Family Tax Benefit (FTB) customer not receiving full child support entitlement privately 277-51070060

When a Family Tax Benefit (FTB) customer advises they cannot privately collect their full ongoing child support entitlement as assessed by Child Support (including through a child support agreement or court order) they should be advised of their options and the effect of child support on their FTB Part A rate.

From 1 July 2012, if it is reasonable for a customer to privately collect their full entitlement, that is, they are not eligible for an exemption from seeking child support, the customer will be deemed to receive their full child support entitlement for Maintenance Income Test (MIT) purposes, regardless of the amount actually received.

From 1 July 2012, customers who collect less than the full child support entitlement will no longer be restricted to the base rate of FTB Part A due to failing the Maintenance Action Test (MAT). If the customer has a current child support assessment, they will pass the MAT, and will be deemed as receiving their full child support entitlement.

The customer's deemed amount will:

• apply regardless of whether the amount actually collected under private arrangement is more or less than the full child support entitlement
• be equal to the amount as assessed by Child Support

Customers who privately collect their child support will be deemed to be receiving their full child support entitlement and will have their Family Tax Benefit (FTB) Part A assessed on that amount, regardless of the actual amount collected, unless they:

• have a partial exemption in place and they are collecting a lesser amount
• transfer from Child Support collection to private collection and discharge any arrears owing for the Child Support collect period
• transfer from private collection to Child Support collection and are owed arrears of child support for the private collect period, or
• privately collect child support arrears relating to a private collection period prior to 1 July 2012

If a private collect customer advises they are having difficulty collecting their full child support entitlement, they have a choice of:

• discussing with Child Support the option to collect child support payments from the paying parent
• Note: if the customer changes to Child Support collect, they can then choose to have their child support assessed under the Disbursement Method
• speaking with a social worker regarding a full or partial exemption
• continue to privately collect a lesser amount, however for FTB purposes they will be deemed as receiving their full child support assessment amount

Customers may need to take other action if they have a:

• court order or court registered agreement, or
• child support agreement

Customers should apply for Child Support collection within 3 months (up to nine months in special circumstances) of not receiving their full child support entitlement. The 3 month period allows the customer time to decide if the shortfall in their child support payments will continue and is also the period of arrears that Child Support is able to collect. Child Support will automatically advise Centrelink of any change in collection method, reporting the date the customer requested Child Support collection.

If a customer asks Child Support to collect any unpaid arrears owed for a private collect period, the arrears date is not automatically reported to Centrelink.

If Child Support advises the customer that they will collect arrears for a private collect period, the customer should contact Centrelink so the arrears period can be manually updated to show it is a Child Support collect period. This will prevent child support from being 'double counted' for the arrears period. See Centrelink action when a Child Support collection customer is owed or receives child support arrears.

Where a retrospective assessment is received from Child Support for private collect customers, the customer will have their FTB reassessed based on the new assessment details.

If the customer is owed child support arrears as a result of an increased retrospective child support assessment, they are not obliged to apply for Child Support collection if they are privately collecting their full ongoing entitlement amount. The customer may wish to register for Child Support collection (including collection of unpaid arrears) if they are experiencing difficulties privately collecting their child support.

If the retrospective assessment applies to 2012/2013 or a later financial year and that year has already been reconciled, the retrospective change may result in re-reconciliation occurring. If the child support assessment has:

• decreased, this may result in a top-up of FTB
• increased, this may result in a reconciliation overpayment. In this scenario, the customer can appeal the FTB reconciliation debt with Centrelink

If the customer wants to discuss or appeal the retrospective change to their child support assessment, refer them to Child Support.

Either the paying or receiving parent can ask Child Support to reassess the amount of child support payable if their income has reduced. If a parent's income has reduced, Child Support may use an estimate of their current income to reassess their child support liability. Centrelink will use the current child support assessment until new assessment details are reported via the data exchange.

A Child Support collect customer may elect to change to private collection, even if they have arrears outstanding from the child support collect period. If a Child Support collect customer changes to private collection and at the same time, or at a later date, discharges Child Support from the responsibility of collecting some or all of the outstanding arrears, the customer is taking responsibility for collecting the arrears themselves.

When a customer contacts to discuss the implications of changing their collection method, the customer should be advised that if they ask Child Support not to pursue collections of outstanding amounts (that is, they choose to discharge them), the amount/s may impact on the rate of FTB Part A they will receive.

Unless the customer is granted an exemption, the non-paid arrears amounts will be included in the MIT in addition to the customer's ongoing child support entitlement from the date of the decision until the end of the financial year, regardless of the period to which the amount relates.

Note: discharged child support arrears relating to a child who is no longer an FTB child, should not be included in the MIT. This is because the child support is not for the maintenance of an FTB child. If there are other remaining FTB children, only the portion of the discharged arrears relating to the current FTB children should be included in the MIT.

The non-paid amount is not automatically reported to Centrelink via the data exchange. The customer will need to self-identify and advise any non-paid arrears amounts.

From 1 July 2012, customers will continue to pass the MAT regardless of whether they are successful in privately collecting the arrears amount.

Prior to 1 July 2012, customers who asked Child Support not to pursue collection of outstanding arrears would continue to pass the Maintenance Action Test (MAT) as long as they attempted to collect the outstanding amount privately. If the customer advised that they intended to privately collect the arrears but were then unsuccessful in collecting some or all of the arrears, the non-paid amounts would not be included in the maintenance income assessment. If after asking Child Support not to pursue collection of outstanding arrears, the customer advised that they did not intend to attempt to collect the arrears, they would fail the MAT from the date of the decision and for the remainder of the financial year unless they were granted an exemption from seeking child support.