1.1.M.65 Modified entitlement method (FTB)
Under the MEM, an individual's FTB Part A rate is determined using the estimated maintenance income worked out by applying the higher of the entitlement method and the disbursement method formula. The MEM applies both where an individual:
- has not elected to use the entitlement method or disbursement method and they are assessed using the entitlement method by default, or
- has elected to use the entitlement method.
These changes compliment the MIC to take better account of child support arrears when calculating FTB entitlement.
Example: Karim chooses to use the entitlement method and has an annual child support assessment of $1,500. He then starts collecting child support arrears owed for previous financial years (owed $4,000 in arrears).
The MEM activates to apply the disbursement method to take the arrears into account, decreasing Karim's ongoing rate of FTB. If the MEM was not applied, Karim would incur a reconciliation debt at the end of the entitlement year when the additional child support arrears he received are counted.
Act reference: FA(Admin)Act section 20 Determination of rate may be based on estimate, indexed estimate or indexed actual income
Policy reference: FA Guide 22.214.171.124 Maintenance income test - general provisions, 126.96.36.199 Maintenance income - entitlement method, 188.8.131.52 Maintenance income - disbursement method, 184.108.40.206 Maintenance income - modified entitlement method, 220.127.116.11 Application of the maintenance income test