Child support overpayments and other payee debt 277-04260000

Child support payers can meet an enforceable maintenance liability directly via cash payments to the Registrar, or via NAPs (s71, s71A or s71B of the CSRC Act). A NAP has the effect of reducing the amount payable to the Registrar, it is not a payment paid to the payee pursuant to s76 of the CSRC Act.

As NAPs reduce the amount payable to the Registrar, the NAP amount is credited against the liability prior to cash being credited. Crediting amounts in this order ensures that any cash that is paid in excess, to the amount the payer was required to pay to the Registrar, is treated as excess to the liability.

The nature of NAPs also means that a NAP cannot create an overpayment, pursuant to s69B, as a NAP credit is not an amount due to the Registrar or payable under s76. Therefore, a NAP overpayment is not considered a debt to the Commonwealth and is not recoverable by the Registrar.

When a retrospective variation has reduced a liability, which has been met by a NAP credit, that credit will be applied to any child support debt amount that remains owing. Where a retrospective variation has reduced the liability and an overpayment is created, Services Australia (the agency) must determine if this overpayment is a s69B (cash) overpayment, if it is an excess NAP credit, or both.

As NAPs reduce the amount payable to the Registrar when a liability is retrospectively reduced and the amount paid (by NAPs, cash or a combination of the two) is excess to that liability, cash payments must be uncredited first. The cash payment represents an amount the payer paid to the Registrar in excess of the amount the payer was liable to pay to the Registrar.

The NAPs had already reduced the amount payable by the payer to the Registrar to $5,000. Therefore, the amount payable to the Registrar, after the variation, would be $0. The payer has already paid $5,000 to the Registrar, which was paid to the payee under s76. As the amount the payee was entitled to under s76 is reduced to $0, they will have been overpaid (s69B) by the $5,000 they received from the Registrar.

Scenario 1

The payer has paid $100 NAPs each month to cover the ongoing liability, no other types of payments have been used to repay the Child Support.

A subsequent variation resulted in a decrease and overpayment of $170.

As no money has been collected or passed onto the payee through Child Support this overpayment/excess NAP cannot be collected and must be converted to a NAP credit.

If the case is still active and is agency collect, the NAP credit will be used against future ongoing liability in the same case.

If the case has ended or is private collect the NAP credit will be removed.

Scenario 2

The payer has paid $2,000 in NAPs and $400 in cash payments that have been used to repay the Child Support.

A subsequent variation resulted in a decrease and overpayment of $1,700.

As the amount of cash that has been collected or passed onto the payee through Child Support in less than the total overpayment part of the overpayment is excess NAP credit. In this scenario $1,300 of the overpayment must be converted from an overpayment to a NAP credit.

If the case is still active and is agency collect, the NAP credit will be used against future ongoing liability in the same case.

If the case has ended or is private collect the NAP credit will be removed.

Scenario 3

The payer has paid $1,900 in NAPs and $500 in cash payments that have been used to repay the Child Support.

A subsequent variation resulted in a decrease and overpayment of $500.

As the amount of cash that has been collected or passed onto the payee through Child Support in equal to or more than the total overpayment, the full overpayment is collectable. No changes should be made to the NAPs, normal overpayment collection process to be completed.