Arrears
Arrears are unpaid child support or maintenance amounts that have built up over time. If a payer misses or underpays their assessed amount, the shortfall is recorded as arrears. Unpaid balances remain on the account and can later be enforced.
Arrears are about unpaid obligations, not overpayments, which are handled separately as carer debts.
Key takeaways for parents
The concept of arrears is important because it separates past debt from current liabilities. Current payments and past debt are handled in different ways. A payer should:
- prioritise meeting the current assessment, which demonstrates good faith and gives the other parent greater certainty; and
- organise repayment of existing arrears separately, often using a schedule of regular transfers.
Arrears remain recorded as a debt, and collection processes are available to recover unpaid amounts.
Arrears definition
Arrears are any amounts relating to unpaid child support, spousal maintenance or carer debts occurring in relation to a registrable maintenance liability including those from an overseas maintenance liability.
Arrears can be in relation to administrative assessments, binding or limited child support agreements, and court orders or court ordered agreements.
Definition source: Guides to Social Policy Law, Child Support Guide, Arrears.
How arrears become debt
Arrears sit outside the formula. The formula calculates what should be paid. Arrears arise afterward when that amount is not fully paid.
At first, arrears are simply unpaid amounts recorded against the payer. The status of the unpaid balance changes once it is registered for collection. Once registered, the arrears become a debt due to the Commonwealth, which allows Services Australia to enforce recovery.
Arrears describe the unpaid amount. A debt describes an enforceable liability. Once registered, the system can take action such as intercepting tax refunds, setting payment arrangements, or pursuing legal recovery.
Arrears can also arise from backdated changes. If an assessment is increased for a past period, the difference becomes arrears even if the payer had been paying the previous amount at the time.
Arrears example
A parent is assessed to pay $500 per month but only pays $300. Each month, $200 is added as arrears. After six months, arrears total $1,200.
If the case is registered for collection, the $1,200 becomes a recoverable debt. Services Australia can then pursue payment using its enforcement powers.
In some situations, arrears from recent private arrangements can be brought into collection, typically covering limited prior periods or longer where exceptional circumstances apply.
If you owe arrears
Arrears mean you have not paid the full assessed amount. The unpaid balance continues to accumulate and remains on your account.
If the case is registered for agency collect, the arrears become a debt due to the Commonwealth and can be actively recovered. Enforcement can include tax refund intercepts, employer deductions, and payment arrangements.
Penalties may also be applied to unpaid amounts. Penalty charges are payable to the Commonwealth, not the other parent. However, Services Australia may reduce or remove penalties when a payer takes steps to clear the debt.
An eligible payer who keeps current liabilities up to date and follows an agreed arrears repayment arrangement may have part of the penalties remitted immediately. The remaining penalties may be remitted after the arrears are cleared under the arrangement.
If you are owed arrears
Arrears mean you are not receiving the full amount of child support that has been assessed, even though the liability exists.
Under private collect, unpaid amounts rely on the parents to manage. If you later switch to agency collect, Services Australia will usually only collect arrears from the recent past, typically the last 3 months, or up to 9 months in exceptional circumstances.
The collection time limit has consequences. Older unpaid amounts can still exist on paper, but may not be recovered through the system if they fall outside those timeframes.