18.104.22.168 FTB Part B Return to Work
This topic outlines the conditions to be met and the actions to be followed when an individual accesses the FTB Part B return to work measure (also known as 'quarantining'), in respect of FTB Part B entitlement.
Individuals who return to work (or start work) for the first time after the birth of a child or after a child comes into their care, may be entitled to the maximum rate of FTB Part B for the financial year period before they return to work provided they were not earning passive employment income (1.1.P.55) in that period. Eligibility for this extra assistance will be calculated after the end of the financial year when FTB payments are reconciled.
This extra assistance is only available for the lower income earner of the couple who returns to work for the first time after the birth of a child or a child entered their care. An individual returns to paid work if the individual is neither engaging in paid work, nor receiving passive employment income during that year and the individual later engaged in paid work for an average of at least 10 hours per week for 4 consecutive weeks that start during the financial year. Adoptive parents and other primary carers such as grandparents are able to access this measure for an eligible FTB Part B child provided a previous carer has not received this assistance.
This topic explains:
- primary earner income limit,
- return to work objectives,
- accessing the FTB Part B return to work measure,
- lower income earner,
- eligible child,
- precluded child,
- quarantine period,
- return to work,
- nominating a return to work,
- shared care,
- multiple partners,
- swapping roles in a couple, and
- self-employment and passive employment income.
Primary earner income limit
The FTB Part B return to work measure is subject to the primary earner income test.
If a secondary earner in a couple returns to paid work (or commences work) for the first time after the birth of a child or after a child comes into their care and the primary earners ATI (1.1.A.20) is more than the income limit, the family will not be eligible to receive FTB Part B for the entire income year in which he or she returns to work.
If the primary earner in a couple has an ATI at or below the income limit the return to work quarantining measure will operate for the income year in which the secondary earner returns to work.
Return to work objectives
The FTB Part B return to work measure ensures that an individual cannot incur an FTB Part B debt for the period in the financial year that the lower income earner is at home after the birth of a child or a child comes into their care and not on paid leave or receiving other employment related income.
Subject to the primary earner's ATI being at or below the income limit, payment of FTB Part B during the financial year will be based on the lower income earner's estimate of ATI.
The extra assistance available for the quarantine period is the maximum rate of FTB Part B payable for the period in the financial year that the lower income earner is at home and is not payable to eligible individuals until after the end of the financial year and after the reconciliation conditions are satisfied.
For eligible couples, if the primary earner's income is at or below the income limit, the quarantine period is free of the lower earner income test and therefore the maximum rate of FTB Part B is payable for that period regardless of the actual ATI of the lower earner for the financial year.
The FTB Part B lower income test applies to all other periods during the financial year (i.e. before or after the quarantine period).
Accessing the FTB Part B return to work measure
Eligible individuals who meet the return to work definition, or who are making a voluntary nomination, will need to contact Centrelink to advise that they have returned to work.
If FTB is paid fortnightly, the individual has until the end of the first lodgement year following the relevant financial year (the entitlement year) to advise Centrelink of a return to work.
If FTB is claimed annually, the individual should advise of a return to work by completing the 'Claim for an annual lump sum payment of Family Tax Benefit Form' available through Centrelink.
Example: An individual who returned to work in the 2012-13 financial year has until 30 June 2014 to complete their 2013 FTB claim and advise a return to work.
A lower income earner who was previously self-employed and is returning to self-employment will need to nominate a return to work by signing a written statement. This must contain their return to work details and be provided to Centrelink after the end of the financial year in which the return to work occurred.
Nominating a return to work of less than an average of 10 hours a week over 4 weeks must be provided in writing to Centrelink after the end of the financial year in which the return to work occurred. A nomination cannot be withdrawn once it is made. See also 'Nominating a return to work' below.
The return to work measure only applies to the first time the lower income earner returns to paid work after the birth of a child or caring for a child that has come into their care. If the individual's taxable income from a previous financial year indicates that the individual may have worked since the birth of the child, then this will be investigated. Otherwise, the individual only needs to declare that this is the first time they have returned to work after having a baby or taking on the care of a child.
Note: Single parent families are not entitled to this extra assistance as they already receive the maximum rate of FTB Part B.
