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A reasonable estimate of taxable income can be provided where:
the taxable income (1.1.T.20) for the financial year is not known.
Income estimates are used to calculate the recipient's FTB entitlement. The estimate is reconciled against the recipient's (and their partner's, if they have one) actual income for the relevant income year when it becomes available. Adjustments may be made to the recipient's FTB entitlements during reconciliation after which any top-ups may be paid or overpayments raised.
Policy reference: FA Guide 3.2.8 Reasonable Estimate of Income
Where an applicant/recipient provides an estimate of their income, the FAO will determine if the estimate is reasonable.
If the estimate is not considered reasonable, the FAO will request the applicant/recipient to provide evidence in support of their estimate. If evidence is not provided or does not substantiate the estimate, the FAO will determine that the applicant/recipient is not entitled to receive FTB. This means current payments being made by instalments will be cancelled. In the case of new or past period claims, entitlement will be assessed at reconciliation.
Where a recipient is being paid by instalments, the date of effect of the FTB cancellation is the day after the end of the individual's latest entitlement period. This could be the day after their next payday or the day after the final payday in the current financial year, depending on when the estimate applies.
Example: A family is claiming FTB by instalments for the current financial year and provide a new estimate which is lower than the estimate upon which current entitlements are based. The FAO assesses this estimate as unreasonable based on information provided by the employer and enters into negotiations for a new estimate with the recipient. Negotiations are unsuccessful. The FAO determines that the recipient is not entitled to be paid FTB by instalment and ceases paying FTB. Payment is cancelled the day after their next payday. The recipient is advised of the decision to cancel their FTB instalments and advised that their FTB will be assessed at reconciliation unless a new reasonable estimate is provided in the future.
Note: In the above example, if the estimate was for the new financial year, then the recipient's payment would be cancelled on the day after their last payday for the current financial year, unless a new estimate is provided and assessed as reasonable.
Act reference: FA(Admin)Act section 28A Variation of instalment entitlement determination where estimate of amount is not reasonable
Policy reference: FA Guide 4.9.3 Outcomes of New Financial Year Assessments
If the individual subsequently provides an estimate of ATI by the end of the income year following the one in which the variation took effect, which is considered reasonable, or the FAO becomes aware of the individual's actual assessed ATI details, the cancellation of entitlement should be overturned. The date of effect of this variation is the date of cancellation. The variation reinstates the determination that applied before the cancellation.
Act reference: FA(Admin)Act section 20 Determination of rate may be based on estimate, indexed estimate and indexed actual income, section 28A Variation of instalment entitlement determination where estimate of amount is not reasonable
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Last reviewed: 2 January 2009
