6.6.3 Non-entitlement to FTB Part A &/or FTB Part B Due to Underestimation of Income

Summary

There are exceptions for certain circumstances that will also allow individuals to regain access to FTB based on an estimate and linked benefits where they have lost entitlement due to having 2 consecutive years of zero entitlement. These include where any of the following events occur after the 2 years of zero entitlement. The individual:

  • becomes an income support individual,
  • has a new FTB child come into their care,
  • separates from their partner,
  • establishes a rate greater than nil for a more recent entitlement year, or
  • resumes their eligibility to FTB.

Generally these will apply automatically when the event occurs or notification of a change of circumstances is provided by the individual in the general course of business. However, exceptions granted under special circumstances category will not be automatic.

An individual can also have multiple exceptions applying to them at once. Therefore if one exception ceases to apply, another may take effect. Exceptions with the most beneficial effect (i.e. earliest date of effect) should be applied first.

Exceptions are also tied to specific consecutive years of non-entitlement.

Example: Mike has 2 consecutive years of non-entitlement for 2009-10 and 2010-11. However, an exception is granted from 1 July 2012 because a new FTB child has come into his care on 31 May 2011 (since the 2 consecutive years). Therefore the exception is for the 2009-10 and 2010-11 years only. If it is later determined that the Mike had no entitlement for the 2011-12 year due to underestimation of income, even with the new child in his care he will be subject to non-entitlement due to 2 consecutive years of zero entitlement for the 2010-11 and 2011-12 years.

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

Income support individual

If at any time after the end of the 2 consecutive zero entitlement years the individual or their partner received a social security pension, a social security benefit, a service pension or income support supplement they will be excepted from non-entitlement. This exception continues to apply even if the individual or their partner has since ceased to be in receipt of any income support payments.

Example: Mary has nil FTB entitlement for both 2009-10 and 2010-11, therefore she is non-entitled from 1 July 2012. On 1 September 2012, Mary is granted an income support payment. Mary will be exempt from non-entitlement from 1 July 2012 given she has received an income support payment after the end of the 2 years of non-entitlement.

Act reference: FA(Admin)Act section 32AI Exception-income support payments

New FTB child

If, since the end of the 2 consecutive years of non-entitlement, an FTB child comes into the individual's care that was not a child in their care at any time during the 2 consecutive years of zero entitlement, this exception will apply.

This provision includes a regular care child (RCC) of the individual who has changed their level of care since the 2 years of non-entitlement and is now deemed to be an FTB child of the individual.

Example: John received FTB Part A via instalments in respect of Jason for the 2009-10 and 2010-11 years. For both of these years John was found to be non-entitled to payment due to underestimation of income. On 13 January 2012, John's partner gave birth to a new child, Lara. As Lara only came into John's care since the end of the 2 consecutive years of non-entitlement, John will remain entitled on 1 July 2012.

However, if after the 2011-12 year is reconciled it is found that John has no entitlement for that year due to underestimation of income, even with a new child, he will be subject to non-entitlement, as there is a new 2 consecutive years of zero entitlement for the 2010-2011 and 2011-2012 years.

Further, an FTB child coming into care will include individuals who partner since the end of the 2 consecutive years of non-entitlement, with an individual who also has an FTB child.

Act reference: FA(Admin)Act section 32AJ Exception-new FTB child

Couple separates

This exception will apply if, at any time since the end of the 2 consecutive years of zero entitlement, the individual separates from a person who was their partner at the end of the 2 zero entitlement years. This exception will continue to apply even if the individual re partners with a new partner.

However, if the individual reconciles with the person who was their partner at the end of the 2 consecutive zero entitlement years, they will be non-entitled unless a different exception applies.

Example: Jane was partnered with Paul on 30 June 2011. Jane has no entitlement to FTB for the 2009-10 and 2010-11 years.

On 1 September 2011, Jane and Paul separate. On 2 September 2011 Jane partners with Julie. As a result of this, Jane (and Paul) will be exempted from preclusion on 1 July 2012 regardless of the fact that she has re-partnered since the end of the 2 year non-entitlement period.

Act reference: FA(Admin)Act section 32AK Exception-couple separates

Greater than nil rate of FTB for later income year

If an individual is found to be entitled to FTB Part A and/or FTB Part B at a rate greater than nil based on actual ATI for a more recent income year since the 2 consecutive years of zero entitlement, this exception will apply.

This may be either through a lump sum or reconciled instalment claim which is for a year that falls any time after the 2 consecutive years of zero entitlement that have resulted in the individual being non-entitled.

Example: Cassandra becomes non-entitled on 1 July 2012 because of consecutive years 2009-10 and 2010-11 of zero entitlement. On 1 November 2012 her entitlement is reconciled for 2011-12, which yields entitlement greater than nil. This means Cassandra is excepted from non-entitlement and is considered to be entitled to FTB based on an estimate from 1 July 2012.

This exception will continue until a new 2 consecutive years of nil-entitlement are accrued or Cassandra's entitlement for 2011-12 is re-reconciled as nil.

Note: Individuals who have been granted an exception due to separation and later establish an entitlement greater than nil can be given a new exception under this category. However, if the individual later re-partners with the original partner they were with when they lost entitlement, and the Secretary is reasonably assured the individual only established entitlement greater than nil due to being single, they will lose their greater than nil rate exception upon their separation exception being revoked and become non-entitled again.

Act reference: FA(Admin)Act section 32AG Exception-greater than nil rate of FTB for later income year

Resumption of eligibility for FTB

If the individual was not eligible for FTB Part A and/or FTB Part B for the whole of an income year (ineligible year) following the 2 consecutive years of zero entitlement, and ineligibility was for a non-income related reason (e.g. they did not have an FTB child), they may qualify for an exception. To test this, the individual must provide Centrelink with a copy of their ATO notice of assessment for the ineligible year. Centrelink will then use this, in conjunction with the individual's current circumstances, to establish whether the individual has any entitlement to FTB on the basis of that income in the current income year. If they do, the exemption will be applied.

Example: Nathan has no entitlement to FTB for the 2009-10 and 2010-11 years for which he received FTB instalments for his child Sam. He did not claim FTB for the whole of the 2011-12 year as he lost care of Sam in June 2011. Sam comes back into his care on 1 July 2012 (exception for child coming into care does not apply as Sam was in Nathan's care during the consecutive years of zero entitlement).

Although Nathan was not eligible for FTB for the whole of 2011-12 due to not having an FTB child in his care, his confirmed ATI for 2011-12 (as assessed by the ATO) attracts entitlement on the basis of his current circumstances. This means that Nathan is excepted from non-entitlement from 1 July 2012.

Act reference: FA(Admin)Act section 32AH Exception-resumption of eligibility for FTB

Special circumstances

Individuals may also be granted an exception if special circumstances exist in relation to them or their partner that did not exist at the end of the 2 consecutive years of zero entitlement that make it inappropriate to preclude payment of FTB A and/or FTB B based on an estimate. Special circumstances exceptions are not automatic and will be determined on a case by case basis as per the normal special circumstances considerations, but may include events such as becoming disaster affected.

Act reference: FA(Admin)Act section 32AL Exception-special circumstances

Last reviewed: 1 July 2015