220.127.116.11 Maintenance Income - Disbursement Method
- overview of the disbursement method,
- application of the disbursement method, and
- effects of reconciliation.
For the purposes of FTB, the disbursement method is an alternative way of estimating the amount of child support (1.1.C.20) an instalment (1.1.I.100) individual will receive during the relevant period (1.1.R.25). It can only be used for child support cases registered for collection by Child Support.
The disbursement method may be appropriate where the individual does not know how much child support they are likely to receive, or if the amount paid by the payer (1.1.P.72) is substantially less than their maintenance liability (1.1.M.23).
Application of the disbursement method
The individual's rate of FTB Part A is recalculated each time the monthly amount of child support they receive from Child Support changes. This means that their FTB rate can change every month.
The estimate of child support is worked out by adding the amount of child support the individual has already received during the financial year to the amount projected for the rest of the relevant period. This second amount is worked out by multiplying the latest Child Support monthly payment the individual has received (less any arrears) by the number of months left in the financial year.
The amount of estimated child support for the financial year is then annualised when applying the maintenance income test for the relevant period.
Example: Maria separates from George on 30 August. Maria takes maintenance action by asking Child Support to make an assessment of George's child support liability. The assessment comes into force on 1 October. Maria opts for private collection (1.1.P.130), but George fails to make any regular maintenance payments. Maria then requests that Child Support collect the maintenance for her and they commence collection on 1 December. Maria also asks that Child Support collect the amounts owing for October and November.
At the Child Support payday on the third Wednesday in January, Maria receives:
- arrears of maintenance of $600 for October and November, and
- a regular payment of maintenance of $300 for December.
An estimate of Maria's annual rate of maintenance income is calculated as follows:
- Relevant period = 1 October to 30 June = 273 days
- [(Year to date figure) + (latest regular payment × 5 months remaining in the relevant period)] × annualisation factor = $900 + $1,500 × (365 divided by 273)
- = $3,208.79
Act reference: FAAct Schedule 1 clause 20A Annualised amount of maintenance income
FA(Admin)Act section 20(3) Determination of rate may be based on estimate, indexed estimate or indexed actual income
The estimated amount of maintenance used to assess an individual's entitlement to FTB Part A is reconciled against the actual amount of maintenance received after the end of the financial year. This may result in a recalculation of their FTB Part A rate for that year.
Policy reference: FA Guide 6.4 Reconciliation