4.3.1.20 FTB Payment Choices for Instalment Recipients

Summary

'More Choice for Families' gives families more choice and flexibility in how their FTB is paid. This enables families to match their payment arrangements more closely to their family circumstances. The FTB payment choices include the following:

An individual may change their choice of delivery and make an alternative choice at any time during the income year. It should be noted that individuals who provide a revised estimate of ATI during the income year which is higher than their previous income estimate, will, if necessary, have their ongoing rate of FTB Part A and/or FTB Part B automatically adjusted to reduce the risk of having an FTB overpayment at the end of the income year.

When a family's FTB rate is reduced under mandatory continuous adjustment there is still the flexibility for them to choose how they wish to receive their FTB payments. This can be done by selecting a payment options from the table above.

It is important to note that FTB Part A and Part B supplements can only be paid at reconciliation after the end of the financial year.

Note: Date of effect rules apply (4.4.2.30).

Choice 1

Example:

• Matt and Andrea have just had their second child.
• Matt's income is usually $35,000, however, he is likely to do overtime this year.
• During the same financial year, Andrea earned $7,000 before going on leave without pay and will not go back to work before the end of June. She is confident her estimate will not change.

Matt and Andrea are not sure what their combined annual income will be and do not want to risk being overpaid FTB Part A, so they have selected Choice 1.

• Matt and Andrea will receive the base rate of FTB Part A and their FTB Part B entitlement as fortnightly payments.
• They will be assessed for any further entitlement to FTB Part A, FTB Part B and the supplements after the end of the income year, when their tax returns have been assessed by the ATO.

Note: If Matt provides an increased estimate later in the year, the family's FTB rate will be automatically adjusted as appropriate for the remainder of the year to reflect the change and to avoid potential overpayment. By choosing this option they are electing to defer payment of more than base rate FTB Part A until the end of the year.

Choice 2

Example:

• Thanh and Lin already receive FTB for one child and have just had their second child.
• Thanh's employment is steady and he has confidently estimated his income for the current income year will be $51,000.
• Lin currently has no income but is thinking about returning to work part-time later in the year.
• Lin will need to notify the FAO if she is not required to lodge a tax return.

Thanh and Lin know they will be entitled to at least the base rate of FTB Part A, but are unsure if they will be entitled to FTB Part B because Lin might return to work before the end of the income (financial) year. They select Choice 2.

• Thanh and Lin will receive all of their FTB Part A as fortnightly payments.
• They will be assessed for any entitlement to FTB Part B and the supplements after the end of the income year when Lin's actual income is known.

Note: In this example if Lin returns to work after June she will have to notify the FAO of an increase in income estimate and the family's FTB rate will be automatically adjusted to avoid an overpayment for the remainder of the year. The family may elect to defer their FTB Part B payment until the end of the financial year when their actual income is known.

Choice 3

Example:

• Cheryl and Steve have just had their first child.
• Steve earned $36,000 last year and is expecting his income to increase but is not sure by how much.
• Cheryl might return to work in February but does not know what her income will be.

Cheryl and Steve are unsure what their combined income will be but they think they might be entitled to more than the base rate of FTB Part A. However, they want to avoid an overpayment. As Cheryl might return to work, they are unsure if they will be entitled to any FTB Part B (which, for eligible families, is based on the lower income earner). Cheryl and Steve think they can afford to wait for any extra FTB so they select Choice 3.

• Cheryl and Steve will receive the base rate of FTB Part A as fortnightly payments.
• They will be assessed for any further entitlement to FTB Part A, any entitlement to FTB Part B, and the supplements after the end of the income year when their actual income is known.
• Cheryl will need to notify the FAO if she is not required to lodge a tax return.

Note: If Cheryl does return to work she will be required to notify the FAO of an increase in estimate of ATI for the income year. The family's ongoing rate of FTB for the remainder of the income will be subject to mandatory continuous adjustment, to reduce the risk of an FTB overpayment at the end of the income year.

Choice 4

Example:

• Tracy and Branko have had their second child.
• Tracy earns around $108,000 per year.
• Branko is caring full-time for the children at home and has no income.

Tracy's income might put them over the limit for FTB Part A, but because Branko will not have any income this income year, and Tracy will not earn above $150,000, they are entitled to FTB Part B. Tracy and Branko select Choice 4.

