Exemptions from seeking child support for Family Tax Benefit (FTB) customers 277-51070090

In some cases, it is not appropriate for a customer to take action to obtain child support. If the customer is required to act, make sure the customer understands the purpose of child support before considering an exemption. For example:

• child support is for the financial benefit of the child
• child support improves the financial resources for children not living with both parents
• children are entitled to receive support from both parents, and
• child support does not have to involve contact between the parents

If the customer has a current child support case and indicates they are unable to collect their entitlement, other options must be explored. These might include:

• a private collect customer asking Child Support to collect on their behalf
• a Child Support collect customer being assessed under the disbursement method
• a partial exemption where they can continue to receive some child support

The customer may apply for an exemption if they must take action to obtain child support and there are circumstances that make it unreasonable for them to do so.

An application for an exemption is the customer's choice. Customers must be advised of the implications of their choice. This includes that an application for child support will not be backdated if the exemption is not granted.

A customer's right not to discuss sensitive matters must be respected. No sensitive information should be recorded on a customer's record. The Resources page has a link to the Privacy and Secrecy page, which defines 'What is sensitive information?'

If an FTB customer applies for an exemption, they are taken to satisfy the Maintenance Action Test (MAT) until a decision is made. If the customer is seeking an exemption from the MAT, the progress of this request will be reviewed in 60 days.

The customer also has 13 weeks (91 days) to satisfy the MAT. This is called the Deciding Maintenance Action (DMA) period. If the request for an exemption is rejected and their DMA period has ended, they have 14 days from the date they are advised of the rejection to take reasonable action before their FTB Part A is reduced to the base rate.

Parentage unknown

The customer should apply for a parentage (other parent) unknown exemption when:

• they do not know who the other parent is and
• the other parent is not named on the birth certificate

If the customer does know who the other parent is, a parentage unknown exemption is not applicable even if the other parent is not named on the birth certificate. Unless another exemption (such as family and domestic violence) needs to be explored, customers should seek legal advice in proving parentage.

Exemptions for child support may require assessment by a social worker. Some 'Parentage Unknown 'exemptions and 'Artificial Conception Procedure' cases are assessed by Service Officers. Maintenance Action Test (MAT) codes has information about specific exemptions and whether social worker involvement is required. That procedure should be consulted before a referral to the social worker is made.

In situations where the customers share the care of a child or if each parent has one or more children in care, only one child support case will be registered.

If details of a child support case are transferred from Child Support for a customer who had been granted an exemption, a new exemption should be assessed following customer contact. If it is found the exemption still applies and the child support case is to be ended Centrelink will advise Child Support. The Resources page has an example.

A partial exemption may be granted in private collect cases where a customer:

• is unable to collect their full entitlement, but it is not appropriate for them to transfer the responsibility of collection to Child Support
• a customer:
• had a retrospective increase to their private collect child support assessment, and
• is unable to collect the arrears from the payer, and
• provides a letter from a legal practitioner advising they cannot assist the customer as it would not be cost effective to do so

A partial exemption allows the customer to collect whatever they can privately (or to be re-reconciled on the amount they actually received). Their rate of FTB Part A is based on the amount of child support they actually receive rather than the amount of the child support assessment.

A partial exemption can also be granted where a customer is unable to apply for a child support assessment due to exceptional circumstances like the threat of violence but can privately collect some form of maintenance from the other parent. For example, the other parent pays non-cash maintenance in the form of rent expenses.

If the circumstances existed previously, exemptions may be backdated. This may be appropriate for instalment or lump sum customers who are collecting child support privately or customers who do not have an existing child support case.

Grounds for backdating an exemption are established through an assessment of whether the circumstances existed before the date of claim for the entire backdated period.

Special circumstances do not need to be established to backdate an exemption to 1 July of the previous financial year. In order to backdate any further however, special circumstances for backdating a maintenance action exemption must first be established.

Backdating an exemption for a customer who was not previously meeting the MAT may result in an arrears payment.

In cases where arrears generate and the customer has an existing debt, there must be sufficient grounds for a temporary exclusion from debt offsetting to be approved. When exceptional or unforeseen circumstances apply which may cause the customer to suffer severe financial hardship, customers can request to be temporarily excluded from debt recovery before money being taken from their FTB arrears, lump sum or top-up payments.
See Debt offsetting during family assistance reassessment, reconciliation and claim processing.

