Collection of child support debts through third parties (s72A and s72AC) 277-04100000

Make sure contact has been made or attempted as appropriate with the customer. See Contact with Child Support customers.

Consider third party collection if:

• the customer has a relevant debt, and
• there is an identified source of funds, and
• deductions from salary or wages, or relevant income support payments is insufficient to satisfy the debt, and/or
• collection through this source will recover unpaid amounts in the shortest possible time

See References for a link to the Child Support Guide 5.2.8 Tax refund intercepts for the definitions of 'relevant debt'.

Customers are aware of amounts due payable and overdue. Customers are also informed of the consequences of non-payment when they speak with us, by receiving a letter, or through information available on our website.

If the circumstances are appropriate to take action, and you are unsure if the customer is aware of the payment and consequences, you must discuss this with your Service Support Officer (SSO) or Team Leader first. See Technical support in Child Support

Note: garnishee from other sources can occur even if employer withholding (EW) and employer withholding arrears (EWA) is in place. Investigate each case to decide if additional third party collection is appropriate. Document all discussions about debt and payment arrangements in the Collection window using the Collection and debt macro.

Section 72A notices must not be issued to collect:

• Income Support Payments administered by Centrelink, when this is the only income source
• National Disability Insurance Scheme (NDIS) payments
• National Redress Scheme payments
• ABSTUDY payments administered by Centrelink
• Department of Foreign Affairs and Trade (DFAT) payment
• These payments are financial support issued to vulnerable Australians who are currently overseas and have been unable to return to Australia, either because they cannot afford flights or flights are not available
• Status Resolution Support Services (SRSS) Program payments, or
• Unrestricted Non-preserved Superannuation (UNPS), unless the customer has elected to cash these amounts
• Self-Employment Allowance payments when this is the customers only source of income
• Self-Employment Assistance is a Department of Employment and Workplace Relations (DEWR) program. The program is for unemployed people who wish to start their own independent business
• Self-Employment Allowance may be identified through an ATO system search or s120 response from a financial institution
• DEWR will not comply with s72A notices in this circumstance
• A s72A notice may be issued to the bank account to which Self-Employment Allowance payments are made provided the account belongs to the customer

When considering garnisheeing a bank account, close attention must be given to the s120 response including transaction statements to determine:

• if any of the above payments have been deposited in the account,
• if the account is a specific NDIS account,
• if a s72A notice will be effective against the type of funds or account type
• the identity of the account owner/signatory matches the customer information recorded in Cuba

See Updating Child Support customer information if changing or updating the personal and protected information of a customer.

Types of funds against which a s72A notice issued to a financial institution will not be effective:

• Company bank accounts even if the customer is the sole signatory to the account, or sole director or shareholder of the company
• Credit card accounts. Positive credit balances may be recoverable depending on the contractual arrangements between the financial institution and the debtor
• Excess funds paid onto a loan
• Joint bank accounts
• Partnership bank accounts
• Trust accounts where the customer is the trustee for funds held for the benefits of others

Note: What funds can be attached? lists examples of the types of funds against which a section s72A notice may or may not be issued.

Information about a source of funds can come from:

• customers
• other government entities – ATO, Centrelink, Medicare, DVA etc.
• information already held on the system
• direct access searches
• employers/contractors current and past
• financial institutions
• accountants and solicitors
• real estate and settlement agents
• share registries
• gambling bodies
• other third parties who may hold or transfer monies on behalf of a person, such as AUSTRAC

See External Searches Guide.

Has a possible source of funds been identified?

• Yes, go to Step 4
• No, collection through third parties is not an option at this time. Procedure ends here

Review the case to see if the debt is correct.

Is the debt an overpayment?

• Yes, make sure the overpayment is legally recoverable. Follow the process in Child support overpayments and other payee debt
• No, check:
• intrays indicating incomplete work, for example NAPs and estimates
• the care level is correct in the assessment
• assessments based on non-ATO incomes have the best available incomes used. See Income processing for Child Support customers
• pending Change of Assessment or Objection decisions, and
• unreconciled estimates. If appropriate and where possible, reconcile these estimates

The Service Officer must be satisfied the debt is correct before issuing a notice to a third party. This ensures Child Support does not take money unless warranted.

Action to garnishee funds can be taken when the information gathered identifies, or gives a reasonable belief, that the person (third party) within Australia:

• holds or controls funds for a customer, and
• the amount of funds available will satisfy the debt, either partially or in full

Is more information required before taking garnishee action?

