This topic explains the reconciliation process when the recipient's partner dies.
If the recipient's partner dies during the relevant income year (1.1.R.23) and the executor of the deceased partner's estate lodges the tax returns before the end of the income year, reconciliation does not occur until after the end of the income year when the recipient has lodged their tax return.
Example: Mrs Nbebi receives FTB and Mr Nbebi dies on 1 January. The executor lodges the returns in March and the estate is wound up by the end of April. Mrs Nbebi lodges her tax return in August of the first lodgement year and her entitlement is reconciled soon after.
If a recipient whose partner has died lodges their return in the first lodgement year (1.1.L.30) before the executor has lodged the returns for the deceased partner an interim reconciliation can take place. If the executor of the estate subsequently lodges the returns before 30 June of the second lodgement year then a final reconciliation occurs.
If the executor of the estate has not lodged the tax returns by 30 June of the first lodgement year then no further reconciliation takes place and any interim reconciliation outcome becomes the final reconciliation outcome.
Where the partner dies part way through the income year, assessment of the recipient's family assistance entitlement is carried out by including:
Act reference: FAAct Schedule 3 clause 3 Adjusted taxable income of members of couple
Policy reference: FA Guide 3.2.1 Adjusted Taxable Income - General Provisions
Where the partner dies part way through the income year, the actual ATI (1.1.A.20) of the deceased person is annualised for reconciliation purposes to bring it into line with the assessment for all other FTB and CCB recipients.
The formula for annualising is:
'Income of partner to date of death' means the ATI of the partner up to and including the day before they died. 'Number of days partner was alive during income year' means the number of days up to and including the day they died.
Example: Mr Nbebi's ATI up to the date of his death on 1 January is $25,000. His annualised ATI for reconciliation purposes is $25,000 x 365 / 184 = $49,592.
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 18.104.22.168 Reconciliation Process, 22.214.171.124 Verification of Adjusted Taxable Income, 126.96.36.199 FTB Reconciliation Due to Maintenance Income, 188.8.131.52 CCB Reconciliation & Child Care Usage/Attendance Information
The reconciliation outcome for the period before the partner died(i.e. while recipient and partner were a member of a couple) can only be a top-up or a nil adjustment. It cannot result in a debt for the period that the recipient was with their deceased partner. This is similar to the treatment of recipients who separate during the income year.
Act reference: FAAct Schedule 3 clause 3A Working out adjusted taxable income in certain cases where individuals cease to be members of a couple
Policy reference: FA Guide 184.108.40.206 Reconciliation - Ex-partners
Last reviewed: 30 April 2012