4.4.2.20 Change in income related circumstances
Introduction
This topic covers income related changes in circumstances and the dates of effect of the resulting variations to the FTB rate. Changes in income related circumstances may result in an increase or decrease of FTB rates, including a decrease to nil.
Income related changes include:
- changes to estimates of ATI
- changes to maintenance income.
Income changes causing a revised estimate of ATI
Income related changes in circumstances that may lead to a revised estimate of ATI include commencing or ceasing work, changes to hours of work, pay rises and superannuation payouts.
Date of effect - revised estimates of ATI
The dates of effect to be applied where a revised estimate changes the rate of FTB are shown in the following table.
| If an income related change of circumstances resulting in … | is notified … | the date of effect of the reassessment is … |
|---|---|---|
| a favourable determination | for the current financial year | the date of notification of the change of circumstances.
Example: Sue stops work and provides a revised estimate on 3 October. The date of effect of the increase is 3 October. |
| for a future financial year | the beginning of the financial year of the estimate.
Example: Melissa provides an estimate for the new financial year on 15 June as she knows her hours of work will reduce from 1 August. The date of effect of the increase is 1 July. |
|
| an unfavourable determination (including a decrease to nil) | for the current financial year and is actioned in time for the payday following notification | the date of notification of the change of circumstances.
Example: Martha commences work on 3 October and provides a revised estimate on 10 October. The change is actioned immediately taking her new estimate into account. Her FTB is reduced from the next payday with date of effect of 10 October. |
| for the current financial year and is not actioned in time for the payday following notification but a later payday | the beginning of the instalment period of the later payday.
Example: Sue advises her hours of work have increased and provides a revised estimate but the new estimate is not actioned in time for the next payday, the date of effect is the beginning of the next instalment period. |
|
| for a future financial year | the beginning of the financial year of the estimate.
Example: Jennifer provides an estimate for the new financial year on 2 June as she knows her husband will receive a pay increase from 14 July. Her FTB is reduced with date of effect of 1 July. |
Act reference: FA(Admin)Act section 31A Variation of instalment entitlement determination to reflect revised adjusted taxable income estimates
Policy reference: FA Guide 3.2.8.30 Revised estimates, 5.2.2 Information required for instalment claims
Change in income not notified or not notified within time
Where an individual provides a revised estimate some time after the increase in income has occurred (but within the same financial year) the date of effect rules, as outlined in the previous table, still apply. Debts of this nature can only be raised, by comparing actual income with estimated income within the reconciliation process.
Example: Sue starts work on 30 August but does not provide a revised estimate until 10 May of the following year. Her FTB is reduced from the next payday with date of effect of 10 May.
Income & non-income related change advised at the same time
Generally, the date of effect is the date an individual notifies Centrelink of an event or change in their circumstance. However, in some cases, the date of effect may be different from the date of notification. For example, an individual may notify of a new child in the family and a related revised estimate which may affect the individual's FTB entitlement. Where the revised estimates affects the individual's rate of FTB for a reason other than just a change in ATI, such as the birth or adoption of a child, the date of effect is the day of the event (for example, the birth or adoption of the child).
If the change in income estimate did not occur because of the birth or adoption of the child, then the date of effect for the revised estimate should be the date of notification, but the date of effect for the new child should be the date of the child's birth or adoption.
Where an individual has a second child and at the same time her partner's income increases as a result of a pay rise, the new estimate is not the result of the birth or adoption of the child. As the pay rise is the only cause of the increased income, the date of effect for the revised estimate is the date the individual notifies Centrelink and the date of effect for the additional child is the date of the birth or adoption.
Example: On 1 October Diane informs Centrelink of the birth of her second child, born on 28 July. At the same time, Diane provides a new estimate of her income because of a change in salary on 5 September. As both income and non-income related circumstances are involved, different dates of effect apply to each. As the birth of the baby is a change in non-income related circumstances, the date of effect of the FTB rate change in respect of the child is the date of the child's birth, that is 28 July. Diane's change in salary is a change in income related circumstances which is not attributed to the birth of the child, meaning that the revised estimate in this instance would apply from the date of notification, that is 1 October.
The date of effect of non-income related changes is outlined in 4.4.2.10.
Act reference: FA(Admin)Act section 31 Variation of instalment entitlement determination to reflect changes in eligibility, section 31A Variation of instalment entitlement determination to reflect revised adjusted taxable income estimates
Policy reference: FA Guide 4.4.2.10 Change in non-income related circumstances
Date of effect - maintenance income
The following table outlines the date of effect for changes to maintenance income.
| If a change in maintenance income occurs due to … | the date of effect of the reassessment is … | The reason for the difference is … |
|---|---|---|
| commencement or change in a Child Support assessment | the beginning of the instalment period of the first affected payday. | reconciliation identifies any debt or credit due to revised estimates of maintenance income. |
| Centrelink receiving the details of monthly Child Support disbursement | first day of the next month. | reconciliation identifies any debt or arrears due to revised estimates of maintenance income. |
| availability of details of maintenance income received during a financial year (reconciliation) | the beginning of the relevant period in the financial year. | the details relate to the whole of the relevant period in the financial year, and do not change at any particular point in time. |
| a change in an individual's annual amount of maintenance income following a change in the maintenance assessment method | the beginning of the instalment period of the first affected payday. | reconciliation identifies any debt or arrears due to revised estimates of maintenance income. |
Act reference: FA(Admin)Act section 31B Variation of instalment entitlement determination to reflect revised maintenance income estimates
Policy reference: FA Guide 3.1.7 Maintenance income test
Mandatory continuous adjustment
Individuals who receive FTB by instalment and advise of a change in their ATI estimate during the year may have their FTB rate automatically adjusted, if required, to reduce the risk of an overpayment at the end of the income year. This process is known as mandatory continuous adjustment (MCA).
The individual's daily rate of FTB is calculated on the basis of the new estimate for the remainder of the income year, but a deduction is made from their daily rate to take account of the notional overpayment of FTB, if there is a notional overpayment, based on the previous income estimate.
Policy reference: FA Guide 4.3.1.30 Mandatory continuous adjustment of FTB instalments