The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia.

3.1.7.22 Maintenance income - disbursement method

Summary

This topic outlines how the disbursement method (1.1.D.100) is utilised in the estimation of maintenance income for the purposes of FTB. It covers:

  • overview of the disbursement method
  • application of the disbursement method, and
  • effects of reconciliation.

Overview

For the purposes of FTB, the disbursement method is an alternative way of estimating the amount of child support (1.1.C.20) an instalment (1.1.I.100) individual will receive during the relevant period (1.1.R.25). It can only be used for agency collect child support cases.

The disbursement method may be appropriate where the individual does not know how much child support they are likely to receive, or if the amount paid by the payer (1.1.P.72) is substantially less than their maintenance liability (1.1.M.23).

The individual must ask Services Australia to use the disbursement method to assess the amount of maintenance (1.1.M.10) they receive, otherwise the entitlement method (1.1.E.35) is used by default.

Policy reference: FA Guide 3.1.5 Maintenance action test for FTB Part A, 3.1.7.15 Relevant period, 3.1.7.21 Maintenance income - entitlement method

Application of the disbursement method

The individual's rate of FTB Part A is recalculated each time the monthly amount of child support they receive changes. This means that their FTB rate can change every month.

The estimate of child support is worked out by adding the amount of child support the individual has already received during the financial year to the amount projected for the rest of the relevant period. This second amount is worked out by multiplying the latest monthly child support payment the individual has received (less any arrears) by the number of months left in the financial year.

The amount of estimated child support for the financial year is then annualised when applying the MIT for the relevant period.

Example: Maria separates from George on 30 August. Maria takes maintenance action by asking Services Australia to make an assessment of George's child support liability. The assessment comes into force on 1 October. Maria opts for private collection (1.1.P.130), but George fails to make any regular maintenance payments. Maria then requests that Services Australia collect the maintenance for her and they commence agency collection on 1 December. Maria also asks that Services Australia collect the amounts owing for October and November.

On the third Wednesday in January, Maria receives:

  • arrears of maintenance of $600 for October and November, and
  • a regular payment of maintenance of $300 for December.

An estimate of Maria's annual rate of maintenance income is calculated as follows:

  • Relevant period = 1 October to 30 June = 273 days
  • [(Year to date figure) + (latest regular payment × 5 months remaining in the relevant period)] × annualisation factor = ($900 + $1,500) × (365 ÷ 273) = $3,208.79

Act reference: FAAct Schedule 1 clause 20A Annualised amount of maintenance income

FA(Admin)Act section 20(3) If … an individual's rate of FTB is required to be …

Policy reference: FA Guide 3.1.6 Child support assessments & agreements, 3.1.7 Maintenance income test

Reconciliation

For agency collect cases, the estimated amount of maintenance used to assess an individual's entitlement to FTB Part A is reconciled against the actual amount of maintenance received after the end of the financial year. This may result in a recalculation of their FTB Part A rate for that year.

Policy reference: FA Guide 6.4 Reconciliation

Last reviewed: