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6.4.1.40 Outcomes of Reconciliation

Summary

This topic provides a summary of the outcomes that may result from the reconciliation of FA. The outcome of reconciliation may be a:

  • nil adjustment,
  • top-up (positive adjustment), or
  • overpayment (negative adjustment).

 

There are timing restrictions on when individuals can receive top-up payments under reconciliation conditions (6.4.1.30).

 

This topic also covers:

  • impact of reconciliation on NBS and NBU,
  • review of reconciliation decisions, and
  • reconciliation after the end of the lodgement period.

 

Nil adjustment

When an individual's entitlement to FTB or CCB is the same as the amount they received for the relevant income year (1.1.R.23), there is a nil adjustment. This means the individual has received their exact entitlement.

 

Top-up (positive adjustment)

When an individual's entitlement to FTB or CCB for the relevant income year is more than the amount they received for the relevant income year, there is a positive adjustment. This means the individual will receive the difference between what they should have been paid and what they actually received for the relevant income year. A top-up may result if the individual's estimated ATI is higher than their actual ATI, as assessed by the ATO. A top-up may also result if the individual chooses a More Choice for Families payment option that allows them to receive part of their entitlement during the income year and the rest of their entitlements after their payments have been reconciled.

 

Note: RA will be included in an individual's FTB top-up if:

  • their FTB Part A entitlement is more than the base rate, and
  • they would have received RA during the relevant income year except for the fact that they were only paid the base rate due of FTB Part A due to their estimated income, and
  • their rent details have been verified by Centrelink.

Example: Amanda is a member of a couple and receives FTB Part A by instalment for her 2 year old daughter. Amanda pays private rent of $270.00 a week. As she receives more than the base rate of FTB Part A, Amanda receives some RA as part of her fortnightly instalments. At the end of the income year, it is determined that her actual family income makes Amanda eligible for the maximum rate of FTB Part A including the maximum rate of RA. Amanda receives a top-up.

 

For CCB and CCR, if reconciliation, or the review of the reconciliation outcome, is initiated through the provision of an updated Attendance Record Report after the end of the lodgement year, it may result in a top-up.

 

Overpayment (negative adjustment)

When an individual's entitlement to FTB or CCB is less than the amount they received for the relevant income year, there is an overpayment (negative adjustment). This means the difference between what they actually received and what they should have been paid for the relevant income year will be raised as an overpayment. The individual's income tax returns, as well as the income tax returns of another consenting adult, may also be used to recover any balance of the overpayment. An overpayment may result if the individual's estimated ATI is lower than their actual ATI, as assessed by the ATO. Other methods of recovery, including withholdings and garnishee, may also be used.

 

Individuals who receive SBP may be indirectly affected by reconciliation. Where SBP is paid under the $60,000 income test, it is not reconciled. Where SBP is paid under the FTB Part A eligibility test, the SBP is not reconciled directly, but is raised as a debt where FTB reconciliation results in nil FTB Part A entitlement for the day that SBP was paid.

 

Note: If SBP is raised as a debt due to FTB Part A reconciliation, the individual may still be eligible for SBP for a later date. In this case, a debt is raised for the original payment and the debt is offset by the new SBP entitlement for the later date. Where the later date is in a subsequent income year, the individual will be entitled to a top-up of the difference between the 2 rates.

 

Example: Jane is receiving FTB Part A by instalments for 2 children and gives birth to a stillborn child. Jane does not meet the $60,000 SBP income test, but is eligible for payment as she is in receipt of FTB Part A. SBP is paid due to Jane's FTB Part A eligibility on the day of the stillbirth. At FTB reconciliation, Jane's ATI is above the FTB Part A threshold. As such, all of Jane's FTB Part A for the relevant year and her SBP are raised as a debt during reconciliation. However, as Jane is still eligible for FTB Part A by instalments as at 1 July of the following year and it is still within 52 weeks beginning on the day of the stillbirth, Jane is now paid SBP due to her FTB Part A eligibility on 1 July. The new SBP is used to offset the debt raised for the original payment, and as the SBP rate had increased on 1 July due to indexation, the difference is used to offset part of Jane's FTB Part A debt.

 

Act Reference: FAAct section 36 When an individual is eligible for SBP in normal circumstances

Policy reference: FA Guide 2.12.1 SBP Eligibility Criteria, 3.12 SBP Rate, 6.4.1.20 Payments Affected by Reconciliation

 

Impact of reconciliation on NBS and NBU

Where an individual has received NBS and/or NBU during the relevant financial year, the payments are subject to reconciliation in the same way as FTB Part A. Where reconciliation results in nil FTB Part A entitlement for the day that NBU was paid, NBU is raised as a debt. Likewise, where reconciliation results in nil FTB entitlement for part or all of a period that NBS was paid, the NBS for that period is also raised as a debt. However, as an individual can be eligible for NBS/NBU for any day within a period of one year beginning on the child's birth or entrustment to care as part of an adoption process, NBS and/or NBU eligibility may exist for a later date. In these cases, the reconciliation debt raised may be offset with the NBS/NBU entitlement for the later period.

 

Example: Hunter has a child entrusted to his care as part of an adoption process on 1 March. Hunter claims FTB Part A and receives NBU and NBS for 91 days beginning on the day of entrustment to care. FTB reconciliation completes for the relevant year on 1 December and results in Hunter having nil FTB entitlement for the period that NBS was paid. However, as Hunter was still receiving FTB on 1 July of the subsequent year, Hunter is now eligible for NBU and NBS from 1 July. The FTB reconciliation debt is partially offset by the NBU and NBS entitlement for the period 1 July to 29 September of the subsequent year.

 

Act Reference: FAAct section 58AA NBU of family tax benefit if newborn supplement added into Part A rate, section 35A Eligibility for NBS

 

Review of reconciliation decisions

An individual's FA can be reconciled again if:

  • ATI (1.1.A.20) for either the individual or partner changes,
    • Example: The individual's income tax is re-assessed by the ATO, a non-lodger (1.1.N.33) lodges an income tax return or the individual revises an estimate.
  • maintenance income (1.1.M.10) for either the individual or partner changes.
    • Example: Child Support modifies a disbursement amount or a private collect individual does not collect their full child support entitlement.
  • information is provided that an FTB child of the individual has met health check or immunisation requirements since the date of the previous reconciliation.

 

An individual's CCB and CCR will also be re-reconciled if a child care service submits an updated Attendance Record Report substituting new attendance information for that already provided. Processing of this information will result in an automatic re-reconciliation. This differs from a review initiated by an individual as it will usually occur without the individual's prior knowledge.

 

Reconciliation after the end of the lodgement period

Where reconciliation is initiated through the provision of actual ATI or maintenance income after the end of the lodgement year (1.1.L.30) it can only result in a nil or negative adjustment. This may occur where the individual and/or their partner lodge an income tax return after the lodgement year.

 

Note: If an income tax return is not lodged by the individual and/or their partner do not inform Centrelink that they are not required to lodge a tax return before the end of the lodgement year, no top-ups or FTB supplements are payable.

 

A non-lodger debt will be raised after the end of the lodgement year if the individual and/or their partner fail to lodge a tax return or inform Centrelink they are not required to lodge an income tax return.

 

Policy reference: FA Guide 6.4.1 Overview of Reconciliation, 6.4.1.30 Reconciliation Process, 6.4.2.10 Verification of Adjusted Taxable Income, 6.1 Centrelink Review & Appeal Process, 6.4.3.20 Non-lodger Process, 6.4.4.20 Reconciliation - Ex-partners

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Last reviewed: 20 March 2014


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Last Edited: 04/03/2014 11:42:08 AM


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