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There are several possible outcomes arising from the new financial year and transitional period assessment process. These outcomes depend on whether or not the recipient responds to the FAO after being contacted and, in cases where they do respond, the nature of their response.
This section contains information on the following:
Recipients are contacted as part of the NFYA process or after being granted FTB in the period between the NFYA process and the end of the current financial year. They are given options regarding the estimate of income to be used to determine their rate of FTB and/or CCB from the beginning of the new financial year. Depending on the type and rate of payment being received by the recipient, the options available to them may differ.
Recipients are given 2 options in relation to their estimate for the new financial year:
Act reference: FA(Admin)Act section 20(2A) Determination of rate may be based on estimate, indexed estimate or indexed actual income, section 20A Indexed estimates, section 20B Indexed actual incomes, section 20C Indexed estimates and indexed actual income of members of couples
If a recipient does not respond to the request to provide an estimate, the indexed estimate amount provided in the advice is used to determine their rate of FTB and/or CCB from the beginning of the new financial year, provided this is more than 14 days after a notice under section 20A(2) is given.
Note: If the letter is returned to sender, then normal returned mail procedures apply.
Example: A family is being paid instalments of FTB and CCB by fee reduction for the current financial year based on an estimate of their combined ATI (1.1.A.20) of $32,500. When contacted, they choose not to respond. The FAO uses the family's indexed amount (the most recent estimate multiplied by the indexation factor) in the advice to determine their rate of FTB and CCB from the beginning of the new financial year.
Where a recipient's rate of FTB or CCB is based on an estimate, indexed estimate or indexed actual income, the recipient may choose to provide a revised income estimate upon which their rate of FTB may be calculated. In this instance, the FAO will assess whether the recipient's revised estimate is reasonable. If reasonable, the FAO will use this new estimate to determine the recipient's rate of payment from either the day the revised estimate was provided or the first day of the new financial year, in accordance with section 31A of the A New Tax System (Family Assistance) (Administration) Act 1999.
Example 1: Wendy is being paid instalments of FTB based on an indexed income estimate of $45,000. Following an increase in her partner's overtime payments, Wendy provides the FAO with a revised income estimate of $51,000. The FAO assesses this new estimate to be reasonable based on the information provided by the recipient. Wendy's payments will now be based on the revised income estimate of $51,000, beginning from the date the advice was received.
Example 2: Richard and his wife Prue are being paid instalments of FTB and CCB by fee reduction for the current financial year and are advised their indexed amount is $29,000 for the new financial year. Richard advises the FAO that they wish to have their new estimate of $45,000 used for the new financial year. The FAO assesses this new estimate to be reasonable based on the information provided by Richard. From 1 July of the next financial year, the family's entitlements are determined using their income estimate of $45,000.
Note: When a recipient whose payments are based on indexed estimates provides their own revised estimate, they will not be subject to the second stage of income indexation (of actual income).
Act reference: FA(Admin)Act section 31A Variation of instalment entitlement determination to reflect revised adjusted taxable income estimates, section 20 Determination of rate may be based on estimate, indexed estimate or indexed actual income, section 20A Indexed estimates, section 20B Indexed actual incomes
A recipient may choose to provide their own estimate for the new financial year, instead of accepting the indexed estimate provided by the FAO. In this instance, the FAO will assess whether the recipient's estimate is reasonable. If it is determined to be unreasonable, the FAO will contact the recipient to discuss a new reasonable estimate. If the recipient decides not to provide a new estimate or provide evidence to show their previous estimate is reasonable the FAO will make a determination that the recipient is not entitled to be paid FTB for the new financial year unless a new reasonable estimate is provided before the end of the income year following the one in which the variation under section 28A of the A New Tax System (Family Assistance) (Administration) Act 1999 took effect. When actual ATI becomes known, the effect of the 'no entitlement' variation is revoked under section 28A(3).
Example 1: Barry and his wife Michelle are paid FTB by instalments and CCB by fee reduction for the current financial year. They decide to provide a lower estimate than the indexed estimate provided by the FAO. This is because Michelle expects to work less hours in the next financial year. Barry contacts the FAO and advises of their new estimate. The FAO assesses this estimate as unreasonable based on information provided by the relevant employer. Negotiations with Barry for a new estimate are unsuccessful. The FAO determines that Barry is not entitled to be paid FTB by instalment for the new financial year as a reasonable estimate has not been provided. Barry is advised of the decision not to pay FTB by instalment. This decision can be undone if an estimate is provided within the required timeframe or undone and then reconciled when actual ATI becomes known.
Example 2: George is being paid FTB by instalments and CCB by fee reduction for the current financial year. George advises the FAO of a new estimate that is lower than the current estimate being used for his FTB payments. George explains that his partner expects a lower income in the next financial year as she will be working less hours. The FAO assesses this estimate as unreasonable as the expected reduction in working hours does not justify the significant reduction of the estimate. George renegotiates a new reasonable estimate with the FAO. The FAO determines that George is entitled to be paid FTB by instalment and CCB by fee reduction for the new financial year as a reasonable estimate has been agreed.
Note: Some recipients may choose to provide a higher estimate in order to avoid possible overpayments. Where applicable, the FAO may advise the recipient of the consequences of such an approach including possible loss of eligibility for the HCC or having a lower CCB percentage.
Policy reference: FA Guide 3.2.8.30 Revised Estimates
The income amount resulting from the new financial year assessment process occurring in the current financial year applies from a date on or after 1 July of the new financial year.
In most cases, the application of the income amount will be from 1 July. However, the start date for the application of the income amount provided in the notice under subsection 20A(2) or 20B(2) of the A New Tax System (Family Assistance) (Administration) Act 1999 is at least 14 days after the day on which the notice is given. This means that a recipient may have the income amount applied on or after 1 July of the relevant income year.
Example: Jane claims FTB on 25 June providing her ATI for the current year as $50,498. As Jane is unable to provide an estimate of her ATI for the new financial year beginning 1 July, she agrees with the FAO to use indexed actual income based on her most recent ATI for the new financial year. A notice is issued under subsection 20B(2) of the A New Tax System (Family Assistance) (Administration) Act 1999 on 26 June. Jane's FTB payments can only be based on the indexed amount on or after 10 July of the new financial year. Before the new rates take effect, Jane's FTB payments will be based on her estimated ATI of $50,498.
Act reference: FA(Admin)Act section 20A Indexed estimates, section 20B Indexed actual incomes
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Last reviewed: 2 January 2009