• Yes, contact the third party via phone or issue a s120 notice. See Child Support’s information gathering powers
• No, consider if it is appropriate to issue either a:
• s72A notice, see Table 2
• s72AC notice, see Table 3

Notices for collection through third parties are issued under s72A of the Child Support (Registration and Collection) Act 1988.

Note: make sure only one s72A notice is active for the same third party at any time. This provides the third party with clear obligations.

A s72A notice may be issued for:

• a lump sum, go to Step 2
• a periodic amount, go to Step 3
• cents in the dollar, go to Step 4

Lump sum notices are appropriate when the identified funds are:

• greater than $100, unless the case has ended or has a low liability and debt has accrued over a substantial period of time
• available once only, such as proceeds from a sale of a house or a compensation payout, and
• likely to become unavailable in the future. For example, funds in a bank account

Section 72A notices sent to financial institutions for money held for a customer must be issued for a lump sum amount only.

All Service officers manage Simple lump sum opportunities, such as garnishee of bank accounts.

The Lump Sum team, manage Complex/urgent lump sum opportunities requiring ongoing management. See the Customer Referral Guidelines > Lump sum opportunity.

For urgent referrals, make at least one (1) contact attempt by phone to all available numbers before completing the referral. If a complex lump sum referral does not meet the criteria, email National ICS for escalation

A s72A notice may be issued for less than the amount of the total debt. This may be appropriate when issuing a lump sum notice to a financial institution and:

• the customer's bank account balance is less than the total debt, or
• regular withdrawals such as rent or mortgage payments will occur, or
• there is no identified income source and the funds in the bank account appear to be meeting immediate essential living expenses, or
• deductions are being made from the customers pay (EW/EWA and the funds available are equal to or less than the regular salary/wage deposits (to avoid duplicate collection action of salary/wages), or
• only ‘unclaimed funds’ are being recovered – the notice must be issued in the amount of the identified unclaimed funds, and not for the total debt amount

In these circumstances, speak to your Service Support Officer (SSO) or Team Leader before issuing the lump sum s72A notice. This allows appropriate consideration of the customer’s capacity to meet their necessary living expenses. See Technical support in Child Support.

Note: banks may charge their customers a fee when they comply with a s72A notice. Customers must speak with their bank if they dispute or are dissatisfied with a fee imposed. Services Australia has no control over the imposition of bank fees. Customers can avoid these potential fees by making their payments on time.

For a s72A notice issued for funds held in a term deposit account, the timeframe for the bank to comply is subject to the terms and conditions of the product. A unique Term Deposit schedule may be issued to request the terms and conditions of the term deposit account to decide if funds can be accessed and payable on demand before the maturity date. Email Financial Institution Liaison.

Go to Step 5

Issue periodic amount notices when EW is not appropriate and the source of funds:

• will replenish at regular intervals, and
• at regular rates

Examples of EW not being appropriate:

• The customer is a subcontractor, or
• Protected earnings amount (PEA) restrictions prevent EW due to low earnings

Set the periodic amount at the upper amount of the acceptable range whenever negotiating debt repayment is unsuccessful.

Note: PEA does not apply to section 72A. When garnisheeing regular payments from a sole source of income, carefully consider the amount requested so that the customer is not placed in undue financial hardship. Some contractors are subject to EW.

Go to Step 5

Issue cents in the dollar notices when the funds only become available at irregular intervals.

Examples of funds being available at irregular intervals:

• Customer is a casual employee and employer withholdings is not an option due to protected earnings or
• Customer lodges invoices for payment either at irregular intervals and/or for irregular amounts

Set the cents in the dollar amount at the upper amount of the acceptable range whenever negotiating debt repayment is unsuccessful.

Note: PEA does not apply to s72A. When garnisheeing regular payments from a sole source of income, carefully consider the amount requested so that the customer is not placed in undue financial hardship.

s72A notices may be issued in relation to a customer who is currently incarcerated.

Remove prisoner identification from the About customer and Customer address sections to maintain the customer’s privacy. See Step 14 in Table 1 of Section 120/161 notice Cuba Process Help to action this in Cuba.

If the third party requires an address to identify the correct customer, in Customer address, manually add the previous address (address before incarceration).

Issue a s72A notice through the Collection window. See the Issue section 72A, 72B and 72AC notice table.

