Debt offset (CS) 277-04110000

Before processing any debt offset all assessments and the debt must be correct. Ensure that:

• there are no outstanding NAP, see Non-agency payment (NAP)). If there is a prescribed NAP credit the offset must be carefully considered so that neither customer is disadvantaged. A debt offset is treated as a payment collected and paid to the payee for the purpose of a prescribed NAP - and allows a prescribed NAP credit to be applied if the other prescribed NAP rules are met
• there are no outstanding objections, Administrative Appeals Tribunal (AAT) applications, or other appeal actions underway, see Child Support Objections
• no change of assessment applications are in progress, see Change of assessment in special circumstances or Capacity to Pay (CTP) Child Support
• care details are correct in both cases, see Change in child support care levels from 1 July 2018 (15 May 2019 for WA Ex-nuptial cases)
• correct incomes have been used for customers in both cases. Any default incomes should be replaced with more accurate incomes where possible, see Income processing for Child Support customers
• the debt is legally recoverable, particularly overpayments and
• any estimates have been considered for review or reconciliation, see Child support estimates

A customer may be contacted after identifying that a debt offset is possible. Debt offset may also be raised when speaking to the customer about other issues.

In either situation the following issues must be discussed with both customers:

Family Tax Benefit (FTB)

Customers in receipt of FTB must be advised any child support debts which have been offset will be treated as normal payments. This means the customer’s FTB will be calculated as if they have received the payment in cash. It is important to advise customers in receipt of FTB that they need to discuss the implications of debt offsetting on their Centrelink payment - offer to warm transfer the customer at the completion of the call.

Child Support does not share information about repaying overpayments with Centrelink.

Other collection action

Advise customers that in addition to the debt offset arrangements, other collection action may be taken. Tax refunds can be intercepted unless Child Support is contacted to discuss hardship. Where capacity to pay is identified, collection action such as employer withholding and Centrelink deductions may also be considered.

Review existing debt offset arrangements and overdue amounts before making a decision to take additional collection action as it may not be appropriate to do so for the customer with the smaller debt.

If an ongoing Debt offset is applied for the full child support entitlement, the new payee’s capacity to repay the debt as soon as practical needs to be assessed in accordance with the Capacity formula on the Resources page of Debt repayment procedure.

The new payee’s child support entitlement is not considered adjusted taxable income in the Capacity formula. The offset amount is in addition to the amount determined via the Capacity formula.

Note: the offset amount is not subtracted from the payment arrangement amount. See example in Debt offset.

No objection rights to a decision to offset debts

Advise customers they do not have objection rights to a decision made to offset debts. Customers must be advised they may apply to a court under the Administrative Decision (Judicial Review) 1977 Act for a review of the decision if they are unhappy with the outcome.

Circumstances of the case and both customers will be considered when deciding to offset debts ensuring both customers:

• are aware of the information that will be considered when making a decision, and
• have the opportunity to provide information to ensure an appropriate decision is made

All customer discussions including all details of amounts offset and decisions to offset future liabilities must be fully documented in the notepad on the Debt Offset window.

Will a debt offset be applied?

• Yes, go to Step 4
• No, go to Step 6

Record a new debt offset. See Debt Offset Cuba Process Help. A Debt Offset Indicator will be placed on the Customer window.

For overpayment debt offsets, one-off offsets are the only available option.

Record a special recovery condition using the condition Client Agreement for both customers in the Recovery Conditions window to prevent automated collection action, for example TRIPs, Centrelink deductions. This will ensure a manual review to determine if collection action is appropriate.

Once the debt offset is processed, letters must be sent to both customers to confirm the debt has been offset and explain any ongoing offsets.

Cuba does not automatically generate debt offset letters and manual letters and unique letters must be sent through the Letters Detail window in Cuba.

If the debt offset consists of the full amount of the ongoing monthly liability:

• UQ80.0 Debt offset - full amount of liability - payer letter
• UQ80.01 Debt offset - full amount of liability - payee letter

If the debt offset consists of a combination of a one-off lump sum and full amount of the monthly ongoing liability:

• UQ80.02 Debt offset - One off lump sum and full amount of liability - payer letter
• UQ80.03 Debt offset - One off lump sum and full amount of liability - payee letter

If the debt offset consists of a one-off lump sum because both cases have ended or it is an overpayment offset:

• UQ80.12 Debt offset - One off lump sum overpayment

For help creating unique letters see Letters Cuba Process Help.

Customer agreement to debt offset

A customer can request a debt offset be changed or stopped, but it is Child Support's decision to do so or not.

Whether or not the customers agreed to the offset, the letter to each customer must include the following advice.

‘…may apply to a court under the Administrative Decisions (Judicial Review) Act 1977 for a review of the decision if they are unhappy with the outcome.’

If the decision is made not to proceed with a debt offset:

• the decision and reasons for the decision must be fully documented, and
• the DEBTOFFS intray must be manually deleted

Sent the following unique letters to the customer advising them of the decision:

• UQ80.10 Debt offset - decision not to offset - payer letter
• UQ80.11 Debt offset - decision not to offset - payee letter

For help creating unique letters see Letters Cuba Process Help.