Raising Family Pool debts 107-09120070

The Burke family is a blended family, with both parents bringing with them a child from a previous relationship. They have also had 2 children together.

• Child A is the natural child of Parent 1
• Child B and Child C are the natural children of both Parent 1 and Parent 2
• Child D is the natural Child of Parent 2
• All 4 children are between 16 and 23 years old, and
• All 4 children are applying for Youth Allowance as full-time students

This is how the scenario can help work out the family pools for the Burke children.

In this situation, Child A's parents for the Parental Income Test are Parent 1 and Parent 2.

Legislation says that 2 or more people have 'parental income in common' (for example, are in the same family pool) if:

• the Parental Income Test applies to each of them, and
• a parent of one person is also a parent of each of the other people

As all four children live at home, they all have the same parents in common.

This means they are all in the family pool for Child A.

This also means the combined parental income for all children is based on the combined income of Parents 1 and 2.

Now assume that:

• Child A must live Away From Home to study, and has no plans to return home after he finishes study
• Children B, C and D live at home with Parent 1 and Parent 2

Who is in the family pool for Child A now?

As Child A does not 'normally live with' Parent 2 anymore, his parent for the Parental Income Test is now only Parent 1.

Parent 1 is also a parent for Children B, C and D, because they all 'normally live with' Parent 1.

This means the family pool for Child A still includes all four children. However, the combined parental income for Child A consists only of Parent 1's income.

Now assume that:

• Child A and Child D must live away from home to study, and neither have intentions to return to live at home after they finish study
• Children B and C still live at home with Parent 1 and Parent 2

Who is in each child's family pool now?

• Child A's family pool is Child A, Child B and Child C (because they each have Parent 1 in common)
  Note: that Child A will be assessed only on Parent 1's income
• Child B's family pool is Child A, Child B, Child C and Child D (because Child B has at least one parent in common with each of the other children)
  Note: that Child B will be assessed on the combined income of Parents 1 and 2
• Child C's family pool is Child A, Child B, Child C and Child D (because Child C has at least one parent in common with each of the other children)
  Note: that Child C will be assessed on the combined income of Parents 1 and 2
• Child D's family pool is Child B, Child C and Child D (because they each have Parent 2 in common)
  Note: that Child D will be assessed only on Parent 2's income

Greg, Paul and Bill are all:

• secondary school students in receipt of Youth Allowance (YA)
• full brothers and not part of a blended family

This means they are part of the one family pool for the assessment of YA. Their parents' income is above the Parental Income Test (PIT) threshold but not enough to reduce their payment to zero.

On 1 October 2010, a data match from Greg's school advises that he has withdrawn from study. A letter is sent to Greg asking him to contact to discuss the issue. A manual review is set for both Paul and Bill.

Greg contacts and confirms:

• he withdrew from study on 9 August, and
• no longer wishes to receive payment of YA as he has now found full time work

His payment is cancelled with effect from 10 August 2010.

As a result of the retrospective cancellation of Greg's payment, a ripple:

• creates on the records of both siblings Paul and Bill
• results in a reduction of payment for Paul and Bill from 10 August 2010, and
• creates debt shells for all three brothers for the period 10 August 2010 until the date that the siblings were last paid

Greg has a qualification debt as he is no longer studying and his YA has now been cancelled. Paul and Bill have payability debts and a reduction in ongoing payments.

The debts for Paul and Bill are raised and they receive the Account Payable. They then contact querying their debts and the circumstances that have led to the debt.

Provide a general explanation about a sibling's change in circumstances where it affects a customer's payment.

If a YA/ABSTUDY customer's payment has been varied/cancelled owing to a sibling's change, tell them there has been a change in their family pool arrangements. The Family Pool diagram can be used to help the customer understand the changes.

If the customer is not satisfied with this general explanation, particular details of the sibling's change in circumstances can be provided. Using the example above, explain to Paul and Bill that Greg had a change of circumstance. This means he is no longer in their family pool. As their debt in not directly related to Greg ceasing study, there is no need to provide enrolment verification details.

This is the same for any other scenario where a change in circumstance for Greg affects the Family Pool assessment.

Note: assess each situation individually. Take a common sense approach to determine what information is disclosed.

In this specific scenario, it is likely that Paul and Bill would have known that Greg's circumstances had changed. They were all living under the same roof at the time of the changed circumstances.

There will be other situations where customers could not be expected to know of a sibling's change in circumstances. For example:

• siblings reside in different geographical locations and are not in regular communication with each other, or
• where there is a breakdown in the relationship between siblings and there is no communication between any members of the family pool

The debts raised against Bill and Paul were because they received a higher rate of payment than they were entitled to. When Greg ceased study, this resulted in a change to the Family Pool assessment. Bill and Paul were entitled to a lesser amount of payment from the day Greg ceased studying.

Had Greg advised within 14 days, Bill and Paul:

• would not have a debt, but
• their ongoing payment rate would still be reduced

If a customer advises of a change in their sibling's circumstances, take reasonable steps to verify the information before actioning another customer's record.

Contact Greg to verify the information via phone. If contact is unsuccessful, send a letter requesting him to contact to discuss his current circumstances. Tell Paul and Bill that their payments are being reviewed.

Do not take action on Greg's payment until he confirms his current circumstances. Tell the sibling who provided the information the potential impact of Greg's change will be. Offer them the option of having their payment suspended until Greg's details can be confirmed. If the customer chooses to continue their payment, advise them that they may get an overpayment.