22.214.171.124 Non-entitlement to FTB Based on an Estimate Due to 3 or More Non-lodger Decisions
If an individual has 3 or more FTB non-lodger decisions (variations under FA(Admin)Act subsection 28(2) for an income year) because they or their partner (who is a 'relevant partner') did not lodge a required tax return for the relevant income year, and for at least one of those decisions there is an FTB non-lodger debt that has not been fully repaid, the individual (and their partner, if applicable) will lose entitlement to FTB based on an estimate.
Application of non-entitlement provision
Individuals with 3 or more non-lodger decisions with an associated outstanding debt lose entitlement to FTB payments based on an estimate.
All non-lodger decisions count towards the 3 non-lodger decisions leading to non-entitlement. These also include non-lodger decisions that do not have a non-lodger debt associated with them (e.g. where the individual has paid the debt amount off in full, or they are entitled to, but on a zero rate of payment).
Once the non-lodger decisions are made, they remain on the individual's record and will always be counted for non-entitlement purposes.
Non-lodger decisions that arise solely due to an individual's ex-partner not lodging a tax return are not counted towards the 3 non-lodger decisions unless the individual and their ex-partner reconcile and become re-partnered at some point later.
The individual with 3 non-lodger decisions will lose entitlement to FTB based on an estimate if they have an outstanding non-lodger debt associated with at least one of those decisions. If an individual loses entitlement to FTB, they will also lose entitlement to all components of FTB including RA. However, if the individual is also receiving income support, they may be entitled to RA paid with their income support payment.
Loss of entitlement to FTB will preclude the individual (and their partner, if applicable) from accessing ancillary benefits via FTB such as:
- the lower threshold of the Extended Medicare Safety Net from the start of the following calendar year,
- Pharmaceutical Benefits Scheme,
- Child Dental Benefits Schedule, and
- health care card.
However, some individuals may be able to access these benefits if they are eligible for certain income support payments or concession cards.
Example: Iain does not lodge his tax returns for the years 2011-12, 2012-13 and 2013-14, nor does he inform the Centrelink that he is not required to lodge. For each of these years, a subsection 28(2) decision was made, determining that Iain was not entitled to any payment and a debt was raised for the monies under section 71.
When Centrelink raises the non-lodger debt for 2013-14, Iain will lose entitlement to FTB by fortnightly instalments, and all access to add-ons. Iain will only be able to regain entitlement to FTB by fortnightly instalments when he either:
- lodges all his outstanding tax returns for the 2011-12, 2012-13, 2013-14 income years, or
- informs Centrelink that he is not required to lodge, or
- repays all outstanding non-lodger debt amounts, and
- lodges a new claim for FTB.
Iain's current partner Michelle will also lose entitlement to FTB based on an estimate at the same time Iain does, and will have to meet the same requirements as Iain to be paid FTB by instalments whilst they are partnered.
Loss of entitlement to FTB will also preclude the individual (and their partner, if applicable) from accessing SBP under the FTB Part A eligibility test.
Act reference: FA(Admin)Act section 32AE Non-entitlement to payment of FTB after 3 or more variations under subsection 28(2)
Past period lump sum payments
Individuals who are affected by the non-entitlement for FTB based on an estimate are able to re-claim FTB as fortnightly instalments if they lodge all outstanding tax returns, inform Centrelink they are not required to lodge for the relevant years or fully repay all their outstanding non-lodger debts.
These individuals are able to make a claim for payment of FTB based on actual income if they make a past period claim following the end of the relevant income year. The claimant's and their partner's (if applicable) actual income for the relevant income year must be known before the lump sum claim can be determined.
Example: Vicky loses entitlement to payment of FTB based on an estimate due to having 3 non-lodger decisions as at 1 July 2015. In August 2016 she lodges a past period claim for the 2015-16 financial year, after she and her partner Jamie lodge their income tax returns for 2015-16. In September 2016 Centrelink receives confirmation of their ATI at which time Vicky's claim is determined and Vicky is paid her FTB entitlement for the 2015-16 income year as a lump sum.
