Recording not required to lodge advice and previous year income 007-11010080

Item

Question and answer

1

Question: What is the tax-free threshold?

Answer: The standard tax-free threshold is $18,200. This may be higher if a person has received an income support payment during a relevant financial year. See Tax free threshold.

These changes are not administered by Services Australia; more information can find be found at ato.gov.au.

2

Question: Does that mean anyone who earns under $18,200 will not need to lodge a tax return?

Answer: Some people who earn under $18,200 will not be required to lodge a tax return for income purposes.

However, others whose income is under the tax-free threshold of $18,200 may still be required to lodge a tax return. These reasons include:

• Tax withheld from payments (regardless if the taxable income is below the tax free threshold)
• Liable parent or recipient parent under a child support agreement, and did not receive an ISP for the entire relevant financial year
• Reportable fringe benefits (including exempt reportable fringe benefits)
• Made a loss or profit from a business or other investment
• Reportable superannuation
• Total investment loss
• Tax exempt foreign income

To determine if they are required to lodge, they must visit the ATO website where they can use the online tool 'Do I need to lodge a tax return?' The Resources page contains a link to the online tool.

3

Question: Where does a person go to complete an ATO non-lodgement advice?

Answer: Options are to:

• complete the non-lodgement advice through their myGov online account after linking to the ATO
• print an ATO non-lodgement advice from ATO website (see Resources page for a link), or
• contact the ATO to have it sent to them by mail

4

Question: What does the customer need to do if their ‘not required to lodge’ advice is not accepted by Services Australia?

Answer: If the information provided by the customer indicates they may be required to lodge a return, they must go to the ATO website and use the 'Do I need to lodge a tax return?' online tool. See Resources page for a link.

If it is determined they are not required to lodge, they must complete the ATO 'Non-lodgement advice' with the ATO.

5

Question: If an initial 'not required to lodge advice' is not accepted by Services Australia, and they check with the ATO and are advised they are not required to lodge, can their new not required to lodge advice be accepted?

Answer: It is preferred that the customer lodges the non-lodgement advice with the ATO. The ATO will then automatically advise the agency of the non-lodgement advice outcome.

However, the Family Assistance Office non lodgement exemption workflow can be run again if the customer's details need updating. If the system determines the person is required to lodge, they must lodge the ATO 'Non-lodgement advice' with the ATO.

6

Question: What happens once an ATO non-lodgement advice is lodged?

Answer: The ATO will automatically advise Services Australia of the outcome. The advice is generally received within 28 days.

If the ATO confirms the person is not required to lodge, the most recent income estimate for the previous financial year will be used to reconcile the customer's Family Tax Benefit payment. If this amount is not accurate, the customer may update their income for the previous financial year.

Child Care Subsidy reconciliation will only occur once all required information is available, e.g. adequate income details for both the customer and their partner if they have a partner. To ensure the reconciliation amount is correct, customers must still confirm their income with Services Australia, even if they have lodged an ATO non-lodgement advice.

7

Question: Can a not required to lodge advice through Services Australia be updated more than once?

Answer: Yes. This may trigger a reassessment of their entitlement for the financial year. However, if a customer has lodged a tax return for the relevant financial year and information has been transferred from the ATO, the customer must be referred to the ATO to amend their income.

8

Question: Does the 'Advise non-lodgement of tax return' online option tell customers why their update was not accepted?

Answer: In some situations it may.

If STP payroll data is available and is used to determine the advice is to be 'not accepted' then the online service will list the reasons identified through STP data. This may be any of the below:

• Income is over the tax free threshold
• Income includes reportable fringe benefits
• Income includes net investment losses
• Income includes reportable superannuation contributions
• Income includes exempt foreign income
• Income had tax withheld

If STP data is not used and the non-lodgement outcome is assessed based on the answers provided by the customer then Services Australia does not provide a reason.

9

Question: Why does the workflow not show on the Income details page that the update will not be accepted?

Answer: The workflow must be completed for every customer regardless, whether the update will be accepted or not accepted. This is to ensure the customer's annual estimate is captured on the record and is used if they lodge an ATO non-lodgement advice.

10

Question: For child support, will the workflow pick up if a customer has transferred between income support payments when determining if they were on an income support payment for the full financial year?

Answer: Yes. The background check looks at the days they have been on income support, not the different income support payments:

• Non lodgement updates are used to balance FTB, CCS, CCB/CCR and SIFS
• Customers should be referred to the Child Support Agency (CSA) if they have queries relating to CSA tax lodgement requirements. The 'Do I need to lodge a tax return' tool on the ATO website may help customers determine if they need to lodge a tax return for child support purposes

11

Question: Is there a way to tell if a customer has already provided a not required to lodge advice for the financial year?

Answer: Yes. This can be checked by any of the following:

• Checking the Document List (DL) screen to see if an NLE DOC has been recorded
• Checking the notes on relevant Customer First (CF) SAP Interaction Record/s. To view the Note in CF select the:
• CRN/BP hyperlink to go to Customer Details
• Interaction History tab
• relevant ID hyperlink
• Note tab
• Text hyperlink to view the full activity notes
• Checking the FAO Non Lodgement Exemption (FNLE) and FAO Income for Previous Year (FIPY) screens to see if the income and reason for non-lodgement has been recorded. If there are no details on the FNLE screen, the previous update was not accepted
• Running the Family Assistance Office non lodgement exemption workflow. A message on the Income details page will state income for the relevant financial year has already been recorded

Item

Scenario

1

Non-lodgement exemption for 2023-24 accepted

Liz received Family Tax Benefit (FTB) by instalment delivery for the 2023-24 financial year based on an income estimate:

• $6,750 taxable income for Liz, based on part-time work
• $56,200 taxable income for partner Dylan, based on an expected salary for the year

Dylan's actual income details for 2023-24 are transferred from the Australian Taxation Office (ATO) on 10 July 2024. Dylan's taxable income is $54,462.

