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6.4.2.30 FTB reconciliation due to maintenance income

Summary

This topic explains how maintenance income (1.1.M.10) can affect the reconciliation of FTB Part A. It details:

  • assessment of entitlement – Child Support collect
  • assessment of entitlement – private collect
  • maintenance income
  • child support agreements, and
  • annualisation of maintenance income.

Assessment of entitlement - Child Support collect

For individuals who use Child Support collect (3.1.5.50) and are entitled to more than the base rate of FTB Part A under the income test, and who have, or whose partner has, children from a previous relationship, reconciliation must also take into account the actual amount of maintenance income received during the relevant income year (1.1.R.23).

This means that at reconciliation, a payee's FTB Part A entitlement is calculated on both their actual ATI (1.1.A.20) and the actual amount of maintenance income received. This is compared to the amount of FTB Part A they were paid based on estimate/s of both their ATI and maintenance income.

Example: Deborah is single and receives FTB by instalments for their child for the income year. Deborah's FTB instalments are assessed on her estimated ATI of $60,000 and estimated maintenance income of $5,000. Deborah's actual ATI is $60,000 but they did not receive any maintenance income disbursements during the year according to Child Support. This results in a positive adjustment and Deborah receives a top-up as their FTB Part A was assessed by Centrelink under the entitlement method during the income year.

Assessment of entitlement - private collect

Individuals who use private collect (3.1.5.55) and are entitled to more than base rate of FTB Part A under the income test, and who have, or whose partner has, children from a previous relationship, will be deemed to have privately collected their full child support entitlement at reconciliation.

This means that at reconciliation, a payee's FTB Part A entitlement is calculated on both their actual ATI and the deemed amount of maintenance income.

Maintenance Income

Only maintenance income received or deemed to be received during a relevant period (1.1.R.25) can affect an individual's rate of FTB during a relevant income year.

Child support agreements

For FTB recipients who have a child support agreement, Centrelink will use the 'Child Support notional assessment' amount in determining their FTB Part A entitlements. The notional assessment is the annual rate of child support that would be payable under the child support formula if there was no child support agreement in place. For guidance on child support agreements in relation to which there is a notional assessment, refer to 3.1.7.14.

Annualisation of maintenance income

When determining FTB Part A entitlement, it may be necessary to annualise the amount of maintenance income received during the relevant period/s in an income year. For individuals using private collect, this may involve the annualisation of the amount of maintenance income the individual is deemed to have received based on their daily child support rate and the number of days that rate applied.

Where an individual only receives maintenance income for part of the relevant income year, that income is annualised for reconciliation purposes to bring it into line with the assessment of all other FTB recipients.

The formula for annualising is:

Divide Number of days in income year by Number of days in the relevant period or periods then multiply by Maintenance income for the relevant period or periods

Example: George's relevant period during the relevant income year is 200 days. For the first 100 days, George's privately collected maintenance entitlement is $1,825.00 per annum ($5.00 per day). For the second 100 days, George's entitlement increases to $3,650.00 per annum ($10.00 per day). The total maintenance income deemed to be collected by George is $1,500.00 ($5.00 × 100 plus $10.00 × 100). The annualised maintenance income used to determine George's entitlement for the relevant period is $2,737.50 ($1,500.00 × (365 ÷ 200)).

Act reference: FAAct Schedule 1 clause 20 Effect of maintenance income on family tax benefit rate, Schedule 1 clause 20A Annualised amount of maintenance income

Policy reference: FA Guide 3.1.7.11 Assessable maintenance income

Last reviewed: