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From January 2010, individuals who receive FTB (and/or their partners, if applicable) will not be able to receive FTB payments based on an estimate if they have an outstanding non-lodger debt as a result of a non-lodger decision because they have not lodged their required income tax returns or failed to inform the FAO that they are not required to lodge.
If an individual who receives FTB and/or their partner fails to lodge an income tax return in respect of an income year (1.1.I.75) by the end of the lodgement year (1.1.L.30) (the financial year following the income year) the individual's entitlement determination may be varied. The effect of a non-lodger decision is that the individual was not entitled to FTB in respect of that income year. A non-lodger debt is then raised for the amount of FTB they received for that year.
A non-lodger decision may be made at any time following the end of the lodgement year but is generally made in November of the extended lodgement year (1.1.E.70) (the second income year following the year of entitlement). A variation of entitlement notice is issued by the FAO to the individual.
If an individual has a non-lodger debt as a result of a non-lodger decision, the non-payment of FTB based on an estimate can be applied at the end of the grace period. A 75 day grace period for the lodgement of income tax returns or to fully repay a non-lodger debt (or a combination of both) takes effect following the Secretary making a variation (under A New Tax System (Family Assistance) (Administration) Act 1999 section 28(2)), at which time the individual will be issued a variation of entitlement notice. The grace period may be a longer period if the Secretary determines that there are special circumstances to vary the length of the grace period.
FTB payments based on an estimate may continue during the grace period but would cease at the end of the grace period if there are still outstanding income tax returns or the FAO has not been informed that the individual and/or their partner are not required to lodge and there is still an outstanding non-lodger debt.
Where an individual has repaid all their non-lodger debt(s), and/or lodged all their relevant income tax returns (or a combination of both), the prohibition will be removed to enable fortnightly FTB payments to re-commence.
Act reference: FA(Admin)Act section 28 Variation of instalment and past period entitlement determinations where income tax return not lodged, section 32AA Non-payment of family tax benefit for non-lodgement of tax returns, section 32AB Prohibited periods for claimant, section 32AC Prohibited periods for relevant partner, section 32AD Prohibited periods for new partner
Policy reference: FA Guide 6.4.3.60 Removal of Non-payment of FTB Based on an Estimate
The non-payment of FTB will apply if a recipient's rate of FTB is worked out on the basis of an income estimate or indexed income estimate, or an estimate of maintenance income (1.1.M.10).
The non-payment of FTB based on an estimate must be applied unless there are special circumstances that make it appropriate to end or defer the prohibition period.
Act reference: FA(Admin)Act section 20 Determination of rate may be based on estimate, indexed estimate or indexed actual income
Policy reference: FA Guide 3.2.1 Adjusted Taxable Income - General Provisions, 3.2.8.10 Initial Estimate When Making a Claim, 3.1.7.10 Maintenance Income Test - General Provisions
Non-payment of FTB based on an estimate will prevent an individual from being paid FTB Part A, including RA, LFS, and MBA, and FTB Part B.
Individuals who receive RA as part of their FTB and who also receive income support will be prevented from receiving RA through their income support payments while they are subject to a non-payment of FTB based on an estimate. This is because an individual may remain entitled to FTB (including RA) although they are prohibited from being paid on the basis of an estimate.
Non-payment of FTB will not affect the eligibility of an individual (or their partner, if applicable) for any of the following concessions, rebates or payments unless they lose entitlement to FTB through the operation of FA(Admin)Act section 32AE, non-entitlement to payment of FTB (1.1.N.31):
Act reference: FA(Admin)Act section 32AE Non-entitlement to payment of FTB after 3 variations under subsection 28(2)
SSAct section 1061ZK(4) Qualification for health care card
Income Tax Assessment Act 1997
If an individual informs the FAO that they (and their partner, if applicable) have lodged their relevant tax return the prohibition will be lifted. However, the individual may be required to provide evidence of lodgement of outstanding tax returns.
