Family Tax Benefit (FTB) reconciliation debts where estimated or actual income was used 107-04090010

Scenario - Final maintenance payment details for the relevant income year received from Child Support and final payments for the relevant income year made.

Unless actual income details are needed, FTB reconciliation compares the FTB paid based on:

• estimated income and maintenance income with
• entitlement based on customer's latest estimate and actual maintenance

The higher of the estimated tax-free pension/benefit and the actual amount paid are used. Any debt is automatically recorded in the Debt Management and Information System (DMIS).

Is the debt amount less than $50?

Yes, the FTB debt will be automatically waived and DMIS record updated. Procedure ends here

No, go to Step 2

Centrelink commences recovery action. A letter automatically issues to the customer with details of the debt amount, including:

• Debt reason: FTB Reconciliation (FRC)
• Start date: 1 July of the relevant income year
• End date: 30 June of the relevant income year
• Section Act: section 71(2) Family Assistance (Administration) Act 1999
• Source code: FAO/SYS
• Benefit Type: FTB

Recover the debt in the following way, if the customer is:

• receiving payments from Services Australia, the standard reconciliation withholding rate applies
• not current and the amount remains unpaid by the due date, the customer must enter into a payment arrangement

To avoid the Interest Charge the customer must, within 28 days of the date of the letter:

• Pay their debt/s in full, or
• Continue making payments under their existing payment arrangement, or
• Enter into a payment arrangement and make payments under that arrangement

Customers may be subject to non-payment of FTB instalment payments to zero entitlement customers, if:

• There is zero entitlement to FTB due to the underestimation of income, and
• it is the second consecutive zero entitlement result since 2009-10

The ATO assesses the tax return of a customer and their current partner or ex-partner. The ATO then passes this information on to Services Australia

Are actual income details needed for the customer (or current partner) before reconciliation can proceed?

• Yes, go to Step 2
• No, go to Step 3

The customer's taxation Notice of Assessment (NOA) issued by the ATO will not include any FTB information.

Procedure ends here.

Reconciliation is a recalculation of the customer's FTB entitlement. If the result is a debt, it is recorded in the Debt Management and Information System (DMIS). Details of the debt go back to the ATO. Services Australia will take no recovery action or advise the customer while the ATO attempts recovery.

Parked debts for the 2000-01 reconciliation year:

• can be viewed by Keying ‘PRK’ on the Select View field
• have a status of P- wash up and will be added automatically
• are protected and cannot be modified
• cannot have recovery arrangements added
• are excluded from the Customer Reference Number (CRN) balance for recovery purposes

Note: The parked debt will remain as parked but have a status of P-Income if:

• The ATO cancels the NOA before it is issued for the 2000-01 reconciliation year only, and
• the debt is still parked awaiting wash up

Once reconciliation is complete, standard unparking procedures will apply.

Go to step 4

A mixed delivery customer is a customer who has chosen to claim FTB:

• by instalments, and
• as a lump sum claim in the one financial year

Is this a mixed delivery customer who:

• has an FTB lump sum claim entitlement and
• has a reconciliation debt and
• both are being processed at the same time?
• Yes, go to Step 5
• No, go to Step 6

The FTB lump sum amount is adjusted to offset:

• the FTB reconciliation debt and
• any other outstanding debts

The ATO may use any remaining FTB entitlement to offset tax debts. See Debt offsetting during family assistance reassessment, reconciliation and claim processing.

Go to Step 7.

The ATO may use the customer's (and consenting partner's) tax refund to offset outstanding FTB debts.

See Debt offsetting during family assistance reassessment, reconciliation and claim processing.

Services Australia will receive details of the actions taken by the ATO.

The status of the debt in DMIS will change to determined (DET). This will show any amount recovered from FTB lump sum claim entitlement or tax refund.

See ATO recoveries on the Overpayment Recovery History (OPRH) screen as ATO - Reco. Tax refund.

A letter is automatically sent to the customer advising the FTB reconciliation/lump sum claim result. This includes details of any amounts recovered from FTB lump sum claim or a tax refund.

• Yes, waiver of the debt occurs automatically. Details auto-update in DMIS. Procedure ends here
• No, go to Step 9

Recovery action begins. The customer receives a letter with details of the debt amount, including:

• Debt reason: FTB Reconciliation (FRC)
• Start date: 1 July of the relevant financial year
• End date: 30 June of the relevant financial year
• Section act: Section 71(2) Family Assistance (Administration) Act 1999
• Source code: FAO/SYS
• Benefit Type: FTB

Note: Recovery action on a raised reconciliation debt ceases if the NOA is cancelled. The debt is held until new details are advised.

Recovery of the debt happens in the following way:

• If the customer is receiving Centrelink payments, standard reconciliation withholding rate will apply
• If the customer is not current and the amount is not paid by the due date, the customer must enter into a payment arrangement. Interest Charge applies.

To avoid the Interest Charge being applied, non-current customers need to do one of the following within 28 days of the date of the letter:

• Pay their debt/s in full
• Continue making payments under their existing payment arrangement
• Enter into a payment arrangement and then make payments under that arrangement