6.4.3 Requirement to lodge an income tax return

Introduction

This section discusses the requirement for individuals who receive FTB (and/or their partners) to lodge an income tax return, or to notify Centrelink of their ATI if they and/or their partner are not required to lodge an income tax return. It also outlines the processes that Centrelink may undertake if the individuals (and/or their partners) fail to lodge an income tax return.

There is no explicit requirement under FA law for individuals to lodge a tax return. The Commissioner of Taxation has the authority to determine if an individual is required to do so. This requirement is imposed under tax law for certain individuals who are covered by 2 annual legislative instruments created by the Commissioner of Taxation each financial year. These instruments are:

• Notice of Requirement to Lodge a Return for the Income Year Ended 30 June (relevant year), and
• Notice of Requirement for Parents with a Child Support Assessment to Lodge a Return for the Income Year Ended 30 June (relevant year).

Lodge an income tax return within 12 months of entitlement

An individual claiming FTB (and/or their partner), is required to lodge an income tax return or notify Centrelink of their ATI if they are not required to lodge an income tax return, within 12 months following the income year (1.1.I.75) in which they received a payment.

Where an individual (and/or their partner) lodges an income tax return or notifies Centrelink of their ATI if they are not required to lodge an income tax return, the individual's payments for the income year are reconciled.

Advise of ATI within 12 months of entitlement if not required to lodge an income tax return

An individual who receives FTB (and/or their partner) is required to notify Centrelink of their ATI if they are not required to lodge an income tax return, within 12 months from the end of the relevant income year.

Where an individual (and/or their partner) notifies Centrelink of their ATI because they are not required to lodge an income tax return, Centrelink must determine that the ATI amount declared for the relevant income year is reasonable in order for their payments to be reconciled.

Non-lodger debt is raised if income tax return is not lodged or Centrelink is not notified of ATI if not required to lodge

If an individual (and/or their partner) fails to lodge an income tax return or fails to notify Centrelink of their ATI if they are not required to lodge an income tax return, by the end of the lodgement year (1.1.L.30), a non-lodger debt will be raised. The debt will comprise any FTB they received in the relevant income year.

In addition, where a non-lodger debt is raised that includes a day that SBP was paid (under the FTB Part A eligibility test), the SBP amount paid will also be raised as a debt.

Note: Other FA payments, such as SBP (where paid under the income test), are not raised as a debt as they have no tax lodgement requirements.

Note: Where NBS and/or NBU are included in a non-lodger debt or an SBP debt is raised due to an FTB non-lodger decision, the individual's entitlement to NBS, NBU and/or SBP for that child is not reassessed until the non-lodger status is resolved.

Non-lodger process

A non-lodger decision may be made at any time following the end of the lodgement year. Following a decision, a variation of entitlement is issued to the individual by Centrelink. A grace period is provided for a period of 75 days beginning on the day of the variation of an individual's FTB entitlement for a relevant income year in order for the individual to resolve their non-lodger status. The grace period may be a longer period if the Secretary determines that there are special circumstances to vary the length of the grace period. FTB payments based on income estimates may continue to be paid during the grace period but would cease if there are still outstanding income tax returns, or Centrelink has not been notified of the individual’s (and/or their partner’s) ATI if they are not required to lodge an income tax return, and there are still outstanding non-lodger debts by the end of this period.

Lodgement of tax return after the lodgement period - instalment recipients

If an individual who receives FTB by instalment (and/or their partner), fails to lodge an income tax return or notify Centrelink of their ATI if they are not required to lodge an income tax return, within 12 months following the relevant income year, then they are no longer eligible to receive any top-up payments including the FTB Part A and FTB Part B supplements.

Where an individual (and/or their partner) lodges an income tax return after the lodgement year, they will only be entitled to the lesser of:

• the amount of FA the individual was entitled to during the relevant income year, or
• the amount of FA the individual was entitled to based on actual ATI.

An individual who has chosen to defer some of their FTB entitlement for the relevant year and lodges a tax return, or notifies Centrelink of their ATI if they and/or their partner are not required to lodge an income tax return, after the end of the lodgement year, they can only be paid the lesser of their legislative entitlement based on ATI or the amount they would have received for the relevant income year based on their estimated income had the choice not been made to defer some or all of their FTB for that income year.

The 12-month lodgement timeframe may be extended if special circumstances exist that prevent the individual from meeting their income confirmation obligations. An extension can be granted up to the end of the year following the lodgement year.

Lodgement of tax returns after the lodgement period - lump sum claimants

An individual (and/or their partner), is required to lodge an income tax return or notify Centrelink of their ATI if they are not required to lodge an income tax return, within 12 months following the entitlement year (this is the same requirement that applies to instalment recipients). If this timeframe is not met, the claim is considered not effective. For further information about determining FTB past period claims, see 4.2.3.10.

The 12-month lodgement timeframe may be extended if special circumstances exist that prevent the individual from meeting their income confirmation obligations. An extension can be granted up to the end of the income year following the lodgement year.

Note: Lodgements 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 for FTB purposes. Centrelink may grant an extension to the 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.