Acceptable evidence may include, but is not limited to:
The above are examples of evidence only and not intended to be inclusive.
The non-payment of FTB based on an estimate will apply to an individual (and their partner, if applicable) who receives less than 100% of the FTB for a child due to shared care of that child. The other carer who receives the remaining amount of FTB will not be subject to a non-payment of their FTB, unless they, or their partner, are also subject to a separate non-payment period because they have an outstanding non-lodger debt due to not lodging their relevant tax returns or failing to inform the FAO they are not required to lodge.
Example: Greg and Jill have a son Avi, for whom they have been receiving FTB in fortnightly instalments. Greg and Jill separate and share care for Avi on a 50-50 basis. Jill lodges her tax return for the 2007-08 income year, however Greg does not lodge a tax return for that year. In November 2009 a decision is made that Greg is not entitled to FTB for the 2007-08 income year because he has not lodged his tax return and a non-lodger debt is raised. Greg still has not lodged his tax return or fully repaid the non-lodger debt at the end of the grace period and in January 2010, Greg is prohibited from being paid FTB based on an estimate.
However, Jill could still be paid FTB by instalments based on her FTB shared care percentage of 50% for Avi, because she has lodged her relevant tax return.
Act reference: FA(Admin)Act section 32AD Prohibited periods for new partner, section 32AB Prohibited periods for claimant, section 32AC Prohibited periods for relevant partner, section 32AA Non-payment of FTB for non-lodgement of tax returns
If a non-payment of FTB based on an estimate has been applied to an individual and their partner due to the partner's outstanding income tax lodgement, and the couple subsequently separates, the non-payment will no longer apply to the individual. However, if the couple later reconcile and the partner has still not lodged the relevant tax returns or fully repaid the non-lodger debt, the non-payment of FTB based on an estimate will recommence.
Example: Agnes and George are members of a couple. George is paid FTB by instalments for the children for the 2007-08 income year. Agnes does not lodge her income tax return for the 2007-08 income year, and in November 2009 George's entitlement determination is varied so that he is not entitled to FTB for the 2007-08 income year due to his partner's non-lodgement. A non-lodger debt is raised for the entire amount of FTB he received for the 2007-08 income year. George's partner Agnes does not lodge her income tax return or the non-lodger debt is not fully repaid by the end of the grace period. In January 2010 George is prohibited from being paid FTB based on an income estimate.
In April 2010 Agnes and George separate, and share the care of their children. As a result of this separation George's non-lodger debt will be varied and the prohibition will be lifted for George. However, if Agnes and George reconcile, George will again be prohibited from receiving FTB based on an income estimate if Agnes has still not lodged her income tax return in respect of the 2007-08 income year, or the non-lodger debt for 2007-08 is not fully repaid.
Act reference: FA(Admin)Act section 32AC Prohibited periods for relevant partner, section 32AB Prohibited periods for claimant, section 32AA Non-payment of FTB for non-lodgement of tax returns
If an individual in a blended family (1.1.B.30) is subject to a non-payment of FTB based on an estimate (for not lodging their income tax returns), their current partner will also be prohibited from receiving FTB based on an estimate while they remain a couple, even if the partner is separately receiving FTB for children from a previous relationship.
If the prohibited person becomes a member of a couple, the new partner can also not be paid FTB based on an estimate or for a past-period in a current income year. This applies regardless of whether the new partner also receives FTB instalment for children of a previous relationship.
Example: Carl and Dom have 2 FTB children, Tom and Anna. Carl claims FTB for Tom, a child from Carl's previous relationship and Dom claims FTB for Anna, a child of Dom's previous relationship. Carl does not lodge his tax return and he fails to inform the FAO that he is not required to lodge, which results in a non-lodger debt. As a result Carl will not be paid FTB based on an estimate. Whilst they are partnered Dom will also not be paid FTB based on an estimate until Carl lodges the requisite tax returns, informs the FAO that he is not required to lodge or fully pays the non-lodger debt.
