• No, the decision is to refuse the customer's application. Go to Step 3

See Apply FAR not to apply decision table of Fixed annual rate (FAR) not to apply Cuba Process Help.

Document the decision using the FAR not to apply decision macro.

Contact the customer to advise:

• the decision to accept the application
• the date from which the lower rate (either minimum or nil, depending on the percentage of care) will apply
• they will be assessed to pay the lower rate until the end of the current child support period and the decision for FAR not to apply will then be reassessed for the next child support period
• the decision can be amended at any time if new information is received

Document the conversations about the FAR not to apply acceptance decision with the customer in the Child Support Period window notepad.

Internationals - If the PP is overseas check to see if the case has been transmitted, this information is available in the International Transmittal window or the case notes.

If case has been transmitted create an International Stakeholder follow up intray, route to:
MC S003 Cent Auth TM 1
None Pool

Incarcerated Customers Team - If the payer is incarcerated follow the FAR not to apply application macro to accept and finalise the decision when speaking with the customer.

If the acceptance of an application for the FAR not to apply results in outstanding amounts owed by the payer or an overpayment to the payee, discuss this with each customer. See Debt repayment and Child support overpayments and other payee debt, for more information. Document any discussion regarding payments and collection in the Collection window.

See Apply FAR not to apply decision table of Fixed annual rate (FAR) not to apply Cuba Process Help.

Document the decision using the FAR not to apply decision macro.

Contact the customer about the FAR not to apply refusal decision and the reasons why. Advise them of their objection rights. See Contact with Child Support customers. An objection to the refusal must be in writing.

Advise the customer if they feel there are unique circumstances, which mean the FAR assessment is unfair, they can consider lodging a Change of Assessment application. Explain they would need to be able to establish one of the 10 COA reasons for their COA application to proceed. Complete the COA discussion if they wish to discuss this option.

Document the conversations about the FAR not to apply refusal decision with the customer in the Child Support Period window notepad

Document any discussion regarding payments and collection in the Collection window. See Debt repayment and Child Support overpayments and other payee debt.

When a FAR not to apply application is finalised, check the correct letter generates. See Step 11 in the Apply FAR not to apply decision table of Fixed annual rate (FAR) not to apply Cuba Process Help.

For information on how to view letters, see Letters Cuba Process Help

If a decision has been made for the fixed annual rate (FAR) not to apply, it can be later amended if:

• a customer's current income (annualised) is not equal to or less than the single parent pension, maximum basic rate(PPS), or
• it would not be unjust and inequitable for the customer to pay the FAR

The References page contains a link to the Child Support Guide 2.5.3: Application to have the Fixed Annual Rate of child support not used.

In making this decision:

• contact the customer to discuss their circumstances. See Contact with Child Support customers
• consider the customer's current income (annualised)
• check the sources of information discussed in Investigate income, and
• consider the customer's circumstances to determine if it would not be unjust and inequitable, see Table 3

An assessment can be amended from either:

• the date a customer's circumstances changed meaning the customer no longer met the requirements for FAR not to apply, or
• the date the FAR was first not applied, if the requirements were in fact never satisfied

If it is decided the assessment should be changed and the FAR reapplied, document the reasons for the decision in the Child Support Period window notepad.

See Amend FAR not to apply decision table of Fixed annual rate (FAR) not to apply Cuba Process Help.

• Contact the applicant to advise their assessment has been amended and they are now assessed to pay the FAR. See Contact with Child Support customers. Advise the customer of their objection rights. An objection to the amendment must be in writing.

When a FAR not to apply application is amended, check the correct letter generates. See Step 8 in the Amend FAR not to apply decision table of Fixed annual rate (FAR) not to apply Cuba Process Help

For more information see Letters Cuba Process Help.