Child support overpayments and other payee debt 277-04260000

When an overpayment occurs:

• a Payee Overpayment intray generates, and
• a letter issues to the payee

Identify the combination of events that caused the overpayment. Understand what happened and when, to determine if the overpayment is correct and/or recoverable.

Review the letters issued on the date the overpayment was created:

• Look for an RPO-01 (Receiving Parent Overpayment) letter to the payee and identify any decision letters sent at the same time
• Sometimes the system:
• suppresses the Cuba letters, and
• issues a NOA-01 CS Notice of Assessment and Covering page consolidating the RPO-01 and decision letters
• Look for a NOA-01 letter. Consider when the NOA-01 letter issues
• What case decisions were made on that day?

Review the case details:

• Check RAS to identify any staff or automated activity on the case
• Consider the payer maintenance liability window from the Case window to identify the date the account went into credit:
• identify the decisions made by Child Support at that time
• check if payments were received or non-agency payment (NAP) credits applied to the case
• key a date range in the search function if the overpayment occurred over 12 months ago

If uncertain about the correctness of the overpayment, consider:

• income correction
• estimate reconciliation
• terminating event
• care decision
• the payee electing to end the assessment
• section 107 order ends the liability for a child from the start date
• court order
• payer residency decision

Check the Discharge Arrears window for any previous discharge amounts. It may be necessary to adjust the overpayment or discharge. See Collecting child support payments privately and/or discharging arrears.

If unsure whether the discharge needs to be adjusted, seek help from a Service Support Officer (SSO).

If the overpayment:

• is correct:
• finalise any outstanding issues before addressing the overpayment. For example income correction, pending care decisions or estimate reconciliation
• go to Step 4
• has been created in error, see Table 3

Overpayments arising:

• before 1 July 2018 (15 May 2019 for WA ex-nuptial cases) are recoverable based on the criteria used at the time, see Table 6
• after 1 July 2018 (15 May 2019 for WA Ex-nuptial cases) are recoverable unless:
• the registered maintenance liability should never have existed (ends from the start date). For examples see Step 1 in Table 2, or
• the payer of the registered maintenance liability ceases to be a resident of Australia or a reciprocating jurisdiction which causes the liability to end from a date after the start date. References has a link to the Child Support Guide 1.5.1 Australia’s international maintenance arrangements

Note: Child Support is only able to recover overpayments if payments have been received by the agency and transferred to the payee. Overpayments from non-cash payments such as non-agency payments or Discharged arrears are not recoverable.

If the overpayments is:

• recoverable, go to Step 5
• not recoverable or may not be legally recoverable, see Table 2

Contact the payer, see Information for payers about child support overpayments.

If unable to contact the payer or they previously confirmed they want the overpayment collected, contact the payee:

• Explain how the overpayment occurred
• Negotiate an arrangement to repay the overpayment, see Debt Repayment
• If the payee:
• has an ongoing liability and the case is agency collect, explain the overpayment will be offset at 100% of the ongoing liability, until the overpayment is reduced to nil
• is a salary and wage earner, confirm their employment details. Explain payments will be deducted from their pay. See Service Officer role in setting up EW linking
• Explain the agency may intercept the tax return to repay the overpayment even where it is being offset

Unless it is appropriate to suppress, check the payee overpayment summary suppression indicator is set to Standard or Always. See Payment options in Child Support and Recovery from a payee's child support entitlement.

A payee may obtain a Stay Order to prevent:

• collection of their overpayment, or
• payments made by them being allocated to their overpayment

Holds for payee-only customers can only be placed at the client level, not at the case level. This means a payee-only one will hold:

• all payments, or
• specific payment types

See the Client Payments List window

Only an SSO can add a hold. If a hold is needed, seek help from an SSO.

Overpayments where the registered maintenance liability should never have existed

Paying parents can seek a recovery order under section 143 for these types of overpayments. See, Section 107 and Section 143 orders for Child Support customers.

Examples of decisions under this category:

• Section 107 order
• Section 106A declaration
• payee had less than 35% care on the day of the application (they were not an eligible carer)
• child is not an eligible child on the day of the application
• an objection decision or AAT decision
• payer was not a resident of Australia or a reciprocating jurisdiction on the day of the application, see Residency decisions for Child Support customers
• court order, Stage 1

Overpayment where the payer has ceased to be a resident of Australia or a reciprocating jurisdiction after the start date of the registered liability

No recovery mechanisms are available under child support legislation, the payer may seek legal advice about what other options are available to them. These amounts are not recoverable under a Section 143 order. References has links to Section 107 and Section 143 orders for Child Support customers.

This information applies to both new and existing overpayments.

