4.2.8.25 Dependent YA - Maintenance Income Test Reconciliation

Reconciliation of estimated maintenance income - end of financial year

After the end of the income year (financial year) estimated maintenance income for the income year must be reconciled with actual maintenance income, if there is sufficient information to do so.

The aim of maintenance income test (MIT) reconciliation is to make adjustments to payments retrospectively, through issuing debts or arrears, whereby the rate of payment (previously determined based on estimates of maintenance income) is recalculated based on actual maintenance income. For example, if a parent estimates that they will receive $10,000 in maintenance for the year, then their YA child will experience a rate reduction of $161.77 per fortnight due to the MIT. However, if at the end of the financial year it is found that the parent actually received only $5,000 in maintenance then the young person should have had their YA reduced by $65.62 per fortnight (not $161.77), so arrears are payable totalling $2,500 for the year.

See Table 1 for the steps involved.

Table 1: Reconciling estimated & actual maintenance income

Step Action
1

In determining a recipient's rate of YA, was an estimate of maintenance income used?

  • If NO, then there is no reconciliation to do.
  • If YES, go to step 2.
2

Is there sufficient information to work out the actual amount of maintenance income for the income year without regard to an estimate?

  • If NO, then there is no reconciliation to do.
  • If YES, go to step 3.
3 Work out the recipient's annualised maintenance income free area (MIFA) using Table 2.
4 Work out the actual maintenance income for the income year using Table 3.
5 Work out the annual amount of estimated maintenance income using Table 4.
6

Is the actual maintenance income equal or more than the annualised MIFA, but not more than 125%?

  • If YES, then the existing decision (which calculated the recipient's rate of YA) is affirmed.
  • If NO, go to step 7.
7

Is the actual maintenance income:

  • more than 125% of the annualised MIFA, AND
  • equal or more than the annual amount of estimated maintenance income, BUT NOT more than 125% of the annual amount of estimated maintenance income?

If YES, then the existing decision (which calculated the recipient's rate of YA) is affirmed.
If NO, the recipient's rate of YA must be recalculated in regard to actual maintenance income.

Table 2: Calculating the annualised MIFA

Step Action
1 Using Table 1 of 4.2.8.20 work out whether the MIFA for the YA recipient was the same on all days in the income year. If it was, then that MIFA is the annualised MIFA for the income year.
2 If the MIFA for the YA recipient was not the same on all days in the income year, work out for how many days in the income year each MIFA applied.
3

Work out the MIFA share for each such period by using this formula:

  • MIFA × (Number of days in the period ÷ Number of days in the income year)
4 Add up the MIFA share for each such period in the income year. The result is the annualised MIFA for the income year.

Table 3: Calculating the actual maintenance income

Step Action
1

Is there sufficient information to work out the actual amount of maintenance income for the income year without regard to an estimate?

  • If NO, then the actual maintenance income cannot be calculated and there is no reconciliation to do.
  • If YES, go to step 2.
2

To work out the actual maintenance income for the income year:

  • assume that the person is an FTB child of the parent for the year, and
  • only take into account maintenance income received in relation to the person, and
  • in working out whether maintenance income is received in relation to the person, have regard to the considerations that would apply under the FAAct.

This amount is the actual maintenance income for the income year.

Policy reference: FA Guide 3.1.7 Maintenance income test

Table 4: Calculating the annual amount of estimated maintenance

Step Action
1

For each estimate of maintenance income that applied in relation to a period in the income year, work out the annualised estimate (if it is not already known) by multiplying the amount of the estimate by:

  • Number of days in income year ÷ Number of days in income year for which estimate applied.
2

For each annualised estimate worked out in step 1 for the income year, work out the period estimate by multiplying the annualised estimate by:

  • Number of days in income year for which estimate applied ÷ Number of days in income year.
3 Add up all the period estimates for periods that occurred in the income year. This is the annual amount of estimated maintenance income for the income year.

Example

Django lives with his dad and his mum pays dad maintenance for Django.

On 1 July Django told Centrelink that he estimated that his mum would pay annual maintenance of $10,000 for the whole of the financial year. Consequently, for the period 1 July to 31 December Django's YA was reduced based on an annualised estimate of maintenance income of $10,000.

On 1 January Django told Centrelink that his mum had got a higher paying job, and was going to pay more maintenance than expected, he estimated that his mum would pay annual maintenance of $15,000 for the whole of the financial year. Consequently, for the period 1 January to 31 March Django's YA was reduced based on an annualised estimate of maintenance income of $15,000.

