6.4.1.10 Individuals Affected by Reconciliation

Summary

This topic identifies FA individuals who are affected by reconciliation.

FA individuals who receive FA on the basis of ATI, maintenance income and/or child care usage may be subject to reconciliation. ATI, maintenance income and/or child care usage may be relevant for FTB by instalment, CCB by fee reduction, FTB or CCB for a past period.

FTB individuals to whom reconciliation does not apply

Certain FTB individuals are not subject to reconciliation of ATI - either because all the relevant actual ATI is known when their FTB claim is determined or because their FTB entitlement is not subject to the income test. These include:

  • single individuals in receipt of income support for the entire period during the relevant income year that they received payment,
    • Explanation: An individual's entitlement to FTB is not subject to an income test during the period when they and/or their partner receive income support. For periods during which the individual and/or their partner does not receive income support, the income test is applicable.
  • single individuals claiming for a past period in the previous income year,
    • Explanation: A past period claim for a previous income year can be determined only when the individual's actual ATI for that year is known.
  • partnered individuals claiming for a past period in the previous income year where their partner's actual ATI is available at the time the claim is made.
    • Explanation: If a partner's ATI is not available, a past period (lump sum) claim may only be determined using the individual's and the partner's actual income once it is known.
    • Example: Mary lodges an FTB claim on 1 August 2008 for the period 1 July 2007 to 30 June 2008 following lodgement of her tax return. Her partner Bill lodged his tax return in July 2008. Mary is paid FTB on the basis of her and her partner's combined actual 2007-08 ATI of $54,000. There is no reconciliation of ATI.

Act reference: FAAct Schedule 1 clause 28B Adjusted taxable income exceeding $100,000, Schedule 1 clause 38L Application of income test to pension and benefit recipients and their partners

FA(Admin)Act section 32C Relevant reconciliation time-first individual must lodge tax return

CCB individuals not reconciled

Certain CCB individuals will not have their entitlement for the relevant income year reconciled based on actual income. They are:

  • individuals in receipt of income support, or who have a partner in receipt of income support, for the entire period during the relevant income year that they received payment,
  • individuals who elected to receive zero rate only of CCB throughout the relevant income year, and
  • individuals who were not TFN compliant for the entire period during the relevant income year that they received payment.
    • Explanation: Individuals who do not provide or authorise the use of their TFN for CCB purposes only receive zero rate.

CCB individuals who elected to receive zero rate during the year and any entitlement after the end of the financial year will not have their entitlement reconciled.

CCR individuals

From 2006-07 and 2007-08, individuals who have received CCB for approved child care services will have their CCTR entitlement determined after the CCB reconciliation has taken place. Their CCTR entitlement will be paid directly into their nominated bank account.

From July 2008, individuals who have received CCB as reduced fees for approved child care will have their CCR entitlement determined as a quarterly payment when usage/attendance information is received from child care services. Determination of an individual's CCR annual entitlement can only take place after the CCB reconciliation and a determination of entitlement to CCB or no entitlement has been made. Individuals who have received CCB for approved child care as a lump sum will have their CCR entitlement determined after the CCB reconciliation has taken place. Their CCR entitlement will be paid directly into their nominated bank account.

SBP individuals

From 1 March 2014, individuals who receive SBP may be indirectly subject to reconciliation. Where SBP is paid under the income test, payment is not reconciled. Where SBP is paid under the FTB Part A eligibility test, the SBP is not reconciled directly, but is raised as a debt where FTB reconciliation results in nil FTB Part A entitlement for the day that SBP was paid.

Note: If SBP is raised as a debt due to FTB Part A reconciliation, the individual may still be eligible for SBP for a later date. In this case, a debt is raised for the original payment and the debt is offset by the new SBP entitlement for the later date.

Example: Jane is receiving FTB Part A by instalments for 2 children and gives birth to a stillborn child. Jane does not meet the SBP income test, but is eligible for payment as she is in receipt of FTB Part A. SBP is paid due to Jane's FTB Part A eligibility on the day of the stillbirth. At FTB reconciliation, Jane's ATI is above the FTB Part A threshold. As such, all of Jane's FTB Part A for the relevant year and her SBP are raised as a debt during reconciliation. However, as Jane is still eligible for FTB Part A by instalments as at 1 July of the following year and it is still within 52 weeks beginning on the day of the stillbirth, Jane is now paid SBP due to her FTB Part A eligibility on 1 July. The new SBP is used to offset the debt raised for the original payment, and as the SBP rate had increased on 1 July due to indexation, the difference is used to offset part of Jane's FTB Part A debt.

Act reference: FA(Admin)Act section 58 Variation where failure to provide tax file number, section 14 Restriction on determining claim where income tax assessment not made

Policy reference: FA Guide 4.6.4 More Choice for Families - CCB, 4.6.4.20 No CCB as Reduced Fees - Any CCB Entitlement at End of Year, 4.6.4.30 Rounding Down CCB%, 6.4.1.20 Payments Affected by Reconciliation, 6.4.1.30 Reconciliation Process, 6.4.2.10 Verification of Adjusted Taxable Income, 6.4.2.30 FTB Reconciliation Due to Maintenance Income, 6.4.2.50 CCB Reconciliation & Child Care Usage/Attendance Information, 2.12 SBP Eligibility

Last reviewed: 14 August 2017