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.

6.4.1.30 Reconciliation process

Note: Individuals and/or their partners have 12 months after the income year (1.1.I.75) to lodge an income tax return or notify Centrelink of their ATI if they are not required to lodge an income tax return in order to receive FTB supplements or top-ups.

Example: Iain was paid FTB for the 2023-24 income year. Iain and his partner Catherine have until 30 June 2025 to lodge their tax returns or notify Centrelink of their ATI if Iain and/or Catherine are not required to lodge a tax return, to ensure they receive their full entitlement (including supplements and any top-up).

Note: Lodgement of tax returns are the responsibility of the individual, including those who lodge via a tax agent. Providing financial statements to a tax agent or accountant prior to 30 June of the relevant lodgement year does not constitute lodgement of tax returns. Centrelink may grant an extension to the tax lodgement period if there are special circumstances that prevent an individual from meeting their income confirmation obligations before the end of the lodgement year. A tax lodgement deferral granted by the ATO does not automatically guarantee that Centrelink will grant a special circumstances extension. Special circumstances are circumstances that are unusual, uncommon or exceptional. Failure by an accountant or tax agent to lodge a tax return within the lodgement period (for example, forgetting to lodge in time or delay due to high workloads) will not ordinarily constitute special circumstances.

Explanation: The ATO may grant a tax lodgement deferral after considering the individual’s circumstances in the context of tax law. However, this does not obligate Centrelink to grant an extension to the FA lodgement period as the objects of and considerations relevant to FA law differ from those applicable to tax law.

Summary

This topic outlines the steps involved in the reconciliation of FTB and CCS. It covers the:

  • assessment of FA entitlement
  • assessment of CCS entitlement
  • FTB Part A supplement
  • FTB Part B supplement
  • comparison of amount entitled to amount paid
  • notification of reconciliation outcomes
  • different timing of FTB and CCS reconciliation, and
  • using CCS to offset FA debts.

Assessment of FA entitlement

Excluding CCS, the first step of the reconciliation process is to determine the individual's annual entitlement for the relevant income year (1.1.R.23). This relies on the assessment of the individual's and their partner's (if applicable) actual ATI (for FTB), actual maintenance income (for FTB Part A only as relevant). This information will determine the individual's entitlement for the relevant income year.

Annual entitlement is also dependent on whether an individual is eligible for the end of year FTB Part A supplement for each of their children and/or the FTB Part B supplement.

Note: If an individual (and their partner, if they are have one) are not required to lodge an income tax return, they must notify Centrelink of their ATI for the relevant income year. The notification can only be accepted if the ATI amount is considered to be reasonable.

Policy reference: FA Guide 6.4.2.10 Verification of adjusted taxable income, 3.2.2 Taxable income, 6.4.3.10 Valid reasons for not lodging a tax return, 3.1.1.10 Calculating a rate of FTB - overview, 5.2.1.30 Change of rate circumstances

Assessment of CCS entitlement

CCS reconciliation occurs for all individuals who had entitlement determined (including nil) for a week in a CCS fortnight that began in the relevant income year. The process begins once the reconciliation conditions have been met, that is, post the end of the financial year, the individual (and any partner during the relevant income year) have lodged and had tax returns assessed, or if there is no requirement to lodge, notified Centrelink of their actual ATI.

Using the actual ATI, each determination of entitlement is reviewed to determine a new entitlement amount, and the difference (if any) of any entitlements already received.

Act reference: FA(Admin)Act section 67CD(2) Entitlement to be paid CCS, section 67CD(8) No entitlement to be paid CCS or ACCS, section 103A CCS reconciliation conditions, section 103B First deadline, section 103C Second deadline, section 105 Secretary may review certain decisions on own initiative, section 105C Review of entitlement to be paid CCS or ACCS—taking account of changes of circumstances etc., section 105D Review of entitlement to be paid CCS or ACCS—time limit on increase, section 105E Review of individual's entitlement to be paid CCS by fee reduction—meeting CCS reconciliation conditions

Policy reference: FA Guide 6.4.2.10 Verification of adjusted taxable income, 3.2.2 Taxable income, 6.4.3.10 Valid reasons for not lodging a tax return, 3.5.2 CCS - activity test

FTB Part A supplement

The FTB Part A supplement is paid to a person who is eligible to receive FTB Part A for an FTB child, but is only payable as part of the reconciliation process. The FTB Part A supplement cannot be paid in fortnightly instalments.

