4.9.3 Outcomes of New Financial Year Assessments

Summary

There are several possible outcomes arising from the new financial year and transitional period assessment process. These outcomes depend on whether or not the individual (1.1.I.90) responds to Centrelink after being contacted and, in cases where they do respond, the nature of their response.

This topic contains information on the following:

  • New Financial Year Assessment (NFYA) options for individuals,
  • where an individual does not respond,
  • where an individual's revised estimate is assessed as reasonable,
  • where an individual's revised estimate is assessed as unreasonable, and
  • when the estimated income amount applies.

NFYA options for individuals

Individuals are contacted as part of the NFYA process or after being granted FTB after the NFYA process started, but before the new financial year. Individuals are given 2 options regarding the estimate of income to be used to determine their rate of FTB and/or CCS percentage from the beginning of the new financial year.

The 2 options individuals are given in relation to their estimate for the new financial year are:

  • provide a new estimate that will be used to determine their rate of FTB and/or CCS percentage from the beginning of the new financial year, or
  • accept the indexed amount that is provided in the letter to determine their rate of FTB and/or CCS percentage from the beginning of the new financial year.

Note: Where individuals make a new CCS claim after the NFYA process and before the start of the new financial year, they will instead be required to provide their combined annual estimated ATI (1.1.A.20) for both the current and new financial year. Therefore, these individuals will not be provided with an indexed estimate.

Act reference: FA(Admin)Act section 20(2A) Determination of rate may be based on estimate, indexed estimate or indexed actual income, section 20A Indexed estimates, section 20B Indexed actual incomes, section 20C Indexed estimates and indexed actual income of members of couples, section 67DB(2) Estimate, section 67DC Indexed estimates, section 67DD Indexed actual incomes, section 67DE Indexed estimates and indexed actual incomes for members of couples

Policy reference: FA Guide 3.5.1 CCS - Combined Annual ATI, 4.9.1 Overview of New Financial Year Assessments

Where an individual does not respond

If an individual does not respond to the request to provide an estimate, the indexed estimate amount provided in the advice is used to determine their rate of FTB from the beginning of the new financial year, provided this is more than 14 days after the NFYA is given.

A CCS percentage determined using an indexed estimate will apply from the first Monday of a CCS fortnight that is after the start of the new financial year, and that is also at least 14 days after the NFYA is given.

Note: If the letter is returned to sender, then normal returned mail procedures apply.

Example: A family is being paid instalments of FTB and their CCS for the current financial year based on an estimate of their combined ATI of $32,500. When contacted, they choose not to respond. Centrelink uses the family's indexed amount (the most recent estimate multiplied by the indexation factor) in the advice to determine their rate of FTB and CCS percentage from the beginning of the new financial year (FTB) and the first Monday of a CCS fortnight after 1 July (CCS).

If an individual whose payments are based on an indexed estimate does not later provide their own revised estimate, they may also be subject to the second stage of income indexation. This second stage of income indexation is based on the individual's, and their partner's (1.1.P.30) actual ATI from the ATO.

Centrelink will index the actual ATI from the ATO by the indexation factor. The indexed actual ATI will then be compared to the indexed estimate and the higher amount will be used to determine the individual's rate of payment.

Example: A family is receiving CCS and FTB by instalments for the current financial year based on an indexed estimate of their combined ATI. When their previous year's income is confirmed by the ATO, Centrelink calculates their indexed actual income (the most recent confirmed income from the ATO multiplied by the indexation factor). If this is higher than the current indexed estimate, it will be used to determine the individual's rate of FTB and CCS percentage from the earliest date the new estimate can apply.

Act reference: FA(Admin)Act section 67DD(2) If the Secretary calculates an indexed actual income …

Policy reference: FA Guide 1.1.I.85 Indexed income - actual or estimate (FTB), 4.9.1 Overview of New Financial Year Assessments

Where an individual's revised estimate is assessed as reasonable

Where an individual's rate of FTB or CCS percentage is based on an estimate, indexed estimate or indexed actual income, the individual may choose to provide a revised income estimate upon which their rate of FTB and CCS percentage may be calculated. In this instance, Centrelink will assess whether the individual's revised estimate is reasonable (3.2.8.30). If reasonable, Centrelink will use this new estimate to determine the individual's rate of FTB and/or CCS percentage from either the day the revised estimate was provided (or the first Monday of the next CCS fortnight after the revised estimate was provided for CCS) or the first day of the new financial year (or the first Monday of a CCS fortnight that is after the start of the new financial year), in accordance with FA(Admin)Act section 31A.

Example 1: Wendy is receiving FTB by instalments based on an indexed income estimate of $45,000. Following an increase in her partner's overtime payments, Wendy provides Centrelink with a revised income estimate of $51,000. Centrelink assesses this new estimate to be reasonable based on the information provided by the individual. Wendy's payments will now be based on the revised income estimate of $51,000, beginning from the date the advice was received.

