If an FTB recipient dies part way through the relevant income year (1.1.R.23) and all the conditions for reconciliation are met before the end of that year, reconciliation will not occur until after the end of the income year.
If the recipient did not have a partner during the entitlement period then reconciliation can occur immediately from 1 July of the first lodgement year. If the recipient did have a partner, reconciliation occurs after the actual ATI (1.1.A.20) of the partner becomes available.
Example: An FTB recipient, Mrs Nbebi dies on 1 January. The executor lodges the returns in March and the estate is wound up by the end of April. Mr Nbebi lodges his tax return in August of the first lodgement year and Mrs Nbebi's entitlement is reconciled soon after and can be paid to Mr Nbebi.
If a CCB recipient dies part way through the income year reconciliation will occur as soon as all usage/attendance information is available, even if this is before the end of the year.
When a CCB recipient dies in these circumstances, CCB may be paid to a third party at the Secretary's discretion.
Policy reference: FA Guide 4.6.1 General Provisions for Individual's Claims & Payments
If the recipient dies either during the income year, or the first lodgement year, and the executor of the estate fails to lodge the returns for the income year by 30 June of the first lodgement year then the rules for non-lodgers apply.
Policy reference: FA Guide 6.4.3 Requirement to Lodge an Income Tax Return
Where the recipient dies part way through the income year, the actual ATI of the deceased person is annualised for reconciliation purposes to bring it into line with the assessment of all other FTB and CCB recipients.
The formula for annualising is:
Where 'income of recipient to date of death' means the ATI of the recipient up to and including the day before they died and 'number of days recipient was alive during income year' means the number of days up to and including the day before they died.
Example: Mrs Nbebi's ATI up to the day before the date of her death on 1 January 2001 is $15,000. Her annualised ATI for reconciliation purposes is $15,000 x 365 / 184 = $29,755.
Explanation: Only income up to the day before the person died is included. Even if the deceased person has income on or after the date of death (e.g. bank interest, dividends, rental income) it is not included in the deceased person's taxable income. Any income earned on or after the date of death is included in a trust tax return.
Act reference: FAAct Schedule 3 clause 2(2) Adjusted taxable income
Policy reference: FA Guide 126.96.36.199 Reconciliation Process, 188.8.131.52 Verification of Adjusted Taxable Income, 184.108.40.206 FTB Reconciliation Due to Maintenance Income, 220.127.116.11 CCB Reconciliation & Child Care Usage/Attendance Information
If a deceased recipient has an FTB or CCB reconciliation debt and reconciliation occurred after the estate was disbursed, then the debt should be written off as a legally irrecoverable debt.
Act reference: FA(Admin)Act section 95 Secretary may write off debt
Last reviewed: 30 April 2012