Carl and Dom separate and Carl subsequently partners with Jen, who also has a child from a previous relationship. Jen will also not be paid FTB based on an estimate, even if Jen has no outstanding income tax returns, until Carl lodges the required income tax returns, informs the FAO that he is not required to lodge or fully repays the non-lodger debt. Dom is no longer subject to a prohibited period as she is not Carl's current partner and has met lodgement requirements.
Act reference: FAAct section 26 Only 1 member of a couple eligible for family tax benefit, section 28 Eligibility for family tax benefit of members of a couple in a blended family, section 60 Sharing family tax benefit between members of a couple in a blended family
FA(Admin)Act section 32AA Non-payment of FTB for non-lodgement of tax returns, section 32AB Prohibited periods for claimant, section 32AC Prohibited periods for relevant partner, section 32AD Prohibited periods for new partner
Non-payment of FTB based on an estimate may impact the receipt or repayment of an FTB advance.
Policy reference: FA Guide 1.2.8.10 Advance Payment of FTB Instalments
Individuals (and/or their partners, if applicable) who are subject to non-payment of FTB based on an estimate may still be paid FTB for a past period in a previous income year once they (and their partner, if applicable) have had their actual ATI verified or have advised that they are not required to lodge an income tax return.
Policy reference: FA Guide 4.2.2.20 Specific Requirements for Past Period Claim
Individuals who are subject to a non-payment of FTB based on an estimate will continue to be subject to any existing debt recovery action for their FTB non-lodger debts or any other FTB debt. However, mandatory withholdings will cease for as long as FTB payments are prohibited. Other methods may be used to recover any outstanding FTB debt.
Act reference: FA(Admin)Act section 82 Methods of recovery, section 84 Deductions from debtor's family tax benefit
While subject to a non-payment of FTB based on an estimate, individuals will continue to have the obligation to update their (and their partner's, if applicable) income and circumstances. This may include, but is not limited to:
Act reference: FA(Admin)Act section 7 How to claim, section 14 Restriction on determining claim where income tax assessment not made
Health Insurance Act 1973 section 5B Non-payment of family tax benefit payments due to non-lodgement of tax return
From 1 July 2010 if an individual has 3 or more FTB non-lodger decisions, and at least one decision results in an outstanding debt, the recipient (and the partner, if applicable) will lose entitlement to FTB based on an estimate (1.1.N.31). Loss of entitlement will commence when the recipient has 3 or more variations under A New Tax System (Family Assistance) (Administration) Act 1999 subsection 28(2) due to not lodging the relevant tax returns within the required timeframes and at least one of these results in a debt raised under section 71. Only variations for which there is an outstanding income tax return and/or debt as at 1 July 2010 onwards will apply for the purposes of determining non-entitlement to FTB.
Loss of entitlement to FTB may preclude the individual (and their partner, if applicable) from access to the add-ons such as the lower threshold of the Extended Medicare Safety Net from the start of the following calendar year, Pharmaceutical Benefits Scheme, Medicare Teen Dental Plan, Education Tax Refund or HCC (FTB).
Individuals who are not entitled to FTB based on an estimate will be able to make a claim for payment of FTB for a past period in a previous income year, and payment made following reconciliation based on actual ATI for an individual and their partner (if applicable) for that particular income year. A new claim for payment of FTB based on an estimate will only be accepted once all outstanding income tax returns in respect of those income years have been lodged or all outstanding non-lodger debts are fully repaid.
Act reference: FA(Admin)Act section 32AE Non-entitlement to payment of FTB after 3 variations under subsection 28(2)
Health Insurance Act 1973 section 5B Non-payment of family tax benefit payments due to non-lodgement of tax return
Policy reference: FA Guide 6.4.1 Overview of Reconciliation, 4.2.1.10 Claim Lodgement & Verification, 6.4.3.60 Removal of Non-payment of FTB Based on an Estimate, 6.4.3.70 Non-entitlement to Payment of FTB Based on an Estimate
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Last reviewed: 1 July 2011