If unable to locate the organisation do not create or modify the Organisations on Cuba. If an organisation has a Ceased, Insolvent or Duplicate status, consider if it is appropriate to issue the s72A notice.

If a new organisation is needed, use the Add attributes request macro to request the creation of the new organisation.

For urgent creation of new organisations and/or the addition of attributes, contact the ES queue line. Use Services Australia Workspace, select Employer Withholding in the corporate directory. The Managed Telecommunications Services Task Cards and Quick Reference Guides page contains task cards for Services Australia Workspace.

Liability due but not yet payable

In some circumstances it is appropriate to include the liability for the current month that is due but not yet payable in the notice. Consider the payment history and if the amount due will be paid on time.

Record decision using the Collection and debt macro, which includes the following:

• identified or anticipated source of funds
• contact with the customer
• negotiation with the customer
• reasons for the proposed issue of the notice, and
• any other details relevant to the decision

Note: a warning message will appear if the customer has a current alias. The alias may need to be included on the notice/s.

The s72A notice will automatically issue through Cuba to the third party.

In exceptional circumstances, Service Officers may need to fax the notice to ensure prompt attention. For example, where there is a risk that the funds may move.

Make sure the fax receipt shows a confirmed status.

Only fax a notice to the recipient if they have agreed to receive them in this manner. After faxing the notice, mail the original notice issued via Cuba. See Letters for Child Support customers.

Consider personal service directly on a third party where prompt action is necessary or there is some risk with compliance. The officer serving the notice should identify the served person and record all details in a sworn affidavit of service. The References page contains a link to the Child Support Guide 6.7: Service of documents.

Cuba will automatically send a copy of the notice to the customer 10 days after issuing the notice to the third party.

Note: some employers and financial institutions have their notices sent electronically via Child Support Business Online Services.

Cuba automatically issues the following letters:

• CE08-1 - Section 72A notice to 3rd party
• CE011-1 - Withdraw Section 72A Notice
• CE012-1 - Copy of section 72A notice to Payer

Service Officer action

Issue a direct request for information to confirm a customer with debt is in receipt of a Veterans' pension or allowance that can be garnisheed.

An amount up to 3 times the minimum annual rate of child support (calculated as a fortnightly rate) may be requested from the customers DVA pension and benefit. The amount requested addresses either the ongoing child support and/or any debt.

The References page contains a link to the Child Support Guide 5.2.7: Collection from veterans’ pensions and allowances.

Issue a s72AC notice if:

• the customer refuses to enter an arrangement to address their child support debt, or
• contact attempts have been unsuccessful, or
• the customer requests that deductions start

Note: do not deduct from customer’s DVA pension or benefit if already deducting from their Centrelink benefit for ongoing or overdue child support. If the deduction from Centrelink stops, start collecting from the customer’s DVA pension or benefit.

A s72AC notice can only reflect a periodic amount. The periodic amount requested will be determined by the:

• type and amount of DVA pension or benefit the customer is receiving
• number of the customer’s collect cases, and
• amount of overdue child support and/or overpayment

If the customer later contacts Child Support seeking a concession to this amount, see Income Support Payment (ISP) concession for Centrelink deductions.

To request a s72AC notice:

• pend a s72AC request to generate a 72ACPEND intray
• send an email outlining the collection action to National ICS

Search Officer action

Search Officer receives the email advising of the 72AC PEND intray:

• review the case to make sure:
• all negotiations and/or contact attempts with the customer have been made
• debt correction has taken place
• all other collection avenues are exhausted
• a request for an appropriate periodic amount has occurred, and
• Child Support is not collecting child support through a Centrelink deduction
• when satisfied the request should proceed, finalise the request on Cuba:
• a CE08-3 Section 72AC Notice generates and will be set to keyed
• save and email the notice to National ICS
• National ICS will forward the notice to the DVA income support payments team

Create a Recovery Action Initiated intray. Monitor for a response from the Search Officer to confirm deductions request outcome.

If a deduction request is established, finalise all outstanding issues while waiting for the first payment form DVA. Payments should be received within 21 days from emailing the garnishee.

See Section 72A, 72B and 72AC notices Cuba Process Help.

Service Officer action

If a Service Officer determines it is appropriate to withdraw the s72AC notice, send an email requesting the withdrawal of the s72AC notice to National ICS.

