4.4.3 Estimate of income not reasonable
A reasonable estimate of taxable income can be provided where:
- a variation to an income amount is requested
- a claim is made for FTB by instalment, or
- a claim is made for a past period, and
the taxable income (1.1.T.20) for the financial year is not known.
Income estimates are used to calculate the individual's FTB entitlement. The estimate is reconciled against the individual's (and their partner's, if they have one) actual income for the relevant income year when it becomes available. Adjustments may be made to the individual's FTB entitlements during reconciliation after which any top-ups may be paid or overpayments raised.
Policy reference: FA Guide 3.2.8 Reasonable estimate of income
Consideration of estimate
Where an individual provides an estimate of their income, Centrelink will determine if the estimate is reasonable.
If the estimate is not considered reasonable, Centrelink will request the individual to provide evidence in support of their estimate. If evidence is not provided or does not substantiate the estimate, Centrelink will determine that the individual is not entitled to receive FTB. This means current payments being made by instalments will be cancelled. In the case of new or past period claims, entitlement will be assessed at reconciliation.
Where an individual is being paid by instalments, the date of effect of the FTB cancellation is the day after the end of the individual's latest entitlement period. This could be the day after their next payday or the day after the final payday in the current financial year, depending on when the estimate applies.
Example: A family is claiming FTB by instalments for the current financial year and provide a new estimate which is lower than the estimate upon which current entitlements are based. Centrelink assesses this estimate as unreasonable based on information provided by the employer and enters into negotiations for a new estimate with the Individual. Negotiations are unsuccessful. Centrelink determines that the individual is not entitled to be paid FTB by instalment and ceases paying FTB. Payment is cancelled the day after their next payday. The individual is advised of the decision to cancel their FTB instalments and advised that their FTB will be assessed at reconciliation unless a new reasonable estimate is provided in the future.
Note: In the above example, if the estimate was for the new financial year, then the individual's payment would be cancelled on the day after their last payday for the current financial year, unless a new estimate is provided and assessed as reasonable.
Act reference: FA(Admin)Act section 28A Variation of instalment entitlement determination where estimate of an amount is not reasonable
Policy reference: FA Guide 4.9.3 Outcomes of new financial year assessments
Subsequent estimate considered reasonable
If the individual subsequently provides an estimate of ATI by the end of the income year following the one in which the variation took effect, which is considered reasonable, or Centrelink becomes aware of the individual's actual assessed ATI details, the cancellation of entitlement should be overturned. The date of effect of this variation is the date of cancellation. The variation reinstates the determination that applied before the cancellation.
Act reference: FA(Admin)Act section 20 Determination of rate may be based on estimate, indexed estimate or indexed actual income, section 28A Variation of instalment entitlement determination where estimate of an amount is not reasonable