Lower income earner
The lower income earner will usually be the member of the couple with the lower ATI calculated following reconciliation. An exception to this is to be made where the lower income earner (based on an original estimate of income) turns out to be the primary earner (based on actual income). This exception will only apply to situations where the lower income earner (based on an original estimate of income) has a return to work and the actual lower income earner (based on actual ATI) does not have a return to work within the same financial year. If both members of the couple have the same ATI, the lower income earner will be the member of the couple who returns to paid work first during the year. If both members of a couple have the same income and return to work on the same date, the individual should nominate which member of the couple the 'return to work' definition applies to.
The FTB Part B return to work measure applies to the child that most recently became an FTB child of the lower income earner. If all of the children became FTB children of the lower income earner at the same time the relevant child is the youngest FTB child of the lower income earner.
The FTB Part B return to work measure is only available once in relation to each child. If an individual does not return to work between the births of children, entitlement to access the measure does not accumulate.
Example: Rachel gave birth to Sarah on 1 June and took leave from work to care for her at home. Over 2 years later, Rachel gave birth to Lewis on 1 September. Between the birth of Sarah and Lewis, Rachel did not return to work and therefore is no longer able to access the return to work measure for Sarah. If Rachel returns to work following the birth of Lewis then he will be considered the eligible child.
If the most recent child to enter care has previously been in and out of the care of the individual, the date they first became an FTB child of the individual is considered to be the original date the child entered the care of the individual and not the most recent date.
A precluded child is a child for whom an individual has already received the benefit of the return to work measure. This generally prevents 2 individual parties receiving quarantining in respect of the same child.
Exceptions: There are exceptions to the 'precluded child' rule for:
- shared care situations where the individual parties both qualify by returning to work, or
- both members of a couple in a blended family who are eligible for FTB for the children in the same period, or
- separated members of a couple who are both eligible for FTB for the period before separation, or
- members of a couple who have agreed to swap who claims FTB with the result that both receive payment of FTB at different times during a financial year.
When a lower income earner returns to work for the youngest or most recent child, it would also be a return to work for any other children in care and the other children cannot have a separate quarantine period claimed against them for a subsequent return to work by that lower income earner. However if one of the other children moves into the care of a different individual, they are not considered precluded and can be used to claim a quarantine period.
The start date of the quarantine period is the later of:
- 1 July of the financial year in which the return to work occurs, or
- the day after ceasing work, or
- the day after the period relating to paid leave or other employment related income ceases (passive employment income).
The end date of this period is the day before returning to work.
Example: Lucy gave birth to Sam on 20 June. Lucy receives 3 months paid maternity leave, which ends on 31 August of that year. Lucy takes no other paid leave. Lucy returns to her old employment on 1 March the following year.
The start of the period is 1 September following the end of her paid maternity leave.
The end of the period is 28 February the following year because Lucy returns to work on 1 March.
Lucy can be paid FTB Part B at the maximum rate from 1 September, after the end of her maternity leave, to 28 February the following year.
However, if Lucy decides to take paid recreation leave later in the year because she is going overseas and claims paid leave for the period (15 to 29 September) then she will not be able to quarantine her FTB Part B payments for this period of leave. Except for the days of paid leave, Lucy would still receive FTB Part B at the maximum rate for the period from 1 September to 28 February.
Leave at half pay
As stated above, a 'quarantine period' commences the day after any period relating to paid leave ends. This is the case whether the individual chooses to take their leave at full pay, or half pay.
Example: Liz commences maternity leave on 4 August 2012. She chooses to take her 14 weeks full pay maternity leave at half pay over 28 weeks (i.e. her maternity leave ends on 16 February 2013). Liz decides to go back to her employment on 2 March 2013.
The start of the quarantine period is 17 February 2013, following the end of her maternity leave on 16 February 2013.
The end of the quarantine period is 1 March 2013, because she chooses to return to work on 2 March 2013.
Liz can be paid FTB Part B at the maximum rate from 17 February 2013, after the end of her maternity leave, to 1 March 2013.
Return to work
A lower income earner is considered to have returned to work (or started work) if the lower income earner has an average of at least 10 hours per week of paid work over 4 consecutive weeks that start in that financial year. The return to work date is the first day that the individual's work level reaches an average of at least 10 hours per week.
Paid work is defined as any work for financial gain or any other reward.
Example 1: Lucy gave birth to Sam on 20 June. Lucy returns to her previous employment on Wednesday 1 March. She works 3 hours on 3 days that week (9 hours). The following 3 weeks she works for 4 days per week for 3 hours (12 hours).
Lucy has worked an average of 11.25 hours per week in the 4-week period starting 1 March and is therefore taken to have returned to work on 1 March during that financial year.
Example 2: Pam gave birth to Rachel on 20 June and returns to her previous employment on 1 March the following year. She works 14 hours during that week. For the next 2 weeks, Pam works 14 hours per week but in the fourth week because it is the school holidays she does not work at all.
Pam has worked an average of 10.5 hours per week over 4 consecutive weeks and is therefore taken to have returned to work on 1 March during that financial year.
Nominating a return to work
If the lower income earner has returned to work (or started work), for less than 10 hours per week over a 4-week period, the individual can choose to nominate that they have returned to work. In these cases the return-to-work date is the first date worked. Return to work nominations must be provided to Centrelink in writing after the end of the financial year in which the return to work occurred. The nomination can only be made after the end of the relevant financial year, as it is only then that it will be known that the 10 hours return to work rule has been met. The individual should be advised that nominations must be provided in writing and that the nomination cannot be withdrawn after it is made.
If FTB is paid fortnightly, a return to work nomination must be made by the end of the lodgement year following the financial year in which the return to work occurred. There is no capacity to extend this notification period.
If FTB is claimed annually, a return to work nomination must be provided with the FTB claim, it cannot be provided separately.
Generally, the individual must make the nomination. If both members of a couple were eligible for FTB in the period before engaging in paid work both must nominate if they are still together, so as to ensure that they both agree. If they have separated, the lower income earner must nominate.
If more than one individual fulfils the return to work criteria for a particular child both parties can access the extra assistance if they meet other eligibility conditions.
This includes cases covered by a determination under section 28 or 29 of A New Tax System (Family Assistance) Act 1999. This could apply in situations where:
- members of a couple in a blended family may be eligible for FTB for children in the same period,
- separated members of a couple are both eligible for FTB for the period before separation, or
- members of a couple have agreed to swap who claims FTB with the result that both receive payment of FTB at different times during a financial year.
Where an individual has had 2 or more partners over a financial year and more than one lower income earner returns to work in respect of a child, the FTB Part B quarantine will be limited to the lower income earner whose quarantine period begins first. If an individual has had 2 separate partners during the period before she or he returned to work, and was the lower income earner with respect to one partner and not the other, the FTB Part B quarantine applies only to the period where the individual was the lower income earner.
Example: Mary receives FTB for her one child and was partnered to Bob during July to October, single in November to December and partnered to Greg during January to June. Mary was the lower income earner in July to October and returned to work for the first time on 1 May. Greg was the lower income earner in January to June and returned to work for the first time on 1 February. The potential FTB Part B quarantine period for Mary's return to work is 1 July to 31 October. The potential FTB Part B quarantine period for Greg's return to work is 1 January to 31 January. Therefore, Mary's return to work will attract the FTB Part B quarantine period for 1 July to 31 October. No quarantine will apply for Greg's return to work.
The issue above involves a change in lower income earner status in the same financial year due to multiple partners.
Swapping roles in a couple
A related issue is where the lower income earner status swaps in a couple in different years, but the individual receiving FTB remains the same.
Example: A lower income earner returns to work for the first time in one financial year. Their partner is the lower income earner in a subsequent financial year and the partner returns to work for the first time in that financial year. The intent is that the partner's return to work does not also attract the FTB Part B quarantine for the same child.
Self-employment & passive employment income
If the lower income earner stops working as self-employed in a joint venture with their partner and derives income from an interest or investments held in the venture, then paragraph (c) of the definition of passive employment income is met.
Example: Karen and John are self-employed full-time in their own business. Karen stopped work to have a baby but still receives a dividend from the business. Karen is therefore receiving passive employment income.
If the lower income earner has never worked as self-employed in a joint venture with their partner and derives income from an interest or investments held in the venture then paragraph (c) of the definition of passive employment income is not met.
Example: Jillian and Joseph are partners in a business. Joseph works in the business but Jillian has never worked in the business. Jillian receives a dividend but because she has never been employed in the business, it is not passive employment income.
Act reference: FAAct section 3(1)-'passive employment income', section 3(1)-'secondary earner', section 3B Meaning of paid work and returns to paid work, Schedule 1 clause 29A Method of calculating Part B rate for those who return to paid work after the birth of a child etc, Schedule 1 clause 29B Conditions to be met in respect of an FTB child, Schedule 1 clause 29C Conditions to be met in respect of a day