Centrelink action when a Child Support collection customer is owed or receives child support arrears 277-51040030

For mutual customers, Child Support electronically transfers child support entitlement and disbursement details to Centrelink via the data exchange. Disbursement details include regular child support payments as well as arrears payments collected by Child Support.

For FTB instalment customers, child support arrears are assessed in the financial year in which the customer receives them. For customers claiming FTB as a lump sum after the end of the financial year, all child support received in the relevant financial year will be assessed when working out their FTB Part A rate.

The customer's ongoing fortnightly FTB Part A rate may be affected by child support received during a financial year. All payments collected by Child Support will be reported to Centrelink electronically. This includes regular disbursements, non-agency payments that have been reported by either the customer or the person liable to pay child support, and arrears that are owed from previous Child Support collection periods:

• If the customer has opted for the Disbursement Method to be used, any child support arrears will be included in the customer's annual maintenance income in the year to date total. Each time a payment is disbursed to a customer, annual maintenance income for the financial year is recalculated and may change the customer's ongoing FTB Part A rate. It is possible that the customer will have been overpaid FTB if a lower estimate of annual maintenance income has been used to date.
• Under the Modified Entitlement Method the system automatically applies the assessment method (Entitlement or Disbursement) that results in the higher estimate of annual maintenance income. This helps to offset any overpayment of FTB that has already occurred and reduces the risk of an overpayment during the reconciliation process after the end of the financial year.

At FTB reconciliation, maintenance income for a Child Support collect period is based on the actual child support amounts received, including any arrears. Customers may benefit from the Maintenance Income Credit (MIC) which is calculated during FTB reconciliation.

Customers may incur an overpayment of FTB Part A if the maintenance income applied throughout the year is lower than the actual maintenance amount received when calculated at reconciliation after any MIC depletion is applied. This may occur, for example, if arrears are paid for a period in the relevant financial year or a retrospective assessment is applied.

If a customer transfers from private collect to Child Support collect and is owed child support payments, they may ask Child Support to collect an amount owed from the private collect period. Generally, Child Support will only collect arrears in respect of the three month period immediately before the customer transfers to Child Support collect. Due to the customer already being deemed to have received their full child support assessed amount, if Child Support then collects the arrears for the private collect period, the maintenance income details should be adjusted for that period to reflect the amount the customer actually received, as any arrears will be included in disbursement information transferred by Child Support. This ensures that maintenance income is assessed correctly at FTB reconciliation.

Child support arrears received for a child who is no longer an FTB child or who only attracts no more the base rate of FTB Part A are not assessed as maintenance income.