On 1 April Django told Centrelink that his mum had become unemployed and was unable to pay any more maintenance that financial year. Consequently, for the period 1 April to 30 June Django's YA was not reduced due to the MIT, as his annualised estimate of maintenance income for this period was zero.

Django has 3 periods where different estimates of maintenance income applied:

  • Period 1 (July to December) is for 184 days.
  • Period 2 (January to March) is for 90 days.
  • Period 3 (April to June) is for 91 days.

We already know the annualised estimate for each of these 3 periods:

  • Period 1 (July to December) has an annualised estimate of $10,000.
  • Period 2 (January to March) has an annualised estimate of $15,000.
  • Period 3 (April to June) has an annualised estimate of $0.

The period estimates are worked out by multiplying each annualised estimate by:

  • Number of days in income year for which estimate applied ÷ Number of days in income year

Therefore the period estimate for:

  • Period 1 (July to December) is $10,000 (annualised estimate) × 184/365 = $5,041.09.
  • Period 2 (January to March) is $15,000 (annualised estimate) × 90/365 = $3,698.63.
  • Period 3 (April to June) is $0 (annualised estimate) × 91/365 = $0.

Django's annual amount of estimated maintenance income for the year is worked out by adding all the period estimates for the year together. Therefore Django's annual amount of estimated maintenance income is:

  • $5,041.09 + $3,698.63 + $0 = $8,739.72.

Act reference: SS(Admin)Act Part 3 Division 11 Estimates and verification of maintenance income for YA Rate Calculator, section 126A Review of determination of YA rate in relation to maintenance income

Date of effect for the recalculation for a recipient's rate of YA

The following table shows the date of effect when a recipient's rate of YA has been recalculated due to the reconciliation of their actual maintenance income (as required by Table 1).

If… then…
this recalculation would result in an increase in the recipient's rate of YA, the increase is to be backdated to the date when the recipient's rate of YA was originally calculated based on estimated maintenance income. This is to give the same effect as if the actual maintenance income was known when the recipient's rate of YA was originally calculated. However the increase to the recipient's rate of YA cannot be backdated further than the first day of the financial year immediately preceding the financial year in which the determination to increase the rate of YA (based on a recalculation that counts actual maintenance income) was made.
this recalculation would result in a decrease in the recipient's rate of YA, the decrease is to be backdated to the date when the recipient's rate of YA was originally calculated based on estimated maintenance income. This is to give the same effect as if the actual maintenance income was known when the recipient's rate of YA was originally calculated. There is no time limit as to how far back this backdating can go to take effect.

Example 1: Ralph's rate of YA was originally calculated on 15 September 2017 using an estimate of his maintenance income. Following reconciliation of his actual maintenance income for 2017-18 with the estimated maintenance income for 2015-16 DHS determined (on 8 November 2018) that Ralph's rate of YA must be recalculated resulting in an increase. The date of effect of this increase is taken to be 15 September 2017 and consequently Ralph is paid arrears from this date.

Example 2: Heather's rate of YA was originally calculated on 20 April 2017 using an estimate of her maintenance income. Following reconciliation of her actual maintenance income for 2016-17 and 2017-18, with the estimated maintenance income for 2016-17 and 2017-18, DHS determined (on 10 November 2018) that Heather's rate of YA must be recalculated resulting in an increase. The increase cannot be backdated further than the first day of the financial year immediately preceding the financial year in which the determination to increase the rate of YA was made. Therefore, the date of effect of this increase is taken to be 1 July 2017 (not 20 April 2017) and Heather will be paid arrears from 1 July 2017.

Example 3: Dion's rate of YA was originally calculated on 3 January 2017 using an estimate of his maintenance income. Following reconciliation of his actual maintenance income for 2016-17, 2017 18, and 2018-19 with the estimated maintenance income for these years DHS determined (on 19 October 2019) that Dion's rate of YA must be recalculated resulting in a decrease. Consequently Dion was paid a lower rate of YA from 19 October 2019 onwards. However the date of effect of the decrease is taken to be 3 January 2017 and therefore Dion is deemed to have been overpaid from 3 January 2017 until 19 October 2019.

Act reference: SS(Admin)Act section 109A Date of effect of determination under section 78 resulting…, section 118(2E) If the Secretary makes a determination under section 79 (rate reduction determination)…

Last reviewed: 7 May 2018