Non-pursuit of employer Child Support debts 277-04250000

The employer’s debt may be suitable for non-pursuit if they:

• have ceased to trade
• have finalised notification of dividends paid/organisation deregistered, or
• are listed on an Aged Debt report

Before a debt can be considered for non-pursuit ensure:

• the debt is correct,
• check that top up was applied correctly,
• that is, a valid notice is in place, and the deduction has not been paid
• if not, seek assistance from a Service Support Officer (SSO) to determine if a downward adjustment to recoup the top up is appropriate, and
• all appropriate collection options have been investigated

Ensure attempts have been made to:

• enter into a payment arrangement see Employer/Organisation debt repayment, and
• recover the top up debt

Note: do not limit contact attempts to the payroll officer. Depending on the organisation/employer, include discussions with the owner, partner, Director or public officer.

If more investigation is needed, see:

• Employer withholding reconciliation and top up
• Employers that have gone into liquidations, and
• Australian Securities and Investment Commission and Australian Taxation Office (ATO) systems to confirm the employer’s Australian Business Number

What type of debt is Child Support trying to enforce?

• Not legally recoverable:
• customer now resides outside the legal jurisdiction
• court likely to rule in favour of customer
• go to Step 3

• Uneconomical to pursue:
• uneconomical due to small debt amount
• no capacity to pay/insolvent
• untraceable
• go to Step 4

A debt can be viewed as not legally recoverable if:

• the customer now resides outside the legal jurisdiction, or
• the Court is likely to rule in favour of the customer

Customer with debt now resides outside the legal jurisdiction

The customer now resides in a country with no reciprocating jurisdiction to enable Child Support to request collection action.

Court likely to rule in favour of customer with debt

Where court proceedings would reduce the debt. This only occurs in limited circumstances, if there is a lack of sufficient evidence that the debt exists.

If the debt is not legally recoverable but is not listed above, seek help from an Employer Services Service Support Officer (ES SSO).

Insolvency

Insolvency is the inability of a person (an individual or a corporation) to pay all their debts when they fall due. The Bankruptcy Act governs Sole Traders and individuals who are insolvent. The Corporations Act covers Companies. .

Circumstances may include:

• the employer is a sole trader (personally responsible for all the debts and liabilities accrued by the business) and a liquidator has been appointed under Part IX of the Bankruptcy Act (personal debt agreement). The business is wound up and there are no further assets or money available to satisfy the remaining debt
• the employer is not a company and the business has gone through an insolvency process where parties to the business have been declared Insolvent under Part X of the Bankruptcy Act, and concern has been registered with ASFA and no dividend is likely
• the employer has had liquidation finalised and all likely dividends have been paid

Child support maintenance debts survive all insolvency and bankruptcy action including Part IX debt agreements and Part X Personal Insolvency Agreements.

Child Support cannot agree to receive any less than the amount of child support owing. If an agreement is reached with other creditors Child Support will accept the payments made under the agreement and pursue the remaining arrears once the agreement is finalised.

In the following circumstances debt can be viewed as uneconomical to pursue.

Uneconomical

A debt may be uneconomical to pursue if it would cost the Commonwealth more than the amount of the debt to recover it.

The costs of the debt recovery would:

• include searches, and
• be relevant for a low debt case where the employer has ceased trading. The debt is unlikely to continue to increase

No capacity to pay

The employer has no assets, no evidence of a current or future income source and legal action to recover the debt would not be, or has not been successful. These circumstances include where the debt:

• is over 5 years old, and
• is confirmed as correct by an ES SSO

Refer to record keeping requirements in Section 59 of the Child Support (Registration and Collection) Act.

Untraceable

The employer location remains unknown for a continuous period of 6 month after reasonable searches have not located them.

If the debt may be uneconomical to pursue but the circumstances are not listed above, seek advice from an ES SSO.

Non-pursuit is suitable if:

• the debt is correct
• all appropriate collection options have been investigated
• the organisation’s liquidation or receivership has been finalised and all dividends have been paid
• there are no administrative enforcement options available and the overdue arrears is too low to be considered for litigation, or
• there are no administrative enforcement options available and the case is not suitable for litigation as there is no identifiable asset

If non-pursuit is suitable, see Table 2 - Prepare and record submissions

Non-pursuit is not suitable if:

• the organisation has a current debt with an active link in place, as the debt will re-raise each time the employer makes a payment, or
• the organisation is under receivership or liquidation and all dividends have not been paid, unless Child Support is satisfied with the intended distribution of funds. For example sufficient funds available only to pay liquidator Company

Note: non-pursuit decisions cannot be made in relation to part of a debt. If any collection action is possible the debt is not appropriate for non-pursuit. Continue to take steps to reach a collection outcome. Follow the process in Employer/Organisation debt repayment.

