220.127.116.11 Non-lodger process
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.
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), individuals who receive FTB (and/or their partners) who have not lodged an income tax return or advised Centrelink they are not required to lodge are advised that:
- if they and/or their partner are required to lodge an income tax return, they should 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 should advise Centrelink 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 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 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 advise 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 inform Centrelink that 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 individual's determination made by the Secretary 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 inform Centrelink that they are not required to lodge.
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
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 that they are not required to lodge by the end of the lodgement year.
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 18.104.22.168 Verification of adjusted taxable income