22.214.171.124 Reconciliation Process
Note: From 1 July 2012 individuals and/or their partners have 12 months after the income year (1.1.I.75) to lodge a tax return or notify Centrelink they are not required to lodge in order to receive FTB supplements or top-ups.
Prior to the 2012-13 financial year individuals had an extended lodgement time of 24 months to lodge tax returns.
- Iain was paid FTB for the 2011-12 income year. Iain and his partner Catherine had until 30 June 2014 (2 years) to lodge their tax returns or advise they are not required to lodge a tax return, to ensure they receive their full entitlement (including supplements subject to eligibility requirements and any top up).
- Iain was paid FTB for the 2015-16 income year. Iain and his partner Catherine have until 30 June 2017 (1 year) to lodge their tax returns or advise they are not required to lodge a tax return, to ensure they receive their full entitlement (including supplements and any top-up).
Note: Lodgement of tax returns are the responsibility of the individual, including those who lodge via a tax agent. Providing financial statements to a tax agent or accountant prior to 30 June of the relevant lodgement year does not constitute lodgement of tax returns. Extensions to the tax lodgement period may be granted if there are special circumstances that prevent an individual from lodging their tax return before the end of the lodgement year. Special circumstances are circumstances that are unusual, uncommon or exceptional. Failure by an accountant or tax agent to lodge a tax return within the lodgement period (e.g. forgetting to lodge in time or delay due to high workloads) will not ordinarily constitute special circumstances.
This topic outlines the steps involved in the reconciliation of FTB and CCB. It covers the:
- assessment of FA entitlement,
- FTB Part A supplement,
- FTB Part B supplement,
- comparison of amount entitled to amount paid,
- notification of reconciliation outcomes,
- different timing of FTB and CCB reconciliation, and
- using CCR to offset family assistance debts.
Assessment of FA entitlement
The first step of the reconciliation process is to determine the individual's annual entitlement for the relevant income year (1.1.R.23). This relies on the assessment of the individual's and their partner's (if applicable) actual ATI (for both FTB and CCB), actual maintenance income (for FTB Part A only as relevant) and/or child care attendance record reports from approved child care service providers within the relevant income year (for CCB). This information will determine the individual's entitlement for the relevant income year.
Annual entitlement is also dependent on whether an individual is eligible for the end of year FTB Part A supplement for each of their children and/or the FTB Part B supplement.
Note: Individuals who are not required to lodge a tax return must advise Centrelink they are not required to lodge and provide their final assessment of ATI for the relevant income year. If the individual provides a different assessment of ATI, it can be accepted only if it is considered to be reasonable.
Note: Once a determination of CCB entitlement or no entitlement has been made for an individual and a child, an individual who can show that the income for the income year that was taken into account was incorrect, may apply for a review of this decision or the Secretary may initiate a review.
Note: Determination of an individual's CCR entitlement can only take place after the CCB reconciliation has occurred.
Act reference: FA(Admin)Act section 51 Determination to be made if determination of conditional eligibility in force, section 51A Secretary must determine entitlement, section 51B Determination of entitlement, section 51C Determination that no entitlement, section 51E Notice of determination, section 105 Secretary may review certain decisions on own initiative, section 109A Review of certain decisions may be initiated by applicant
Policy reference: FA Guide 126.96.36.199 Verification of Adjusted Taxable Income, 3.2.2 Taxable Income, 188.8.131.52 Valid Reasons for Not Lodging a Tax Return, 184.108.40.206 Calculating a Rate of FTB - Overview, 3.5.2 Calculating Approved Care CCB Entitlement, 220.127.116.11 Change of Rate Circumstances, 3.8 CCR Rate Calculation
FTB Part A supplement
The FTB Part A supplement is paid to a person who is eligible to receive FTB Part A for an FTB child, but is only payable as part of the reconciliation process. The FTB Part A supplement cannot be paid in fortnightly instalments.
Payment of the supplement is conditional on:
- the FTB individual and/or their partner lodging a tax return or informing Centrelink they are not required to lodge a tax return within 12 months of the relevant income year, and
- the FTB individual having family ATI of $80,000 or less for the relevant income year, and
- completion and notification of a health check for an FTB child who has turned 4 in the income year, if the health check requirement applies to the individual (for further details on the child health check requirement see 1.1.H.05), and
- meeting immunisation requirements for FTB children who turned 1, in the relevant income year, and in each income year after that until the age of 19 years (up to the end of the calendar year in which a child turns 19) (for further details on immunisation requirements see 1.1.I.10).
The FTB Part A supplement is included as part of the rate calculation process during reconciliation and may have the effect of reducing an overpayment incurred during the current or previous income year/s.