Payment of the supplement is conditional on:

  • the FTB individual and/or their partner lodging an income tax return or notifying Centrelink of their ATI if they are not required to lodge an income tax return, within 12 months of the relevant income year, and
  • the FTB individual having family ATI of $80,000 or less for the relevant income year.

The FTB Part A supplement is included as part of the rate calculation process during reconciliation and may have the effect of reducing an overpayment incurred during the current or previous income year/s.

FTB Part B supplement

The FTB Part B supplement is paid to a person who is eligible to receive FTB Part B but is only payable as part of the reconciliation process. The FTB Part B supplement cannot be paid in fortnightly instalments.

Payment of the supplement is conditional on the individual and/or their partner lodging an income tax return or notifying Centrelink of their ATI if they are not required to lodge an income tax return, within 12 months of the income year. The FTB Part B supplement is included as part of the rate calculation process during reconciliation and therefore, may have the effect of reducing an overpayment incurred during the current or previous income year/s.

Amount entitled versus amount paid

The second step in reconciliation is to subtract the amount paid to the individual in FTB instalments or CCS fee reductions during the relevant income year according to Centrelink records from the individual's FTB and/or CCS entitlement. The result of this calculation is the reconciliation outcome which may entitle an individual to a top-up, require the repayment of a debt, or a nil adjustment.

Example: Marlene is single and receives FTB Part A for one child during the 2023-24 income year. The fortnightly entitlement is calculated based on Marlene's estimate of $75,000. Marlene lodges their tax return in August 2024 and their income is assessed by the ATO to be $78,000. Marlene's underestimated income for 2023-24 may give rise to an overpayment but this would be offset by the FTB Part A supplement to the value of the overpayment. If there is a supplement balance left over, it would be paid to Marlene.

Act reference: FA(Admin)Act section 71B Debts in respect of CCS or ACCS-no entitlement, section 71C Debts in respect of CCS or ACCS-overpayment

Policy reference: FA Guide 6.4.1.20 Payments affected by reconciliation, 6.4.1.40 Outcomes of reconciliation

Notification of reconciliation outcomes

For FTB, in cases where a Secretary-initiated review (that is, reconciliation) is carried out, only positive (top-ups) or negative (debts) adjustments of FTB need to be advised in writing to individuals. However, all individuals with a nil adjustment following reconciliation may be advised that they have been correctly paid.

For CCS, in cases where a Secretary-initiated review (that is, reconciliation) is carried out, the outcome needs to be advised in writing to individuals.

In cases where the reconciliation of FTB is triggered by the lodgement of an income tax return, the reconciliation outcome may be advised to the ATO. The ATO may use some or all of an FTB top-up payment for the recovery of any tax debts (after it has been used to recover FA debts). Conversely, once a tax refund has been applied to any tax debts, that may exist, the ATO may use any remaining tax refund to recover FTB, CCS or ACCS debts. If the ATO is unable to fully recover a debt from the individual's or partner's tax refund (where the partner consents to such recovery), the residual debt amount will be advised to Centrelink for recovery.

In all cases where an individual initiates a review of their entitlements, they must be notified in writing of the outcome.

Act reference: FA(Admin)Act section 106 Notice of review decision not relating to CCS or ACCS, section 106A Notice of certain review decisions relating to CCS or ACCS, section 82 Methods of recovery, section 84A Setting off family assistance against debt owed, section 87 Application of income tax refund owed to person, section 92A Setting off family assistance of person against another person's debt, section 93 Application of income tax refund owed to another person

Policy reference: FA Guide 6.2 Internal reviews, 7.2.1 Debt recovery - general provisions, 7.2.3 Debt recovery from FA entitlement, 7.3 Non-recoverable debts

Different timing of FTB & CCS reconciliation

Due to different information being required to reconcile FTB and CCS, reconciliation can occur at different times for each payment, depending on when this information is available.

Using CCS withholding to offset debts

Five per cent of CCS payments made during the financial year are withheld to assist with managing any potential debts. Should a debt be raised at reconciliation, the withheld amount of subsidy will first be used to offset that debt.

Act reference: FA(Admin)Act section 67EB(3) The withholding amount, for a payment …

Policy reference: FA Guide 7.2 Methods of debt recovery

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