6.4.2.30 FTB Reconciliation Due to Maintenance Income

Summary

This topic explains how maintenance income (1.1.M.10) can affect the reconciliation of FTB Part A. It details:

  • the assessment of a payee's entitlement,
  • what maintenance income is to be used,
  • how maintenance income is verified, and
  • how maintenance income is annualised.

Assessment of entitlement - Child Support collect

For individuals who use Child Support collect and are entitled to more than the base rate of FTB Part A under the income test, and who have, or whose partner has, children from a previous relationship reconciliation must also take into account the actual amount of maintenance income received during the relevant income year (1.1.R.23).

This means that at reconciliation a payee's FTB Part A entitlement is calculated on both their actual ATI (1.1.A.20) and the actual amount of maintenance income received. This is compared to the amount of FTB Part A they were paid based on estimate/s of both their ATI and maintenance income.

Example: Deborah is single and receives FTB by instalment for her daughter for the income year between 1 July and 30 June. Deborah's FTB is assessed on her ATI of $38,000 and maintenance income of $5,000. Deborah's actual ATI is $38,000 and she did not receive any maintenance income during the year according to Child Support disbursements. This results in a positive adjustment and Deborah receives a top-up as she was assessed under the entitlement method by Centrelink during the income year.

Assessment of entitlement - private collect

From 1 July 2012, individuals who are private collect and are entitled to more than base rate of FTB Part A under the income test, and who have, or whose partner has, children from a previous relationship will be deemed to have privately collected their full child support entitlement at reconciliation.

This means that at reconciliation a payee's FTB Part A entitlement is calculated on both their actual ATI and the deemed amount of maintenance income (3.1.5.50).

Prior to 1 July 2012, an individual who chose to collect their child support privately was assumed to be collecting 100% of their child support assessment or registered agreement. The amount of the assessment or agreement was taken to be the received amount and used when applying the maintenance income test, unless the individual advised Centrelink otherwise. Where the amount received was less than the assessed amount, failure of the maintenance action test could have resulted.

Maintenance Income

Only maintenance income received during a relevant period (1.1.R.25) can affect an individual's rate of FTB for part of, or for the entire claim period, during the relevant income year.

Child support agreements

For recipients who have a child support agreement, Centrelink will use the 'Child Support notional assessment' amount in determining FTB Part A entitlements. The notional assessment is the annual rate of child support that would be payable under the child support formula if there was no child support agreement. For guidance on child support agreements in relation to which there is a notional assessment, refer to 3.1.7.14 Notional Assessments.

Annualisation of maintenance income

When determining entitlement, it may be necessary to annualise the amount of maintenance income received during the relevant period/s. For private collect person's, this may also involve the assessment of the amount of maintenance income the person should have received based on their daily child support rate and the number of days that rate applied.

Where a person only receives maintenance income for part of the relevant income year, that income is annualised for reconciliation purposes to bring it into line with the assessment of all other FTB recipients.

The formula for annualising is:

Divide Number of days in income year by Number of days in the relevant period or periods then multiply by Maintenance income for the relevant period or periods

Example: George's relevant period during the relevant income year is 200 days. For the first 100 days, George privately collects a maintenance entitlement of $1,825 per annum ($5 per day). For the second 100 days, his entitlement increases to $3,650 per annum ($10 per day). The total maintenance income to be collected by George is $1,500 ($5 × 100 plus $10 × 100). The annualised maintenance income used to determine his entitlement for the relevant period is $2,737.50 ($1,500 × (365 ÷ 200)).

Policy reference: FA Guide 3.1.7.11 Assessable Maintenance Income

Last reviewed: 21 March 2016