Debt repayment 277-04120000
Expand allAutomated Message – Consequence Statement
When selected from the Services Australia workspace, customers will be played the automated message:
‘Thank you for discussing your child support payments with us.
Child support must be paid regularly and on time. If you have a debt, you must repay this immediately, or as soon as possible. Failure to do this can result in action being taken to recover payments without further contact. This can include:
- investigating your financial circumstances and collecting from accessible funds
- collecting from salary and wages or social security payments
- intercepting tax refunds
- taking legal action against your assets, and
- preventing you from leaving Australia
Remember late payment penalties may apply. If you are unable to make a payment on time, you must contact us to discuss your options.’
Capacity formula
The capacity formula is only to be used once it is fully explored whether the customer can pay in full or within 3 instalments. The Collection and debt macro must always be used to calculate the customer’s debt repayment capacity and the acceptable range for repayment.
How the capacity formula is determined
Table 1
|
Key |
Capacity formula components |
Effect on the capacity formula |
|
A |
Adjusted taxable income |
Adjusted taxable income The income used in the customer’s assessment. This is generally the Adjusted Taxable Income, which includes other income amounts from the last relevant year of income. Current income must be used where information indicates it is significantly greater (>5%) than the adjusted taxable income reflected in the assessment. If the customer has multiple cases with different adjusted taxable income amounts use the income that most accurately represents their current capacity. |
|
B |
Less: Self-support amount |
Self-support amount The self-support amount is 1/3 (Male Total Average Weekly Earnings (MTAWE) to recognise customers need a level of disposable income for ordinary living expenses. The Collection and debt macro automatically calculates the amount. |
|
C |
Less: Relevant dependent child amount |
Relevant dependent child allowance Allowance provided to recognise the cost of supporting relevant dependent children (where applicable). |
|
D |
Less: Cost of children based on care |
Cost of children based on care Allowance made for the cost of children (while in the customer’s care), based on the level of care (total cost of child x cost %). This amount is calculated by multiplying the cost of child amount by the customer’s cost percentage for each child. Use the cost percentage relevant to the role of the customer with the debt. |
|
E |
Less: Child support annual rate |
Child Support annual rate Allowance for the annual rate/s of child support payable based on the current assessment/s. If there are multiple liabilities, then all annual rates are deducted. |
|
F |
Less: Tax payable |
Tax payable The approximate amount of individual tax required to be paid based on the customer’s taxable income. The Collection and debt macro automatically calculates the amount. Do not enter additional amounts such as HECS/HELP debts or the Medicare levy surcharge. |
|
G |
Equals: Disposable income |
Disposable income The amount that represents a customer’s capacity to pay their child support debt/overpayment, after taking into account the necessary expenses listed above (B, C, D, E and F). |
|
H |
Acceptable range |
Acceptable range If the customers adjusted taxable income is:
The lowest acceptable arrangement for customers not in receipt of an income support payment is 3 times minimum weekly rate. COVID-19 provision (until 30/11/2021) If a customer’s adjusted taxable income is $66,667 or higher, the interim acceptable range is:
If a customer’s adjusted taxable income is under $66,667, the interim acceptable range is:
Customers must apply for hardship if they are still not able to establish a payment arrangement. |
Capacity formula for international cases
For some international cases, 1 or more component of the capacity formula may not be available in Cuba, for example, where the registration is based on an international assessment or court order.
Gather information that allows a reasonable determination to be made of the customer's disposable income as follows:
- ask the customer for their current income - for overseas incomes use the most recent exchange rate, that is, for today to convert the income to $AUD, and
- ask the customer about any children in their care - manually calculate the cost of children based on the amount of care or a relevant dependent child amount using the Child support formula calculators
Capacity calculator
Note: this is an estimation tool only and must not be used with customers.
The capacity calculator is a separate product designed for training purposes, or to complete estimations of disposable income and acceptable repayment range amounts. For example to complete hypothetical calculations when preparing for outbound contact.
The Collection and debt macro must be used when discussing debt repayment as this will calculate the disposable income, acceptable payment range and create approved documentation for Cuba.
Open the Debt repayment - capacity calculator.