Customers granted an exemption should contact Child Support to end the case. For example, there are family and domestic violence concerns, and they have a current child support case.

The customer can also elect to discharge any arrears on the case. Discharging the arrears may help in stopping more family and domestic violence issues and will not have any impact on the FTB rate for the backdated or ongoing period. The customer's annual FTB entitlement will be recalculated at reconciliation, based on the actual amount of child support received throughout the year. This effectively means that there is no need to backdate exemptions for this customer group.

For social workers

If a full exemption is being considered for a customer who has arrears accrued for a previous Child Support collect period and the customer elects not to 'discharge' the arrears, it may indicate that an exemption is not appropriate. If the customer collects the arrears, they will be used in the MIT calculation at reconciliation.

When a customer has a private collect child support case and there are family and domestic violence concerns present, it may be appropriate to backdate an exemption. The backdating of the exemption is to offset the effect of child support that the customer was deemed to have received but may not have received due to the family and domestic violence circumstances. This allows Centrelink to reassess the customer's FTB entitlement based on the actual amount of child support they received during this period. If the customer is eligible for arrears of FTB, they will be assessed after the end of the relevant financial year/s, when reconciliation occurs.

In cases where arrears generate and the customer has an existing debt, there must be sufficient grounds for a temporary exclusion from debt offsetting to be approved. When exceptional or unforeseen circumstances apply which may cause the customer to suffer severe financial hardship, customers can request to be temporarily excluded from debt recovery before money being taken from their FTB arrears, lump sum or top-up payments.
See Debt offsetting during family assistance reassessment, reconciliation and claim processing.

As Child Support are only able to end a case from the day after the request is made (that is, they are unable to backdate the case end), additional coding is required by Centrelink to remove the uncollected child support so that it will not be included in the FTB rate calculation.

To end a case, the customer must lodge a request with Child Support. The Ending a child support assessment (CS1671) form may be used however Child Support will still need to speak with the customer before they can end the case.

If the customer or their partner are receiving FTB Part A at more than the base rate, they can elect to voluntarily end their child support case. However, their FTB Part A rate may be reduced to base rate if they have not applied for/been given a Maintenance Action Test (MAT) exemption. For more details see Effect on Family Tax Benefit (FTB) where the customer elects to suspend or end a child support assessment.

When a social worker grants a full exemption, they must refer the customer to Child Support immediately to request the case be ended. If they are unable to transfer the customer, they must email Child Support using the 'Maintenance Exemption Notification to Child Support' template. The Resources page has a link.

Family and domestic violence cases

If the care of the child/ren is shared or divided between the parties to a child support case, a parent can elect to end the child support assessment for:

• any child for whom they are assessed to receive child support from the other parent. If a parent has a child support entitlement of $0 but more than 65% care of the child, they can end the case for that child
• all the children of the case, if:
• the assessed annual rate of child support for both parties is $0, and
• the parent has an exemption because of family and domestic violence (even if one or more of the children are solely in the other parent’s care)

Where ending the case might create further family and domestic violence, a partial exemption may be considered but only if the child support case is private collect.

Note: ending a case can result in some payees becoming a payer in a case. Becoming the payer in a case satisfies the Maintenance Action Test.

If the recipient chooses to end the child support assessment for the child/ren in their own care, they must be advised they may become the payer for the children in the other parent's care.

If an FTB recipient is or would be the payer, they are considered as having taken reasonable maintenance action for a child by having the children in their care taken into account in the child support case. However, where a domestic violence exemption has been granted for the payee and the alleged perpetrators care of the FTB child/ren increases, or their Adjusted Taxable Income (ATI) decreases and they subsequently become a potential payee, the alleged perpetrator may then apply for child support, and they are entitled to do so. For policy advice contact the Level 2 Policy Helpdesk.

Exception

In some cases, 2 carers may be entitled to child support for the same child. For example, a grandparent and a parent.

In these cases, a joint election to end the case is required from both carers. When a joint election cannot be obtained from both carers and there is family violence involved, it may be appropriate to discuss a partial exemption for the parent carer as an alternative option to ending the case.

There is no MAT requirement in respect of a non-parent carer and therefore they are not required to apply for an exemption (such as violence). The Level 2 Policy Helpdesk can assist if policy advice is needed.