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This topic outlines the possible outcomes of the non-lodger process:
FA can be reconciled, using the individual's most recent estimate or indexed estimate of taxable income if they:
Policy reference: FA Guide 6.4.2.10 Verification of Adjusted Taxable Income
An individual has their entitlement for the relevant income year (1.1.R.23) reconciled under the normal reconciliation process if:
An individual has a debt due to the Commonwealth if:
For FTB, the total amount of FTB paid to an individual for the relevant income year is raised as a debt if the individual fails to respond to Centrelink's non-lodger letters.
Individuals who choose to defer some of their FTB entitlement for the relevant income year and do not lodge an income tax return by the end of the lodgement year will be subject to a non-lodger debt for the amount of FTB they actually received during the relevant income year. Any deferred portion of their entitlements will not be paid until an income tax return has been lodged within the allowable time period.
For a debt to arise from a partner not lodging an income tax return or not advising Centrelink that they are not required to lodge an income tax return, an individual must still be partnered, as of 1 July of the extended lodgement year (1.1.E.70) with the same person with whom they were partnered as at 30 June of the relevant income year.
If an individual or their partner subsequently lodges their income tax return/s after a debt has been raised, but before 30 June of the extended lodgement year, the individual can be paid their full entitlement, including supplements. However, if an individual or their partner lodges their income tax return/s after a debt has been raised and after 30 June of the extended lodgement year, the debt determination must be varied to reflect that the individual was entitled to the lesser of:
Explanation: This means that the individual will not be entitled to receive any top-up payment or FTB supplements if they lodge income tax return/s after the extended lodgement year.
An individual who has chosen to defer some of their FTB entitlement for the relevant year and lodges a tax return after the end of the extended lodgement year, can only be paid for the relevant income year the lesser of their legislative entitlement based on ATI or the amount they would have received had the choice not been made to defer some or all of FTB.
Act reference: FA(Admin)Act section 28 Variation of instalment and past period entitlement determinations where income tax return not lodged
Policy reference: FA Guide 6.4.2.10 Verification of Adjusted Taxable Income, 6.4.3 Requirement to Lodge an Income Tax Return, 6.4.3.20 Non-Lodger Process, 7.2 Methods of Debt Recovery, 7.3 Non-Recoverable Debts
For FTB advances (1.2.8), the total amount of the advance repaid by the individual during the relevant income year is raised as an FTB advance debt if the individual fails to respond to Centrelink's non-lodger letters. The total amount repaid is the sum of the daily reduction amounts applied during the relevant income year.
After an FTB advance debt has been raised due to a non-lodger determination, if an individual or their partner subsequently lodges their income tax return/s or advise that they are not required to lodge income tax return/s the FTB advance debt is extinguished (i.e. it is taken never to have been an FTB advance debt) and normal reconciliation processes will apply where all other conditions for reconciliation have been met.
Act reference: FAAct Schedule 1 clause 48 Changing the repayment period-recalculation of amount of unrepaid FTB advance, Schedule 1 clause 51 Recalculation of amount of unrepaid FTB advance
FA(Admin)Act section 71A Debts arising in respect of FTB advances
Policy reference: FA Guide 1.2.8.10 FTB Advance Payments - Details, 1.2.8.20 Variations to FTB Advance Repayment Period, 7.6 FTB Advance Debts, 6.4.3.20 Non-lodger Process
Prior to 1 July 2008, for CCB the debt is equal to the total amount of fee reductions received during the relevant income year less the minimum CCB entitlement for that year. From 1 July 2008 onwards, for CCB the debt is equal to the total amount of fee reductions received during the relevant income year as the CCB entitlement reduces to the zero rate for that year.
Note: Section 60D is discretionary.
Act reference: FA(Admin)Act section 60D Variation where income tax return not lodged
Where an individual has an outstanding income tax return for relevant income years (that is the year for which they received an FTB entitlement) or they have not informed Centrelink they were not required to lodge for that year and a non-lodger decision was made that resulted in a debt, and the debt is still outstanding, they will be prohibited from receiving FTB payments based on an estimate (1.1.N.35). The non-payment of FTB will also apply to the current partner of an individual who has not lodged a tax return, or failed to inform Centrelink that they are not required to lodge, and has an outstanding debt as a result of a non-lodger decision.
Act reference: FA(Admin)Act section 32AA Non-payment of FTB for non-lodgement of tax returns
Policy reference: FA Guide 6.4.3.40 Non-payment of FTB Based on an Estimate
From 1 July 2010 if an individual has 3 or more FTB non-lodger decisions (variations under A New Tax System (Family Assistance) (Administration) Act 1999 subsection 28(2) for an income year) because the individual and/or their partner did not lodge a required tax return for the relevant income year, and for at least one of those decisions there is an outstanding FTB non-lodger debt that has not been fully repaid, the individual (and/or their partner, if applicable) will lose entitlement to FTB based on an estimate.
Non-lodger decisions that were made before 1 July 2010 that did not generate a debt or where the debt was repaid before 1 July 2010 do not count towards the 3 non-lodger decisions for non-entitlement. Only variations for which there is an outstanding non-lodger debt as at 1 July 2010 onwards will apply for the purposes of determining non-entitlement to payment of FTB.
Act reference: FA(Admin)Act section 32AE Non-entitlement to payment of FTB after 3 variations under subsection 28(2), section 28 Variation of instalment and past period entitlement determinations where income tax return not lodged
Policy reference: FA Guide 6.4.3.70 Non-entitlement to FTB Based on an Estimate Due to 3 or More Non-lodger Decisions
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Last reviewed: 13 May 2013