Letters generated when a payment arrangement is created, amended or ended
Table 2
Debt repayment - Frequently asked questions
Table 3
|
Item |
Description |
|
1 |
What does ‘total debt’ mean? A customer’s total debt is their outstanding child support debt or carer (overpayment) debt plus child support related debts, which includes:
When negotiating a debt with a customer their total debt is the amount that is negotiated. This includes when Service Officers require approval for a payment arrangement/EWA beyond their delegation. |
|
2 |
Is there a maximum timeframe to wait for receipt of a lump sum payment? No - there is not a rule for a maximum timeframe. A Service Officer must use their judgement to determine what is reasonable based on the customer’s circumstances. If there’s a chance that payment in full could take a while to come through, negotiate an arrangement within 3 instalments or an ongoing arrangement in the meantime. |
|
3 |
How is an arrangement for a lump sum plus instalments in Cuba processed? When creating a new payment arrangement, record the lump sum and the instalment amount as part of the same arrangement. See Payment arrangements Cuba Process Help. |
|
4 |
What if a customer’s current income is higher than the adjusted taxable income? If information suggests the current income is higher, for example, more than 5%, use the new income. The new income gives a better reflection of a customer’s capacity to repay their debt. |
|
5 |
What if their current income is less than the adjusted taxable income, but the decrease is not enough for an estimate? Service Officers must continue to use the adjusted taxable income from Cuba. In this instance, if the decrease will have an impact on the capacity calculations, the Service Officer can use discretion to determine an acceptable range of disposable income to negotiate a suitable payment arrangement. Tell the customer they can apply for a Change of assessment in special circumstances to address their income issue. |
|
6 |
What income is to be used in a multi-case situation, if the cases each have different incomes recorded? Use the income that would provide the most accurate reflection of the customer’s capacity. |
|
7 |
If a customer says they have a HECS/HELP debt or higher Medicare levy surcharge, must this be added to the tax payable amount? No. It is important that the standard capacity formula is not 'tweaked' for allowances like HECS/HELP debts, higher Medicare levies, etc. The tax payable calculation is a standard amount and there will always be some customers who pay more/less tax than this. If a customer cannot afford to pay within the range, explore financial hardship. |
|
8 |
What about customers with overseas assessments, where some of the information needed for the capacity formula is not available in Cuba? Some of the information used in the capacity formula may not be available in Cuba for international cases. See Capacity formula for international cases. |
|
9 |
Where did the acceptable range come from? The acceptable range has been determined through research on how other institutions and government departments determine 'acceptable’ repayment amounts. The National Intensive Collection Services Team have also reviewed the characteristic of cases with sustainable and successful payment arrangements. |
|
10 |
Where can more information about the capacity formula be found? Capacity formula on this page has detailed information about each element of the capacity formula. |
|
11 |
Will existing arrangements that do not fall within the acceptable range be reviewed? As part of improving collection in Child Support, customers will continue to be proactively selected for collection action. This will include looking at when existing payment arrangements must be reviewed - taking into account how long it will take to repay the debt, changes in circumstances, new collection intelligence, etc. |
|
12 |
If staff take a call from a customer with a payment arrangement below the acceptable range do they need to review it? Review payment arrangements at every opportunity – particularly if they have been in place for some time. This does not always mean there will be a change to the current arrangement. Discuss the customer’s circumstances to establish if their capacity to pay has changed. If a parent has the capacity to pay more, renegotiate the arrangement. Child support’s aim is to recover debt in the shortest possible time. |
|
13 |
A staff member has negotiated payment in instalments for a debt beyond their delegation and the amount is within the acceptable range. Do they still need to get approval? Yes. Financial delegations to negotiate debt repayment in instalments are set out in section 5 - Debts in the Accountable Authority Instructions (AAIs) and Financial Delegations . They must be followed, even if the amount that has been negotiated is within the acceptable range.
|
|
14 |
When is it appropriate to select ‘Yes’ to Customer Contact when processing a payment arrangement, including EWA and overpayment? Select ‘Yes’ to Customer Contact when the customer:
‘No’ must be selected when enforcement action is being taken, including where the customer has refused to repay the debt, or when contact attempts have been unsuccessful and a letter has not been issued. Selecting ‘Yes’ or ‘No’ to customer contact changes the wording in the Payment Arrangement letter:
|