Non-agency payment (NAP) 277-04230000

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Question and answer

1

How does Child Support treat an unallocated NAP when the assessment ends, the roles reverse, the case is suspended due to reconciliation or the parents move into private collection?

If an enforceable maintenance liability or assessment ends with unallocated non-agency payment, these amounts must disregarded. An unallocated amount paid within one child support enforcement period cannot be applied to future amounts that become payable in a different child support enforcement period.

For example, unallocated NAP cannot be carried over if:

• parent/s elect to end collection and later make an application to resume collection
• a parent moves to a non-reciprocating jurisdiction and later returns to Australia or a reciprocating jurisdiction, or
• parents separate again after a period of reconciliation

Unallocated NAPs cannot be carried over where there is a change in circumstances (e.g. change in care or income) which creates a role reversal. If a subsequent role reversal occurs and a parent returns to their previous role, an earlier unallocated amount cannot be credited towards the new liability because it is associated with a different child support enforcement period.

If a payee elects to move to a private collect arrangement, the payer and payee will have the option of delaying opting out of collection until no credit remains.

See section 107 and section 143 orders for Child support customers for information about actioning an s107 order where there are unallocated NAP.

2

How to treat unallocated prescribed NAP when an assessment has ended with arrears and parent is still regularly making payments towards arrears?

In an ended case, prescribed NAP amounts can still be credited towards the liability that arose after the prescribed NAP was notified to the agency. Prescribed NAP that were not previously credited for any period between the date of notification and the case ending can be credited provided that the payer makes catch up payments to meet 70% of the liability and the criteria for crediting a prescribed NAP is met.

3

Can a NAP be credited for a future liability?

Yes. When an amount is accepted as a NAP against an enforceable maintenance liability, it will be allocated against any current and future amounts payable. An intention to credit against future liabilities is not required.

4

Can money that the payer pays to the child be treated as a NAP?

No. Child Support can only credit amounts paid to the payee, or payments made to a third party to satisfy a debt of either or both parents. Therefore, Child Support could only credit an amount that the payer paid to the child if it was in repayment of a debt the payer or payee owed to the child. Also both parents would have to have intended that this be counted as child support.

5

Can a payer in a private collect case allow for payments that resemble prescribed NAP when paying the payee (in other words pay the payee 70% of the monthly liability)?

Yes. See Applications for child support to be collected for more information.

6

What if the payee claims to have been coerced into agreeing to the NAP?

Any type of NAP can be refused under section 71D if a decision has not yet been made.

If a customer says they were coerced into making a false statement to Child Support, gather as much evidence as possible. If it seems likely that coercion was involved, refuse the NAP. This decision must be made by a SO4 or above. If the NAP has already been accepted, suggest the customer lodge an objection. See References for a link to the Child Support Guide 5.3.1: Non-agency payments for more information.

7

If a NAP is disallowed under S71A can the payer object to the decision and ask for the NAP to be considered under S71C?

The payer can choose to do either - but not at the same time. If an objection to the NAP decision is disallowed the payer can then ask for the NAP to be credited as a prescribed NAP. Explain the benefits and drawbacks of each option:

• a payment claimed as a prescribed NAP can be processed this immediately, and
• an objection may involve an extended timeframe and resultant s71C credits cannot begin to allocate until after the objection process has been finalised

8

What happens to the previously credited prescribed NAP if the liability is later changed with a retrospective effect?

If a retrospective variation is made to a liability, whether it results in an increase or a decrease, the amount credited from a prescribed payment remains unchanged despite that the percentage of the allocated prescribed payment has changed.

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Examples and scenarios

1

Example 1

A payer has a current liability of $100 per month and owes $3,000 in arrears. A prescribed NAP of $2,000 is claimed in August (before July's liability falls due).

Scenario 1

The payer pays $70 in cash in September for the August liability.

$30 is automatically allocated from the $2,000 prescribed NAP and the arrears remain at $3,000.

The unallocated amount for the prescribed NAP reduces to $1,970.

Scenario 2

The payer does not pay anything in August, September and October. On 20 November the payer pays $280 (4 x $70).

$30 is automatically allocated for the October liability from the unallocated prescribed NAP amount.

Manual allocation is needed for the July, August and September liabilities (due in August, September and October). The arrears remain at $3,000 and the unallocated prescribed NAP amount reduces to $1,880.

Scenario 3

The payer does not pay anything in August, September or October but pays $1,000 on 20 November.

$30 is automatically allocated for the October liability from the unallocated prescribed NAP amount. Manual allocation is needed for the July, August and September liabilities (due in August, September and October). $280 (4 x $70) of the cash payment is applied to the $400 liability raised for July, August, September and October. $90 (3 x $30) of the prescribed NAP is manually allocated.

The remaining cash balance of $720 is applied to the arrears, reducing them to $2,280. The unallocated prescribed NAP amount reduces to $1,880.

2

Example 2

A prescribed NAP was reported and accepted in April 2015. The case has ended in June 2016 with arrears.

Prior to the case ending, the Prescribed NAP were automatically allocated every month, except January and February 2016, when the payer has not paid the required 70% of the liability. During this period the payer did not have at least regular care of any of the children of the assessment.

In August 2016, the payer has made a catch up payment, sufficient to cover at least 70% of the liability for January and February 2016. There is the discretion to credit Prescribed NAP for these months, up to 30% of the liability for January and February 2016.

As prescribed NAP were previously credited for all other periods between April 2015 and June 2016, the payer is not entitled to further prescribed NAP credits, after the missed credits for January and February 2016 are allocated.

See References for a link to Section 71C(4) of the Child Support (Registration and Collection) Act 1988 on the References page. This allows discretion to apply a credit where the payer did not pay the amount required for that period on time but subsequently pays it.

Note: Service Officers should consult with their Service Support Officer before manually crediting prescribed NAP in ended cases.