6.6.2 Effect of Non-entitlement Due to Underestimation of Income

Summary

From 1 July 2012, FTB individuals' and their partner's access to FTB Part A (and benefits linked to FTB Part A) and/or FTB Part B based on an estimate will cease if they:

  • advise or have been provided with (by automatic uplift) an income estimate which results in an FTB Part A and/or FTB Part B (primary earner income estimate only) legislative rate greater than nil for 2 consecutive income years, but
  • are reconciled as having a nil (zero) legislative entitlement for the same FTB component in both those income years due to their actual ATI being higher than their estimate.

Example: Joe has had his FTB entitlement reconciled as nil due to underestimation of income for the 2009-10 and 2010-11 years. He will not be able to access fortnightly instalments from 1 July 2012.

Loss of entitlement to FTB Part A will preclude the individual (and their partner, if applicable) from accessing ancillary benefits via FTB such as:

  • the lower threshold of the Extended Medicare Safety Net from the start of the following calendar year,
  • Pharmaceutical Benefits Scheme,
  • Child Dental Benefits Schedule, and
  • health care card.

However, some individuals may be able to access these benefits if they are eligible for certain income support payments or concession cards.

What is underestimation of income

Income years where non-entitlement is attributable to something other than underestimation of income will not be included in the count for this process. The individual must have been entitled in the year based on an estimate (and their correct non-income circumstances) and then subsequently not entitled based on their actual ATI.

There may be cases where an individual was originally entitled based on their estimate throughout the year, but a revised non-income related factor (such as the backdated loss of entitlement for one of their FTB children) subsequently means that the individual would not have been entitled based on their estimate (e.g. due to a lower income cut-out for FTB Part A instalments for the revised circumstances). Such circumstances would not be counted as a year of non-entitlement.

Example: Tim received instalments of FTB Part A for 2 children based on an estimate for the 2010-11 financial year. At reconciliation it is determined he had underestimated his income and had zero entitlement for that year. It is then established that he failed to notify that one child ceased to be in his care, which meant he had one FTB child only during that year. He would not have been entitled based on his estimate for that year, as the income cut-out for fortnightly FTB Part A for one child is lower than his estimate and the his actual income was determined to equal or exceed that cut-out. While Tim would not have been entitled based on his estimate and correct non-income circumstances, that income year would not be counted as a consecutive year for this purpose, despite the fact he is also not entitled based on his actual income.

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

Policy reference: FA Guide 1.1.N.32 Non-entitlement to payment of FTB based on an estimate due to underestimation of income

Last reviewed: 15 August 2016