If an overpayment is not or may not be recoverable, take immediate action to stop Cuba automatically recovering the overpayment. This applies even if SSO confirmation is expected the following day:

• remove the overpayment
• document in the Manage Gift and Overpayment window:
• use the subject line 'Overpayment not recoverable'
• document that the overpayment was removed pending further investigation about its recoverability
• suppress the payee overpayment summary via the Payment Options window
• a Special Recovery Condition or Hardship can be recorded to prevent automatic TRIPs and Centrelink deductions

Review system generated letters for accuracy. If a system generated letter is not available or inaccurate, create a unique letter to both customers.

Has the overpayment confirmed as recoverable?

• Yes:
• reinstate the overpayment by using the reversal functionality in the window (if this was removed to prevent Cuba automatically recovering the overpayment while a decision was being made)
• document in the Manage Gift and Overpayment window that the overpayment has been reinstated because it is recoverable
• delete any system generated letters
• change the payee overpayment summary preference to Always via the Payment Options window. See Payment options in Child Support
• If a Special Recovery Condition was in place, consider if this should now be removed
• action must be taken to recover the debt, see Step 4 in Table 1
• No, the overpayment is not recoverable. Go to Step 3

If any amount of a non-recoverable overpayment has been recovered, seek help from a Service Support Officer (SSO). The SSO may seek help about options from a Program Support Manager.

Any amount already recovered from the payee and disbursed to the payer cannot be ‘reversed’. But if part of an overpayment has already been recovered from the payee and not yet refunded to the payer, do not refund it to the payer.

The amount must be returned to the payee if the overpayment is ‘not recoverable at law’.

Contact both customers, explain:

• how the overpayment occurred (the reason)
• the amount of the overpayment
• Child Support cannot recover the overpayment
• objection rights do not exist to the decision not to recover
• provide the customer with the relevant reason:
• The residency decision resulted in a terminating event. The overpayment is not a debt due to the Commonwealth, so cannot be recovered by the agency. There are no recovery mechanisms available to the payer under child support legislation
• Overpayment was caused by section 107 court order or an overturned s106 order or the assessment ended from the start date due to a retrospective decision. The payer may choose to apply to the court under section 143 for an order requiring the payee to repay all or part of the overpayment. They may also seek collection of the overpayment through the courts or once they have a recovery order they may register it with the agency for collection

An overpayment must be removed from Cuba if it is not recoverable. If not already actioned, remove the overpayment, see Overpayments Cuba Process Help:

• document in the Manage gift and overpayment window:
• Subject line: 'Overpayment not recoverable’
• Notepad: ‘The payment was removed because it is not recoverable at law’. Include the reason and the amount
• delete the Payee Overpayment intray

Review system generated letters for accuracy. Where a system generated letter is not available, create the appropriate unique letter to both customers.

Has a system letter generated?

• Yes:
• review for accuracy, adjust as required
• unlock the customers, see Finalisation guidelines for Child Support staff
• procedure ends here
• No. If the overpayment was caused by a residency decision. Send both letters:
• UQ14.03 - Removal of overpayment - Residency - payee (payer no longer a resident)
• UQ14.04 - Removal of overpayment - Residency – payer no longer a resident

Unlock the customers in line with the Finalisation guidelines for Child Support staff.

See Letters Cuba Process Help.

Errors that create overpayments include:

• system errors:
• duplicate records
• incorrect application of care decisions, and
• income processing
• errors of fact
• keying errors. For example the Eligibility window being saved incorrectly
• invalid decisions
• errors made by delegates. For example Change of Assessment and Departure Prohibition Order decision. See Correcting errors on Child Support cases

Note: for all overpayments created in error, suppress the Payee Overpayment Summary letter immediately. This prevents the customer receiving incorrect information about their debt. See Payment options in Child Support.

If the overpayment resulted from:

• agency error, go to Step 2
• non-agency payment (NAP) with no payments having been received on the account, see Table 4
• payment being received onto the wrong account, see Table 5
• refund received incorrectly from the Australian Taxation Office (ATO), see Table 5

Contact the payee as soon as possible to discuss the reason for the overpayment, explain:

• how the overpayment occurred
• the amount
• If payee has received a payment in error that must be repaid
• Contact the payer - Follow the process in Information for payers about child support overpayments

Note: seek support from an SSO/PSM to determine if a service recovery response is required depending on the nature of the error.

An excess NAP credit may be created when:

• a NAP is credited to a case as child support, and
• the assessment is varied at a later date

The excess NAP credit:

• cannot be refunded to the payer
• cannot be recovered from the payee
• may be used against an ongoing liability in the same case

Note: Cuba will display the excess nap credit as an overpayment. If an excess nap credit is displaying as an overpayment seek help from a Service Support Officer (SSO). The SSO will review and correct. See Resources for examples.

If the case has an ongoing liability, and is:

• agency collect, the payee will not receive child support until the credit amount has been absorbed
• private collect, the excess NAP credit cannot be applied to any future enforceable periods. The excess NAP credit must be removed

The excess NAP credit cannot be recovered by collection action because the money has not been collected or passed on to the payee by Child Support.