• review the request. Withdraw the notice if appropriate
• see Section 72A, 72B and 72AC notices Cuba Process Help
• if notice is withdrawn:
• save and email the withdrawal notice to National ICS
• National ICS will forward the notice to the DVA income support payments team

A notice remains in force until complied with in full or withdrawn in writing. A third party may need to make one (1) or more payments to comply with the notice. Sometimes a future event such as sale of property needs to occur before compliance can occur.

Lump sum notices

It is important to monitor lump sum s72A notices issued to financial institutions. When giving effect to a notice, a financial institution may ‘freeze’ the customer’s bank account(s), particularly when there is insufficient funds to satisfy the amount requested on the notice.

Consider an urgent withdrawal from a financial institution if the customer raises concerns that restricted access to their account prevents them from meeting necessary living expenses. Go to Step 3

Where a notice is in force all variations must be actioned promptly and the notice reissued accordingly.

If correcting or amending the debt:

• withdraw the current notice, and
• issue a new notice reflecting the new debt amount

If the customer makes a voluntary payment, contact them by phone:

• acknowledge the payment, and
• discuss the debt and the options for repayment, and
• withdraw the current notice, and
• if appropriate, issue a new notice for the updated debt amount

See Debt Repayment.

A 72A Review Intray generates when there has been a reduction to the child support debt since the original notice was issued. To action check the account for any reductions.

If there has been a reduction:

• contact the customer
• withdraw the notice and reissue a new 72A notice

Note: periodic amounts or cents in the dollar notices only need to be withdrawn or reissued if the variation to the debt does not relate to a payment made by the persons complying with the notice.

A s72A notice not issued through the Collection window will not generate a 72A expiry review intray. A manual review of these notices is required.

A s72A notice already issued must be withdrawn in writing after 3 months if:

• the customer is no longer employed with the named employer:
• and the employer verbally notifies of the unemployment. Ask the employer for the customer’s contact details and any new employment details
• Employer Services Service Officers will complete the Employer Withholding (linking) macro and document the information in the Collection window
• there is no activity on the bank account, unless it is a term deposit or similar that has not yet matured
• the named third party has finalised all financial interests with the customer, for example, a property settlement

Service Officer (SO3) or above are authorised to withdraw a s72A notice. Only withdraw a notice after considering the reason for issue and the customer’s circumstances. If unsure about a decision, seek help from an SSO.

Place a Hold on the customer’s account if funds were remitted prior to the withdrawal, where a possible refund due to financial hardship is being considered. Contact a Service Support Officer (SSO) to have the payment put on hold with the reason Hardship (s72). See Technical support in Child Support.

Is there evidence suggesting the third party is deducting but not remitting the deductions to Child Support?

• Yes, consider the relationship between the customer and the third party:
• Is the relationship between them that of a closely held entity? For example the customer has a personal relationship with the third party or holds a position within the business
• Email the Tip off analysis unit to start a discussion about whether to withdraw the s72Abefore referring for investigation
• No, withdraw the notice

If withdrawing and re-issuing a s72A to same third party, contact the third party to explain payment requirements.

If the s72A notice is withdrawn and the customer still has outstanding child support or an overpayment, explore further options to recover the child support debt.

Urgent withdrawal from a financial institution

For an urgent withdrawal of a s72A notice issued to a financial institution, see Contacting and following up notices to financial institutions in Banks and organisations.

If the debt has been paid in full after the notice is issued:

• contact the customer by phone to advise the debt has been paid and
• immediately notify the third party and withdraw the notice in writing

Note: debts paid in full due to compliance with the s72A notice do not need to be formally withdrawn if the notice has been satisfied by the party it was issued to. Withdraw the notice if the debt has been paid by a Tax Refund Intercept Process (TRIP), Non-agency payment (NAP), account adjustment, customer etc, otherwise the third party will keep making deductions, not knowing the debt is satisfied.

Issue new notice

If the notice is issued against a future settlement, monitor the debt closer to the time of settlement. If necessary, withdraw the original notice and issue a notice reflecting the updated debt balance.

Contact the third party to make sure they understand the new amount to withhold.

A s72A periodic notice is satisfied when the total amount the notice is issued for is paid in full. Where debt continues to accrue, new notices will need to be issued on a regular basis.

See Section 72A, 72B and 72AC notices Cuba Process Help.

