6.4.3.20 Non-lodger Process

Summary

This topic outlines how Centrelink will follow up on individuals and/or their partners, who are required to lodge an income tax return for the relevant income year (1.1.R.23). It discusses:

the non-lodger process,
prohibition on being paid FTB based on an estimate,
the criteria for determining a non-lodger process,
the income used in the selection criteria, and
the treatment of individuals not selected for the non-lodger process.

Non-lodger process

The non-lodger process prompts individuals who receive FTB and/or their partners who are required to lodge an income tax return do so before the end of the relevant lodgement period.

In March/April of the lodgement year (1.1.L.30) (the income year following the year of entitlement), individuals who receive FTB (and/or their partners) who have not lodged an income tax return or advised Centrelink they are not required to lodge are advised that:

if they and/or their partner are required to lodge an income tax return, they should do so by 30 June of the lodgement year,
if they and/or their partner are not required to lodge an income tax return they should advise Centrelink,
the entire amount of FTB and FTB advance paid to them for the relevant income year may be raised as a debt to the Commonwealth if they and/or their partner are required to lodge an income tax return and they fail to do this by 30 June of the lodgement year, and
no top-ups of FTB (including supplements) can be made if they lodge their income tax returns after 30 June of the extended lodgement year (the second income year following the year of entitlement) regardless of their family's ATI for that year.

Note: The extension of the lodgement period from 1 year to 2 years does not change the requirement for recipients to lodge their income tax returns within 12 months. It simply means that, if they lodge their tax returns up to 24 months from the end of the income year (1.1.I.75), they will receive a top-up, if eligible. By the end of the extended lodgement year, if an individual and/or their partner fail to lodge an income tax return, or do not inform Centrelink that they are not required to lodge, they will not be eligible to receive any top-up payments including the FTB supplements.

These individuals may be reminded by Centrelink again before the end of the lodgement year to either lodge their income tax return or contact Centrelink to advise they are not required to lodge.

If an individual who receives FTB and/or their partner fail to lodge an income tax return by the end of the lodgement year or fail to inform Centrelink that they and/or their partner are not required to lodge an income tax return, a debt will be raised against them. The debt may comprise all the FTB (including LFS and MBA) and CCB they received for the relevant income year. Other FA payments such as the baby bonus are not raised as a debt as there is no requirement to lodge an income tax return to receive these payments.

Note: A non-lodger decision is a variation of the individual's determination made by the Secretary that the individual is/was not entitled to FTB for the financial year for which they and/or their partner have not lodged a tax return.

Individuals who receive FTB (and their partners, if any) may not be able to receive FTB based on an estimate if they have outstanding non-lodger debts as a result of non-lodger decisions for FTB received in relation to previous income years because they have not lodged their requisite income tax returns or failed to inform Centrelink that they are not required to lodge.

Act reference: FA(Admin)Act section 28(2) Consequence of section applying, section 32AA Non-payment of family tax benefit for non-lodgement of tax returns, section 71A Debts arising in respect of FTB advances

Policy reference: FA Guide 6.4.3.30 Outcomes of Non-lodger Process, 6.4.3.10 Valid Reasons for Not Lodging a Tax Return, 6.4.3.40 Non-payment of FTB Based on an Estimate, 7.6 FTB Advance Debts

Non-lodger process selection criteria

The following categories of individuals who receive FTB are selected for the non-lodger process.

Categories selected

Categories excluded

All individuals who received FTB by instalment, for the relevant income year, and

- they and/or their partner have not lodged an income tax return, if required, by March/April of the lodgement year, and
- they and/or their partner provide their own, or accept Centrelink's estimate of (1) taxable income above the tax-free income tax threshold, (2) reportable fringe benefits, (3) net rental property loss,

All individuals who received FTB for a past period, and

- whose partner has not lodged an income tax return, if required, by March/April of the lodgement year.

An individual will be excluded from selection if they:

- are deceased, or
- are partnered with someone with whom they were partnered during the relevant income year and both they and the relevant partner have lodged their individual income tax returns, or
- had 1 or more ex-partners from the relevant income year who have not lodged, as long as they are not partnered with a non-lodger as at 30 June of the income year, or
- are partnered, have lodged their individual income tax return and have been granted an exemption for their partner from the TFN requirement, or
- are partnered, received FTB Part A (including recipients who received CCB) and both the recipient and their partner received income support continuously throughout the relevant income year, or
- are single, have lodged their individual income tax return for the relevant income year, or
- are single, received FTB (including recipients who received CCB) and income support continuously throughout the relevant income year.

Income to be used - selection criteria

Income for the purpose of determining whether an individual's and/or their partner's taxable income is above, equal to or below the tax-free income threshold is the higher of either their:

estimated taxable income for the relevant income year, or
taxable pension or benefit received during the relevant income year according to Centrelink records.

Note: Where there are no details on the individual's record of their (and/or their partner's) taxable income, it is assumed that their income is above the tax-free income threshold.

Policy reference: FA Guide 6.4.3.30 Outcomes of Non-lodger Process

Treatment of individuals not subject to non-lodger notice

An individual can have their entitlement reconciled at any time from July of the lodgement year if adequate income information is available to do so.

Policy reference: FA Guide 6.4.2.10 Verification of Adjusted Taxable Income

_______________________________________________________

Last reviewed: 13 May 2013

Top