Resumption of fortnightly payments
Individuals who lose entitlement to FTB based on an estimate are able to receive FTB as fortnightly payments from the date their ATIs are confirmed for all outstanding non-lodger decisions or all non lodger debts are fully repaid. No arrears are payable for FTB not received in the current year-to-date until the individual (and partner's if applicable) ATI is confirmed in the next financial year.
Example: As at 1 July 2015 Jeffrey has 3 non-lodger decisions for 2010-11, 2011-12 and 2012-13. He lodges his outstanding tax returns for 2010-11 and 2011-12 on 15 August 2015, and on 19 October 2015 he repays the final outstanding amount of his 2012-13 non-lodger debt. On 21 October 2015 Jeffrey lodges a new instalment claim, which includes a claim for the past period 1 July to 18 October 2015. Jeffrey's claim is successful and his instalment payments resume from 19 October 2015. However, he is not entitled to the arrears payment for the period 1 July to 18 October. The payment for this period will be made only after his (and his partner's, if applicable) ATI is confirmed in the next financial year.
Act reference: FA(Admin)Act section 7 How to claim, section 14 Restriction on determining claim where income tax assessment not made, section 16 Determination of instalment entitlement claim, section 17 Determination of past period entitlement claim, section 32AE Non-entitlement to payment of FTB after 3 or more variations under subsection 28(2)
Past period claims for individuals receiving income support
Individuals who receive FTB and income support payments and who lose entitlement to FTB based on an estimate are no longer required to make an instalment claim with their past period claim for FTB in order to be paid for the past period.
Example: Joe lost entitlement to payment of FTB based on an estimate as he had 3 non-lodger decisions as at 1 July 2016. Joe and his partner Jill began receiving social security pensions in 2015-16 and they continue to receive income support payments in 2016-17. On 15 October 2016, Joe and Jill lodge their relevant tax returns for 2015-16. On 20 December 2016 Joe makes an effective past period claim for 2015-16 without lodging an instalment claim for 2016-17. Joe's past period claim is accepted and he receives a lump sum payment for 2015-16. Joe is unable to lodge an instalment claim until all of his remaining non-lodger decisions are resolved.
Act reference: FA(Admin)Act section 10(5) Restrictions on claims for payment of FTB for a past period
Policy reference: FA Guide 6.4.1 Overview of Reconciliation, 126.96.36.199 Claim Lodgement & Verification, 188.8.131.52 Prohibition of FTB Based on an Estimate, 184.108.40.206 Removal of Prohibition of FTB Based on an Estimate, 1.1.N.31 Non-entitlement to FTB due to 3 or more non-lodger decisions
Deferral of non-entitlement - special circumstances
The Secretary has the discretion to determine that the loss of entitlement to FTB on the basis of an estimate of income (which includes maintenance income) will not apply for a specified period where there are special circumstances. This would allow those with special circumstances to continue to receive fortnightly payments of FTB during the specified period.
As a general rule, special circumstances for non-entitlement to FTB would be expected to include the same circumstances as those for prohibition of FTB based on an estimate, where the individual is experiencing hardship due to:
- domestic/family violence (1.1.F.15) (referral to a social worker or ISO is required) (up to 6 months),
- severe financial hardship (up to 4 weeks), or
- severe illness (up to 6 months).
Other circumstances may be considered as 'special circumstances' at the discretion of the Secretary.
Deferral due to special circumstances applies for a specified period and any continuation of the discretion would be subject to ongoing review.
Individuals would be expected to resolve their non-lodger circumstances by the end of the deferral period by lodging all outstanding tax returns or advising that they are not required to lodge or paying all outstanding non-lodger debts. If they fail to do so and their special circumstances no longer apply, they will lose entitlement to FTB under the non-entitlement provision at the end of the deferral period.
In some circumstances the Secretary may determine that the discretion be backdated to apply from a day in the past, or it may be appropriate for the discretion to apply on or after the day the Secretary decides to exercise the discretion.