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.

6.4.3.20 Non-lodger process

Summary

This topic outlines how Centrelink will follow up on individuals and/or their partners, who are required to lodge an income tax return for the relevant income year (1.1.R.23). It discusses:

  • the non-lodger process
  • prohibition on being paid FTB based on an estimate
  • the criteria for determining a non-lodger process, and
  • the treatment of individuals not selected for the non-lodger process.

Non-lodger process

The non-lodger process prompts individuals who receive FTB and/or their partners who are required to lodge an income tax return do so before the end of the relevant lodgement year.

In March/April of the lodgement year (1.1.L.30), if an FTB recipient and/or their partner have not lodged an income tax return for the relevant income year, or notified Centrelink of their ATI if they and/or their partner are not required to lodge an income tax return, Centrelink will send them a non-lodger reminder letter. The letter advises that:

  • if they and/or their partner are required to lodge an income tax return, they must do so by 30 June of the lodgement year
  • if they and/or their partner are not required to lodge an income tax return, they must notify Centrelink of their ATI by 30 June of the lodgement year
  • the entire amount of FTB, FTB advance and SBP (where paid under the FTB Part A eligibility test) paid to them for the relevant income year may be raised as a debt to the Commonwealth if they and/or their partner are required to lodge an income tax return, or notify Centrelink of their ATI if they are not required to lodge an income tax return, and they fail to do this by 30 June of the lodgement year, and
  • no top-ups of FTB (including supplements) can be made if they lodge their income tax returns, or notify Centrelink of their ATI if they are not required to lodge an income tax return, after 30 June of the lodgement year regardless of their family's ATI for that year.

Individuals may be reminded by Centrelink again before the end of the lodgement year to either lodge their income tax return or contact Centrelink to notify of their ATI if they are not required to lodge.

If an individual who receives FTB and/or their partner fail to lodge an income tax return by the end of the lodgement year or fail to notify Centrelink of their ATI if they and/or their partner are not required to lodge an income tax return, a debt will be raised against them. The debt may comprise all the FTB they received for the relevant income year. Any SBP paid (where paid under the FTB Part A eligibility test) will also be raised as a debt.

Other FA payments such as SBP (where paid under the SBP income test) are not raised as a debt as there is no requirement to lodge an income tax return to receive these payments.

Note: A non-lodger decision is a variation of the existing instalment entitlement determination made by the Secretary so that the individual is/was not entitled to FTB for the financial year for which they and/or their partner have not lodged a tax return.

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.

Individuals who receive FTB (and their partners, if any) may not be able to receive FTB based on an estimate if they have outstanding non-lodger debts as a result of non-lodger decisions for FTB received in relation to previous income years because they have not lodged their requisite income tax returns or failed to notify Centrelink of their ATI if they are not required to lodge an income tax return for those income years.

While there is no explicit requirement under FA law for individuals to lodge a tax return, 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).

Act reference: FA(Admin)Act section 28(2) Consequence of section applying, section 28AA Effect of section 28 on NBU of FTB, section 32AA Non-payment of FTB for non-lodgement of tax returns, section 71A Debts arising in respect of FTB advances

Income Tax Assessment Act 1936 section 161 Annual returns

Policy reference: FA Guide 6.4.3.30 Outcomes of non-lodger process, 6.4.3.10 Valid reasons for not lodging a tax return, 6.4.3.40 Prohibition of FTB based on an estimate, 7.6 FTB advance debts

Non-lodger process selection criteria

Individuals will be selected for the non-lodger process if they and/or their partner have not lodged tax returns or notified Centrelink of their ATI if they are not required to lodge an income tax return, by the end of the lodgement year.

Policy reference: FA Guide 6.4.1.30 Reconciliation process, 6.4.1 Overview of reconciliation

Treatment of individuals not subject to non-lodger notice

An individual can have their entitlement reconciled at any time from July of the lodgement year if adequate income information is available to do so.

Policy reference: FA Guide 6.4.2.10 Verification of adjusted taxable income

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