Contact both customers to explain:

• an excess NAP credit has been created due to a retrospective variation
• the amount of the credit
• the NAP credit will remain on the payer’s child support account and be considered for crediting against future liabilities. See Non-agency payment (NAP)
• if the case has an ongoing liability, the payee will not receive child support until the credit amount has been used in full
• If the case is private collect or the case has ended the NAP credit must be reviewed. It may not be able to remain as a credit

See Contact with Child Support customers.

Document the details of the discussion with the customers in the Communications window. Document the discussions with both customers.

In the Collection window record each separate discussion. Select from the dropdown menu:

• OVP-Payee Contact
• OVP-Payer Contact

When these discussions have been recorded:

• delete the Payee Overpayment intray
• auto-unlock the customers
• see Customer Management Approach (CMA) for Child Support

If there is an excess NAP credit only, procedure ends here.

Child Support must refund the third party when:

• money is received from a third party in error, believing them to be the funds of the payer, and
• disburses it to the payee

Example

A financial institution actions a section 72A (garnishee) notice and sends funds to Child Support. The funds are disbursed to the payee. The financial institution later advises the funds were incorrectly deducted from an account that did not belong to the payer.

Child Support must:

• refund the amount to the financial institution from consolidated revenue, and
• recover the consolidated debt from the payee

Follow the process in Using consolidated revenue to repay funds.

When a refund has been received incorrectly from the ATO, Child Support must refund the ATO. Follow the process in using a consolidated revenue to repay funds.

Examples:

• The ATO seeks repayment of a TRIP because someone other than the customer is involved in fraudulent activity
• Child Support has used an incorrect tax file number (TFN) and received a TRIP belonging to a taxpayer other than the customer

Explain to the payee:

• they have received funds in error
• they now have a debt to the commonwealth which needs to be repaid
• we will continue to collect the child support they are owed from the other parent

Explain to the payer:

• funds have been incorrectly applied to their account
• this has now been reversed and
• they are required to pay the outstanding amount

This policy applies to both new and existing overpayments arising before 1 July 2018 or 15 May 2019 for WA ex-nuptial cases.

Not all overpayments are recoverable by Services Australia. Determine whether the overpayment is recoverable based on the policy at the time the debts was raised before discussing with the customers.

If there is an existing overpayment that has not been fully recovered:

• check the notepads associated with the overpayment to determine if this policy was applied
• if not recovered, immediately consider if the policy should be applied to the remaining overpayment

If the overpayment is not recoverable, the payer may apply for a court to order the payee to repay some or all of the overpayment.

Do not recover overpayments arising before 1 July 2018 or 15 May 2019 for WA ex-nuptial cases from retrospective variations caused when:

• the payer failed to comply with their legal obligation to lodge their tax return on time, go to Step 3
• the payer failed to advise Child Support of a change of address which resulted in a terminating event, go to Step 4
• the assessment ended as a result of an objection, AAT decision or court order which determined the application for assessment should not have been accepted, go to Step 5

If the payer lodges a tax return later than the timeframes set by the Australian Taxation Office (ATO), the new income may replace a higher income being used in the assessment. This may create an overpayment.

Because the payer has failed to comply with their legal obligation and this resulted in an overpayment, Child Support will not recover the overpayment.

Note: this usually applies to periods prior to July 2008 as new ATO income rules generally prevent overpayments occurring due to late lodgement.

If the customer lodged a late tax return after June 2008 and it is a reassessment based on Section 11 of the Child Support (Assessment) Regulations 2018, seek help from an SSO to refer the case to Program Advice.

If the late lodged income is higher than the provisional income but it replaces the FAR with a MAR – creating a recoverable overpayment seek SSO/PSM support.

See:

• Income processing for Child Support customers
• Technical and policy escalation process

Prevent automatic recovery of the overpayment while seeking technical advice. Where the payer has asked the ATO to retrospectively record that they are ‘not required to lodge’ for a past year and this results in an overpayment, Child Support will not recover the overpayment.

Go to Step 6

When a payer changes their address, they must notify Child Support within 14 days.

A terminating event occurs when a payer:

• changes their address to a non-reciprocating jurisdiction and
• they have ceased to be an Australian resident

The terminating event date will usually be in the past. This will cause an overpayment.

Child Support will not recover the overpayment if the payer did not advise of the address change (within 14 days) resulting in a delayed residency decision and terminating event. Remove the overpayment at the same time residency decision is made. See Residency decisions for Child Support customers - Specialist Service Officer.

Note: extra time can be provided for normal passage of the post or any special circumstances. The customer must advise Child Support as soon as is reasonably practical.

Go to Step 6

If an overpayment occurred due to a declaration under section 107 of the Child Support (Assessment) Act 1989 there is no longer a registered maintenance liability.

The overpayment is not a debt due to the Commonwealth and therefore not recoverable.

Follow the process in Section 107 order received by Child Support.

If the overpayment is:

• not recoverable, see Table 2
• recoverable, see Step 4 in Table 1