• Tracy and Branko will receive all their FTB Part B as fortnightly payments.
• They will be assessed for any entitlement to FTB Part A and the supplements after the end of the income year when Tracy's actual income is known.
• Branko will need to notify the FAO that he is not required to lodge a tax return.

Choice 5

Example:

• John and Hannah already receive FTB for their 2 children and have just had their niece come to live with them full-time.
• John's employment is steady and he is confident of his income estimate.
• Hannah stays at home to care for the children and will not return to work this income year.

Because John's income is steady and Hannah has no income, they have selected Choice 5.

• John and Hannah will receive all of their FTB Part A and FTB Part B (excluding the supplements) as fortnightly payments.

If John and Hannah are entitled to any more FTB Part A because John's actual income was lower than his estimate, a top-up will be paid into their bank account after the end of the income year. However, if Hannah returns to work or John's actual income was higher than his estimate, they may have an overpayment of both FTB Part A and FTB Part B.

Choice 6

Example:

• Luke and Karina receive FTB for their first child and have just had their second child.
• They work together in a partnership and they have realised their income will be more than what they first estimated for the current income year.
• Luke and Karina own the home they live in and are not entitled to any RA.

If Luke and Karina's actual income is more than their earlier estimate, they may have already been paid too much FTB this income year for their older child. Luke and Karina want to avoid an overpayment and can afford to wait until after the end of the income year for any entitlement, so they decide on Choice 6.

• Luke and Karina will not receive any FTB as fortnightly payments.
• They will be assessed for any entitlement to FTB Part A, FTB Part B, and the supplements after the end of the income year when their actual income is known.

If Luke and Karina are entitled to any FTB after their tax returns have been assessed by the ATO, any FTB to which they are entitled will be used to reduce the amount they may have already been overpaid.

Note: If Luke or Karina notify the FAO of an increase in their estimated income or if they have their income estimate automatically uplifted their fortnightly payments will be automatically adjusted to avoid or reduce the risk of an overpayment and their FTB rate may be reduced to nil so that they do not receive any fortnightly payments for the remainder of the year.

Choice 7

Example:

• Dawn and Sam have 3 children, including a 20 year old son, Colin.
• In addition to his full-time study, Colin has started part-time work and is not sure if his income will remain less than the child income limit for the current income year.

Dawn and Sam have selected Choice 7.

• Dawn and Sam will be assessed for any entitlement to FTB for Colin after the end of the income year, when Colin's income is known.
• They will continue to receive FTB for their other 2 children as fortnightly payments and be assessed for any further entitlement to FTB Part A, FTB Part B and the supplements after all their actual income details become available.

At the end of the year, Dawn and Sam must advise the FAO if Colin's income was less than the child income limit before they can receive any payment for him. If Dawn and Sam have already received any FTB for Colin during the income year and Colin's actual income is over the child income limit, they will have to repay the entire amount of FTB.

Note: For each example above, if the individual notifies the FAO of an increased income estimate, they will not have a choice on whether to receive the base or a different FTB rate before assessment at reconciliation. Their FTB rate will be automatically adjusted to reflect the change.

Combining choices

Example:

• Jennifer and Brad have 3 children.
• Their oldest son, Jason, is 17 and has just started casual work in his final year of secondary school and when he finishes school in December he is hoping to work full-time until he determines his career options.
• Jennifer started work during Term 3 at the local school and hopes it will continue in Term 4.

Because Jennifer and Brad do not know what their combined income will be, and how much the person with the lower income (Jennifer) will earn, they select Choice 3. Jennifer and Brad are also unsure if Jason's income will be less than the child income limit this income year so they decide on Choice 7 for FTB payments for Jason.

• Jennifer and Brad will receive the base rate of their FTB Part A (excluding the FTB Part A supplement amount) for the 2 younger children as fortnightly payments.
• They will be assessed for any further entitlement to FTB Part A, any entitlement to FTB Part B and the supplements after the end of the income year, when their actual income is known.
• They will also be assessed for any entitlement to FTB for Jason after the end of the income year, when Jason's income is known.

Jennifer and Brad must advise the FAO if Jason's income was less than the child income limit before they can receive any payment for him.

Policy reference: FA Guide 4.4.2.30 Date of Effect Rules - FTB Payment Choices, 4.3.1.10 FTB Payment Delivery Choices, 4.3.1.30 Mandatory Continuous Adjustment of FTB Instalments, 4.3.1.40 Payment of Arrears - Financial Hardship

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Last reviewed: 3 January 2012