6.6.1 Non-entitlement to FTB Based on an Estimate Due to Underestimation of Income

Summary

Individuals (and/or their partners, if applicable) cannot access FTB based on an estimate for a current entitlement year if they have had 2 consecutive years of zero entitlement to FTB due to underestimation of income.

Underestimation of income can only be established once actual ATI is known for a relevant income year, after tax returns have been lodged. Non-entitlement may apply to FTB Part A only, FTB Part B only (where income underestimated by the primary income earner) or both FTB Part A and Part B.

This process is designed to identify and prevent individuals accessing instalment payments and other FTB Part A-related government benefits if they have a pattern of non-entitlement due to underestimation of their income, but have been accessing these payments and/or ancillary benefits. The pattern is established if the individual has 2 consecutive years of non-entitlement due to underestimation of income.

Exceptions may apply in particular circumstances to prevent an individual becoming non-entitled when they otherwise would be.

The earliest financial year that can be counted for the purposes of non-entitlement is 2009-10.

Non-entitlement to FTB Part A or FTB Part B or both

The payment affected is the payment for which the underestimation of income specifically relates. If an individual is not entitled to FTB Part A due to underestimation of income, but they have entitlement to FTB Part B, they will only be precluded from receiving FTB Part A. If the individual is deemed to have no entitlement to FTB Part A and Part B they will be cancelled and will need to reclaim either or both payments at a later time when they can establish entitlement with their actual ATI or they can show they are eligible for an exception.

FTB Part B would only be affected if the inaccurate income estimate for instalment payment was for primary earner income. Underestimation of a secondary earner's income cannot preclude the individual/family from receiving FTB Part B.

If an individual is precluded from receiving one part of their FTB entitlement, but is still eligible for the other, the individual will be reconciled for both payments when their actual ATI is known. The individual will not have to reclaim for that payment.

Example: Coby has his FTB Part A entitlement reconciled as nil due to underestimation of income for the 2009 10 and 2010-11 years, however he is still entitled to FTB Part B. As such, he will be unable to access payment of FTB Part A based on an estimate from 1 July 2012, but may still access FTB Part B. When his (and his partner, if applicable) actual ATI is known, reconciliation will occur for both FTB Part B and FTB Part A to confirm if he has any entitlement.

The FTB payment is cancelled when an individual has 2 consecutive years of non-entitlement to both FTB Part A and FTB Part B due to underestimation of income.

Example: Josie has had her FTB entitlement to both FTB Part A and FTB Part B reconciled as nil due to underestimation of income for the 2009 10 and 2010-11 years. As such, her FTB will be cancelled and she will be unable to access fortnightly instalments from 1 July 2012.

Individuals who have their FTB cancelled due to underestimation of income can only access FTB by claiming a lump sum for the past income year when their actual ATI is known, or establishing they are eligible for an exception.

Policy reference: FA Guide 6.6.3 Non-entitlement to FTB Part A &/or FTB Part B Due to Underestimation of Income

Effect of preclusion on partners

Where an individual is not entitled to a component/s of FTB based on an estimate due to underestimation of income, their current partner will also not be entitled to the same component/s. Therefore, the partner of a non-entitled individual is unable to access the FTB Part A and/or Part B components which the non-entitled individual is unable to access based on an estimate while they are partnered with the non-entitled individual.

This rule also applies to individuals who are currently not entitled to FTB. If such an individual partners with another person who is entitled to FTB, the non-entitlement will apply to both of them, following the individual becoming a member of a couple.

Conversely, where the individual re-establishes entitlement, and as a result their preclusion ends, this effect will carry over to their partner.

Similarly, in the instance where the partner (of a precluded individual) successfully makes a new claim, the preclusion that prevents the individual from receiving FTB payments is lifted.

Example: Thomas is precluded from receiving FTB Part A payments due to zero entitlement for income years 2009-10 and 2010-11. Thomas' partner successfully made a lump sum claim for income year 2012-13. The preclusion is lifted as a result of the partner making a successful lump sum claim and the preclusion will also be lifted from Thomas. This means that either Thomas or his partner can access FTB Part A via instalments.

New partners

If the non-entitled individual becomes a member of a new couple, the new partner is also not able to access the same components of FTB based on an estimate which the non-entitled individual is unable to access, unless an exception applies.

Blended families

If an individual in a blended family is subject to non-entitlement due to underestimation of income, their current partner will also be non-entitled to the affected FTB payment based on an estimate for any FTB child, including FTB children from a previous relationship for whom the partner would otherwise have separately received FTB.

Act reference: FA(Admin)Act section 32AF Non-entitlement to FTB on estimated income basis-review of income during 2 consecutive income years, section 32AH Exception-Resumption of eligibility for FTB

Policy reference: FA Guide 6.6.2 Effect of Non-entitlement Due to Underestimation of Income, 6.6.3 Non-entitlement to FTB Part A &/or FTB Part B Due to Underestimation of Income

Last reviewed: 3 July 2017