Order of payment application

The amendments give priority to payments of child support owed to custodians for periods when they were not in receipt of a benefit over payments owed to the Crown. This reduces the time that such custodians have to wait before they receive their payments.

Background

The Act sets out the rules for how payments are to be allocated to the amounts due from a liable person. The priority order is based on both the type of financial support due and the period the amount relates to.

The rules are beneficial to liable parents because they reduce the rate at which penalties accrue on outstanding amounts. However, they have also meant that custodians sometimes had to wait for payments they were entitled to receive until after payments due to the Crown had been made.

Key features

The amendments to section 142 of the Act ensure that payments of formula assessment child support owed to a custodian for periods when the custodian was not receiving a social security benefit are given priority over payments that are owed to the Crown.

The amendments to section 143 of the Act ensure that payments of child support in accordance with a voluntary agreement that are owed to a custodian for periods when the custodian was not receiving a social security benefit are given priority over payments that are owed to the Crown.

There is no change to how payments are allocated in the liable parent's account because to do so would carry a risk that the liable parent would be confused by statement changes or deduce the beneficiary status of the custodian.

Application date

The amendments apply from 1 December 2006.