FTB Part B supplement
The FTB Part B supplement is paid to a person who is eligible to receive FTB Part B but is only payable as part of the reconciliation process. The FTB Part B supplement cannot be paid in fortnightly instalments.
Payment of the supplement is conditional on the individual and/or their partner lodging a tax return or informing Centrelink they are not required to lodge a tax return within 12 months of the income year. The FTB Part B supplement is included as part of the rate calculation process during reconciliation and therefore, may have the effect of reducing an overpayment incurred during the current or previous income year/s.
Amount entitled versus amount paid
The second step in reconciliation is to subtract the amount paid to the individual in FTB instalments or CCB fee reductions during the relevant income year according to Centrelink records from the individual's FTB and/or CCB entitlement. The result of this calculation is the reconciliation outcome which may entitle an individual to a top-up, require the repayment of a debt, or a nil adjustment.
Example: Marlene receives FTB Part A for 1 child during the 2016-17 income year. The fortnightly entitlement is calculated based on Marlene's estimate of $55,000. Marlene lodges her tax return in August 2017 and her income is assessed by the ATO to be $58,000. Marlene's underestimated income for 2016-17 may give rise to an overpayment but, this would be offset by the FTB Part A supplement to the value of the overpayment. If there is a supplement balance left over, it would be paid to Marlene.
Act reference: FA(Admin)Act section 56 Payment in respect of claim for which child care benefit by fee reduction if claim by individual, section 71B Debts where no entitlement or where enrolment advance wrongly paid, section 71C Debts arising in respect of child care benefit where overpayment
Notification of reconciliation outcomes
For FTB, in cases where a Secretary-initiated review (i.e. reconciliation) is carried out, only positive (top-ups) or negative (debts) adjustments of FTB need to be advised in writing to individuals. However, all individuals with a nil adjustment following reconciliation may be advised that they have been correctly paid.
For CCB, once a determination of CCB entitlement or no entitlement has been made for an individual and a child, the individual will be notified in writing in all cases of the outcome of this decision.
In cases where the reconciliation of FTB is triggered by the lodgement of an income tax return, the reconciliation outcome may be advised to the ATO. The ATO may use some or all of a FTB top-up payment for the recovery of any tax debts (after it has been used to recover family assistance debts). Conversely, once a tax refund has been applied to any tax debts, that may exist, the ATO may use any remaining tax refund to recover FTB or CCB debts. If the ATO is unable to fully recover a debt from the individual's or partner's tax refund (where the partner consents to such recovery), the residual debt amount will be advised to Centrelink for recovery.
In all cases where an individual initiates a review of their entitlements, they must be notified in writing of the outcome.
Act reference: FA(Admin)Act section 106 Notice of review decision to be given, section 82 Methods of recovery, section 84A Setting off family assistance against debt owed, section 87 Application of income tax refund owed to person, section 92A Setting off family assistance of person against another person's debt, section 93 Application of income tax refund owed to another person
Different timing of FTB & CCB reconciliation
Due to different information being required to reconcile FTB and CCB, reconciliation can occur at different times for each payment, depending on when this information is available.
Example: Jack is paid FTB by instalment and CCB by fee reduction for the period 1 July 2016 to 5 May 2017 based on an estimated ATI of $55,000. Jack lodges his income tax return on 11 July 2017. On 20 July 2017, Centrelink receives Jack's actual ATI which is $48,000. Jack's FTB is reconciled and a top-up of FTB is paid by Centrelink. Jack's child care attendance details are provided by his approved child care service by 24 July 2017 (the 4th Monday in July when CCB reconciliation processing commences). Centrelink notifies Jack of his CCB reconciliation and CCR annual entitlement outcomes at that time and directly credits any top-up to Jack.
Using CCR to offset debts
CCR is only used to offset current year or previous years CCB or CCR reconciliation debts. It is not used to offset other CCB or CCR debts, FTB reconciliation debts or other FTB debts. Where a CCR debt occurs this can be offset from any CCB or CCR top-up that may be payable. To facilitate these arrangements the CCR is identified as a separate component from the CCB reconciliation result.
Example: Karen is partnered to Scott. Karen is a full-time mother and part-time student, and is paid CCB for her 1 year old son for the period 1 July 2016 to 30 June 2017 based on Scott's estimated ATI of $42,000. Scott's actual ATI was $58,000. Karen was paid more CCB than she was entitled and has a debt. As Karen is now entitled to less CCB she would be entitled to a top up of CCR. Karen's CCB debt will be offset (fully or partially) using her CCR entitlement which is determined at the same time as CCB reconciliation.