A S72A DDN RCD NO DEBT intray generates on the customer's record when:

• an employer reports a section 72A deduction via STP, and
• the customer does not have a debt

Note: this can also occur when the employer reports the wrong deduction type through STP (Employer Services will have contacted the employer to rectify this).

To action the intray:

• check a s72A was issued (in case the employer has reported the incorrect deduction type). If so, delete the intray and document why, or
• check the debt has been paid in full, and:
• Confirm the amount paid via s72A in the Payer Account Summary window
• Notify the employer and withdraw the s72A notice if required

Note: debts paid in full due to compliance with the s72A notice do not need to be formally withdrawn if the notice has been satisfied by the party. Withdraw the notice if the debt has been paid by a TRIP, NAP, account adjustment, customer etc, otherwise the third party will keep making deductions, not knowing the debt is satisfied.

Contact the employer if they fail to comply with the s72A notice by the due date.

How to follow up non-compliance of a s72A notice depends on whether the employer is:

• locked to an Employer Services Service Officer (ESO), or
• has customers linked, or
• reporting s72A deductions being reconciled by Employer Services

Check the employer record to see if the employer record is locked to an ESO or the customer is linked.

• Complete a search to locate the organisation record. Open the organisation record
• check if the details of an ESO is recorded in the Owner Details field
• if there are no ESO details, select the close button to be navigated to the Organisation List screen
• From the Organisation List screen:
• look at the EW PYR column
• a number in the EW PYR column indicates the number of payers linked
• if this column is blank, there are no payers linked to the employer
• From the Payer Account Summary screen:
• go to Go/Payer EW enquiry. If this shows current s72A deductions, Employer Services manage the employer

Is the employer managed by an ESO or have customers linked for deductions?

• Yes:
• create an Organisation Follow Up intray
• document a request to follow up compliance with the notice
• No:
• promptly make 3 contact attempts. Source alternate numbers for the responsible officers to establish the reason
• document all contact attempts in the Collection window and Employer/Organisation Communication window

If a third party fails to comply with the notice, make 3 contact attempts to establish the reason.

Document all contact attempts in the Collection window.

If the third party is a financial institution, see Contacting and following up notices to financial institutions in Banks and organisations.

Go to Step 4.

Make sure the person understands the requirements and encourage them to comply with the notice voluntarily:

• Confirm they received the notice. If not received, reissue the notice after confirming the address for service of the notice
• Make sure the person being spoken with has the appropriate authority. For example notices issued to a Pty Ltd company, speak to the Public Officer
• Ask for the name (and title if relevant) of the person being spoken with and document this information

If the person expresses concern about their obligations to the customer, tell them:

• that under Child Support legislation, they are taken to be acting under the authority of the customer
• the third party is indemnified for any money they pay in line with the notice
• this means the customer cannot prosecute the third party for complying with the notice

If the person remains uncooperative, remind them::

• they may be ordered to pay the amount they failed or refused to deduct. This includes if they no longer hold funds for the customer
• there is a $2,100 penalty for non-compliance

Refer the third party for prosecution if they:

• will not comply with the notice
• make it clear they will not comply, and/or
• have passed the money to the customer

Make contact attempts with the non-compliant recipient of the following notices:

• EF1
• s72A
• s120, or
• s161

If an Organisation fails to remit in response to a s72A notice, report the failure in the Report Suspected Fraud system. See Report Suspected Fraud and Corruption.

If an organisation fails to deduct in response to a s72A notice, or has not provided information in response to a EF1, s120 or s161 notice:

• refer the case to Employer Services if:
• there is an indication of no intent to respond to/action the notice, or
• the required contact attempts are unsuccessful
• complete the Non-compliance with notice referral template. Copy the information into a General Follow Up intray (for customer) or an Organisation Follow Up intray (for employers) titled 'Non Compliance With Notice' and route to:
• Region: NATIONAL OFFICE
• Office: NATIONAL OFFICE
• Stream/Team: MC SEW NAT EMP SERVICES
• Position: A – ES LEGAL NOTICE GATE

Employer Services will:

• reissue the notice with the appropriate signature
• make sure the notice is correctly addressed, and
• monitor for 14 days

If the notice is not complied with, Employer Services will:

• report the suspected fraud
• document the reported suspected fraud on the Client Profile window

Where the person is deducting under a s72A notice but fails to remit these deductions:

• withdraw the s72A notice, and
• report the suspected fraud