In some instances non-pursuit is not suitable but regular review is needed including:

• the employer is going through a liquidation or insolvency process which is not finalised, or
• the employer has an Administrator appointed and payers are still linked

If it is decided the employer debt should not be pursued, complete the Non-pursuit of individual and employer debt macro.

The macro submission must include:

• details of the outstanding debt - Top Up/Con Rev. Remit penalties. For more information see the Child Support Guide 5.2.4 Employer Obligations for collection from salary or wages.
• all relevant collection action taken, including:
• details of attempted payment arrangements
• employer contact attempts
• results from Child Support, ATO and External searches
• details of any tracing activities undertaken
• any other relevant information of collection action investigated/taken
• age of debt (Part IV Section 59 (1b) states that employers must retain records for 5 years
• reason for the non-pursuit of debt including:
• the category of non-pursuit allowable under the PGPA Rules 2014 - not legally recoverable or uneconomical to pursue
• the relevant circumstance under that category
• liquidation distribution of assets has been finalised
• Child Support was listed as a priority creditor and details of funds paid by liquidator
• review date, and
• ES Service Officer’s name, level and the date of the submission

Paste the submission in the Employer Account Summary window notepad.

Create a non-pursuit submission.

Paste the submission in the Debt Write Off window.

See Non-pursuit of debt Cuba process help. A Write Off Authorisation intray is automatically generated. It remains locked to the ESO for monitoring.

Log a technical support request for allocation to an ES SSO.

All submissions for employer debt non-pursuit must be checked by an ES SSO.

ESOs must not approve their own submissions.

ES SSOs check all employer non-pursuit submissions.

Check the submission to ensure:

• it is correct
• complete, and
• all appropriate collection action has been considered

Confirm:

• appropriate attempts have been made to contact the employer and enter into a payment arrangement
• appropriate searches have been conducted
• liquidation has been finalised and all dividends paid
• all action is appropriately documented in the Employer Account Summary window and submission notepad in the Debt Write Off window
• the submission accurately reflects all collection action taken and contains all relevant information
• a correct reason for non-pursuit has been indicated, and
• all outstanding actions have been finalised

Is the submission complete?

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

If not satisfied the non-pursuit submission is complete:

• update the Technical Support Issues notepad stating:
• why the submission is not complete, and
• additional investigation/collection action required
• add a notepad to the Employer Account Summary window indicating why the submission is not appropriate and the additional investigation action required, and
• telephone or email the ESO to inform them of the decision

If the case is suitable for non-pursuit but the submission needs to be updated, document what is required.

• Advise the ESO they need to update the submission
• When the submission has been updated, start this process again
• Go to Step 1 - ES SSO checks submission

If satisfied:

• update the submission notepad in the Employer Account Summary window with the recommendation for approval
• update the Technical Support Issues notepad
• update the non-pursuit details in the Debt Write Off window
• complete the ES SSO NPOD Referral template. Resources has a copy
• paste the information into the Write off authorisation intray
• route the intray – including the completed template here:
• Region: NATIONAL OFFICE
• Office: NATIONAL OFFICE
• Stream/Team: MC SEW NAT EMP SERVICES
• Cuba position name: A – ES WRITE OFFS

The authorised EL1 or their delegate decides if it is appropriate for the debt not to be pursued. Consider if:

• appropriate contact attempts have been made
• appropriate searches have been conducted
• all action is appropriately documented
• the submission accurately reflects all collection action taken and all relevant information
• a correct reason for non-pursuit has been indicated, and
• all outstanding actions have been finalised

If the authorised EL1 or their delegate rejects the submission because they consider additional collection action should be taken:

• update the submission in the Employer Account Summary window with the reasons
• reject the submission in Cuba
• create an Organisation Follow up intray and route to the ES SSO
• list action needed in the intray notepad

Note: if urgent action is required, contact the ES SSO by telephone and/or email.

The ES SSO liaises with the ESO, via an SSO Online Enquiry response.

The ESO undertakes the additional action prior to re-considering a non-pursuit submission.

If the EL1 or the delegate approves the submission:

• authorise the submission in Cuba
• create an Organisation Follow up intray and route to the ES SSO
• update the intray notepad advising of approval (ES SSO to finalise SSO Online Enquiry)

If technical advice is required, the delegate engages ES SSO support via an online enquiry.

As delegated officers above the EL1 level are unlikely to have Cuba access, the EL1 emails the submission to the appropriate delegated officer.

The delegate will respond by email.

Paste these emails on the Employer Account Summary window notepad as an audit trail.

On approval, the EL1 can authorise the submission in Cuba.