Example 2: Richard and his wife Prue are receiving FTB by instalments and CCS for the current financial year and are advised (through the NFYA process) that their indexed income estimate is $29,000 for the new financial year. Richard advises Centrelink that they wish to have their new estimate of $45,000 used for the new financial year. Centrelink assesses this new estimate to be reasonable based on the information provided by Richard. From the beginning of the next financial year, the family's FTB instalments and CCS percentage are determined using their income estimate of $45,000.

Note: When an individual whose payments are based on indexed estimates provides their own revised estimate, they will not be subject to the second stage of income indexation (of actual income).

Act reference: FA(Admin)Act section 31A Variation of instalment entitlement determination to reflect revised adjusted taxable income estimates, section 20 Determination of rate may be based on estimate, indexed estimate or indexed actual income, section 20A Indexed estimates, section 20B Indexed actual incomes, section 67DB(2) Estimate, section 67DC Indexed estimates, section 67DD Indexed actual incomes

Where an individual's new estimate is assessed as unreasonable

An individual may choose to provide their own estimate for the new financial year, instead of accepting the indexed estimate provided by Centrelink. In this instance, Centrelink will assess whether the individual's estimate is reasonable. If it is determined to be unreasonable, Centrelink will contact the individual to discuss a new reasonable estimate. If the individual decides not to provide a new estimate, or provide evidence to show their previous estimate is reasonable, Centrelink will make a determination that the individual is not entitled to be paid FTB or CCS for the new financial year unless a new reasonable estimate is provided or the individual indicates they accept the indexed estimate.

Example 1: Barry and his wife Michelle are paid FTB by instalments for the current financial year. They decide to provide a lower estimate than the indexed estimate provided by Centrelink for the next financial year because Michelle expects to work fewer hours in the next financial year. Barry contacts Centrelink and advises of their new estimate. Centrelink assesses this estimate as unreasonable based on information provided by Barry. Negotiations with Barry for a new estimate are unsuccessful. Centrelink determines that Barry is not entitled to be paid FTB by instalment or receive CCS payments during the next financial year as a reasonable estimate has not been provided. Barry is advised of this decision and that any amounts he may be entitled to may only be calculated at the end of the financial year, once he has met reconciliation conditions (confirmed his actual ATI for that year). If Barry provides a reasonable estimate before the beginning of the next financial year, he may start receiving CCS and FTB payments for the remainder of the financial year (any amounts he may be entitled to for the period he did not have a reasonable estimate in place can only be assessed and paid at end of year reconciliation).

Example 2: George is being paid FTB by instalments and CCS for the current financial year. George advises Centrelink of a new estimate for the next financial year that is lower than the current estimate being used for his FTB and CCS payments. George explains that his partner expects a lower income in the next financial year as she will be working fewer hours. Centrelink assesses this estimate as unreasonable as the expected reduction in working hours does not justify the significant reduction of the estimate. George renegotiates a new reasonable estimate with Centrelink. Centrelink determines that George is entitled to be paid FTB by instalment for the new financial year and continue being paid CCS as a reasonable estimate has been agreed.

Note: Individuals who have fluctuating income may find it difficult to provide an accurate reasonable estimate. These individuals may choose to provide an estimate at the upper end of an estimated income range, in order to avoid possible overpayments. Where applicable, Centrelink may advise the individual of the consequences of such an approach including possible loss of eligibility for the HCC or having a lower CCS percentage.

Policy reference: FA Guide 3.2.8.30 Revised Estimates, 4.4.3 Estimate of Income Not Reasonable

When does the income amount apply?

The income amount resulting from the new financial year assessment process occurring in the current financial year applies from a date on or after 1 July of the new financial year.

In most cases, the application of the income amount will be from the beginning of the new financial year. However, the start date for the application of the income amount provided in the notice under FA(Admin)Act subsection 20A(2) or 20B(2) for FTB is at least 14 days after the day on which the notice is given. This means that an individual may have the income amount applied on or after 1 July of the relevant income year.

For CCS, the start date for the application of the income amount provided in a notice under subsection 67DC(2) (indexed estimate notice) or 67DD(2) (indexed actual notice) must be the first Monday of a CCS fortnight that is also at least 14 days after the notice was given.

Example: Jane claims FTB on 25 June providing her ATI for the current year as $50,498. As Jane is unable to provide an estimate of her ATI for the new financial year beginning 1 July, she agrees with Centrelink to use indexed actual income based on her most recent ATI for the new financial year. A notice is issued under FA(Admin)Act subsection 20B(2) on 26 June. Jane's FTB payments can only be based on the indexed amount on or after 10 July of the new financial year. Before the new rates take effect, Jane's FTB payments will be based on her estimated ATI of $50,498.

Act reference: FA(Admin)Act section 20A Indexed estimates, section 20B Indexed actual incomes, section 67DC(2) If the Secretary calculates an indexed estimate…, section 67DD(2) If the Secretary calculates an indexed actual income …

Last reviewed: 2 July 2018