Changing from Child Support collection to private collection: effect on Family Tax Benefit (FTB) 277-51130080

Customers can ask Child Support to change their collection method at any time.

By changing the collection method, the customer is not changing the payer's liability to pay child support, but instead is electing to privately collect their child support entitlement.

Before 1 July 2012, unless granted an exemption (full or partial) from seeking child support, FTB customers who elected to privately collect their child support were required to collect their full child support entitlement to be paid more than the base rate of FTB Part A for the child.

From 1 July 2012, private collect customers will be deemed as receiving their full child support entitlement, regardless of the amount actually received, unless an exemption (full or partial) from seeking child support has been granted.

To change to private collection, refer the customer to Child Support. For contact details, see Child Support.

Child Support may also ask customers to change to private collection if:

• the paying parent has a satisfactory payment record for the past 6 months
• Child Support is satisfied that the paying parent is likely to continue to pay their child support on time, and
• Child Support is satisfied that private payment arrangements are appropriate for the parties involved

Customers may ask Child Support to start collecting again if the private arrangement breaks down.

A customer may elect to change from Child Support to private collect even if they have arrears outstanding from the Child Support collect period.

If a Child Support collect customer elects to change 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 Child Support to discuss the implications of changing their collection method, the customer should be advised that if they ask Child Support not to pursue collection of the outstanding amounts, 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 Maintenance Income Test (MIT) in addition to the customer's ongoing child support entitlement, from the date of the decision for the remainder of the financial year, regardless of the period to which the amount relates, and regardless of whether the customer:

• takes no action to collect the arrears
• is successful in collecting the arrears, or
• is unsuccessful in collecting the arrears

If the customer advises they are unsuccessful in collecting the arrears, they should be advised it would be in their best interests to seek legal advice to obtain the arrears.

For the subsequent period of private collection, the customer will be deemed as receiving the amount of outstanding arrears as well as their normal child support entitlement for Maintenance Income Test purposes.

The non paid amounts are not automatically reported to Centrelink via the data exchange. The customer needs to self-identify and advise any non paid arrears amounts so they can be manually coded.

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

Before 1 July 2012, customers who asked Child Support not to pursue collection of outstanding arrears would continue to pass the 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 Test.

After asking Child Support not to pursue collection of outstanding arrears, if 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 for the remainder of the financial year unless they were granted an exemption from seeking child support.