6.4.3 Requirement to Lodge an Income Tax Return
This section discusses the requirement for individuals who receive FTB to lodge an income tax return, or to advise Centrelink if they (and/or their partner) are not required to lodge. It also outlines the processes that Centrelink may undertake if the individuals (and/or their partners) fail to lodge an income tax return.
Lodge an income tax return within 12 months of entitlement
An individual claiming FTB (and/or their partner), is required to lodge an income tax return or inform Centrelink if it is determined that they are not required to lodge, within 12 months following the income year in which they received a payment (1.1.I.75).
Where an individual (and/or their partner) lodges an income tax return or informs Centrelink they are not required to lodge, the individual's payments for the income year are reconciled.
Policy reference: FA Guide 6.4.1 Overview of Reconciliation
Advise not required to lodge an income tax return within 12 months of entitlement
An individual who receives FTB (and/or their partner) is required to notify Centrelink they are not required to lodge an income tax return, if they are not required to do so, within 12 months from the end of the relevant income year.
Where an individual (and/or their partner) informs Centrelink they are not required to lodge, the individual must provide a declaration of their (and/or their partner's) ATI for the relevant income year which Centrelink determines to be reasonable in order for their payments to be reconciled.
Non-lodger debt is raised if income tax return is not lodged or Centrelink are not advised of not required to lodge
If an individual (and/or their partner) fails to lodge an income tax return or fails to inform Centrelink that they (and/or their partner) are not required to lodge an income tax return by the end of the lodgement year (1.1.L.30), a non-lodger debt will be raised. The debt will comprise any FTB they received in the year for which they have not lodged an income tax return or advised they are not required to lodge.
In addition, where a non-lodger debt is raised that includes a day that SBP was paid (under the FTB Part A eligibility test), the SBP amount paid will also be raised as a debt.
Note: Other FA payments, such as SBP (where paid under the income test), are not raised as a debt as they have no tax lodgement requirements.
Note: Where NBS and/or NBU are included in a non-lodger debt or an SBP debt is raised due to an FTB non-lodger decision, the individual's entitlement to NBS, NBU and/or SBP for that child is not reassessed until the non-lodger status is resolved.
Act reference: FA(Admin)Act section 28AA Effect of section 28 on NBU of FTB
A non-lodger decision may be made at any time following the end of the lodgement year. Following a decision, a variation of entitlement is issued to the individual by Centrelink. A grace period is provided for a period of 75 days beginning on the day of the variation of an individual's FTB entitlement for a relevant income year in order for the individual to resolve their non-lodger status. The grace period may be a longer period if the Secretary determines that there are special circumstances to vary the length of the grace period. FTB payments based on income estimates may continue to be paid during the grace period but would cease if there are still outstanding income tax returns, or Centrelink has not been informed that the individual (and/or their partner) is not required to lodge, and there are still outstanding non-lodger debts by the end of this period.
Policy reference: FA Guide 22.214.171.124 Prohibition of FTB Based on an Estimate
Lodgement of tax return after the lodgement period - no supplements paid
Individuals (and/or their partners) who fail to lodge an income tax return or inform Centrelink they are not required to lodge within 12 months following the relevant income year, are no longer eligible to receive any top-up payments including the FTB Part A and FTB Part B supplements.
Where an individual (and/or their partner) lodges an income tax return after the lodgement year, they will only be entitled to the lesser of:
- the amount of FA the individual was entitled to during the relevant income year, or
- the amount of FA the individual was entitled to based on actual ATI.
Explanation: This means that the individual will not be entitled to receive any top-up payment or FTB supplements if they lodge income tax return/s after the lodgement year.
An individual who has chosen to defer some of their FTB entitlement for the relevant year and lodges a tax return, or informs Centrelink they are not required to lodge after the end of the lodgement year, can only be paid for the relevant income year the lesser of their legislative entitlement based on ATI or the amount they would have received had the choice not been made to defer some or all of their FTB.
The 12 month lodgement timeframe may be extended if special circumstances exist, which prevent the individual from meeting their income confirmation obligations. An extension can be granted up to the end of the year following the lodgement year.
Note: Lodgements 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 for FTB purposes. Extensions to the lodgement period may be granted if there are special circumstances, which prevent the individual from meeting their income confirmation obligations. 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 (for example forgetting to lodge in time or delay due to high workloads) will not ordinarily constitute special circumstances.