Liz contacts on 20 July to ask about an expected FTB top-up payment. Liz advises of not being required to lodge a tax return for 2023-24 as the income was below the tax free threshold.

Action by Service Officer

Liz contacts as she has been unable to access the non-lodgement online service. The Service Officer runs the Family Assistance Office non lodgement exemption workflow to record income details and a non-lodgement reason for Liz.

Liz says the employer Payment Summary states the gross amount paid was $6,750, no tax was paid and the only other income was $12 in bank account interest. Liz advises they did not have a child support assessment during the financial year.

The Service Officer indicates the income declaration appears reasonable, and then reads the declaration to Liz to acknowledge:

• Income may still be confirmed with the ATO using data such as payment summaries lodged by employers and declarations from financial institutions about interest paid or dividends received
• If Liz does lodge a tax return, actual income details will be transferred from the ATO and used to review the FTB entitlement
• If a tax return is lodged at a later date, and is lodged after the end of the lodgement year, supplements previously paid will be withdrawn, and a debt will be raised

The Service Officer then completes the activity and advises Liz of the FTB reconciliation result.

2

Non-lodgement exemption for 2023-24 not accepted

Mary received Family Tax Benefit (FTB) by instalment delivery for the 2023-24 financial year.

For part of the financial year, Mary received Parenting Payment Single (PPS). Mary became partnered on 10 January 2024 and the FTB rate was then based on the combined family income estimate:

• $20,200 taxable income for Mary, based on the entitlement to PPS and ongoing casual work
• $61,700 taxable income for partner James, based on an expected salary for the year

Mary contacts on 14 August 2024 to ask about an entitlement to an FTB top-up payment now James has had a tax assessment completed for 2023-24.

Mary does not believe she needs to lodge a tax return as the total taxable income (PPS payments and gross income from work) was below the relevant tax threshold and Mary has not paid any tax.

Action by Service Officer

The Service Officer runs the Family Assistance Office non lodgement exemption workflow to record income details and a non-lodgement reason for Mary.

In response to the income questions, Mary advises the actual gross employment income from the Payment Summary and also advises being entitled to child support.

Although the Service Officer indicates the income declaration appears reasonable, the non-lodgement exemption is not accepted because Mary indicated being entitled to child support but was not on income support for the full financial year.

The Service Officer reads the declaration to Mary to acknowledge:

• Mary must contact the ATO for help with lodging a tax return or completing an ATO non-lodgement advice. Mary should be advised to visit the ATO website for more information on obtaining their TFN. If Mary is required to lodge, this must be done by 30 June 2025 to receive an FTB top-up, including supplements and Single Income Family Supplement (SIFS) if eligible
• Details will then be electronically transferred from the ATO and used to reconcile Mary's FTB payments

The Service Officer then completes the activity to record the revised estimate.

3

Non-lodgement advice with ATO

Murray has contacted to advise he is not required to lodge a tax return.

The Service Officer runs the Family Assistance Office non lodgement exemption workflow and notes a previous not required to lodge update for Murray was 'not accepted'.

Murray advises there is no change to the income or declaration details but has completed a non-lodgement advice with the ATO.

The Service Officer checks the FAO Non-Lodger Exemption (FNLE) screen to see if it has been updated with ATO Exemption and notes there has been no update.

The Service Officer advises Murray the details have not yet been received from the ATO and until this information has been transferred, we cannot complete reconciliation.

The Service Officer must:

• code a request for income from the ATO on the Request Actual Income (FRAI) screen, and
• check the FAO Income for Previous Year (FIPY) screen and confirm income details with Murray

These details will be used to reconcile payments after the ATO has transferred information about Murray's non-lodgement.

Murray will not need to contact again. The ATO will automatically transfer the details for reconciliation to occur.

4

Single ISP Non lodgement advice – Not Accepted

Jane has contacted to advise her online non lodgement has not been accepted.

• Jane's only source of income for the financial year is Parenting Payment Single, a taxable ISP payment
• Jane's taxable ISP payment exceeds the tax free threshold
• Jane does not meet the criteria for bulk reconciliation

The Service Officer must check the FIPY screen to ensure the details have been coded from the online non lodgement advice. This will ensure the income is recorded in the event the customer completes an ATO non-lodgement advice.

Jane should be directed to the ATO website to check her lodgement requirements using the 'Do I need to lodge a tax return' online tool.

If the result displays a:

• Tax return is required, Jane will need to lodge a tax return
• Tax return is not required, Jane will need to complete an ATO non-lodgement advice

Jane can do this using the ATO online service via myGov. The ATO will then send the necessary information to Centrelink so Jane's FTB and CCS can be reconciled.

5

Retrospective ISP grant with arrears paid in a previous financial year

Penny received FTB for child Jeremy, and is also a carer for parent, Leonie. Penny is granted Carer Payment from June 2024.

Penny's Carer Payment claim is not finalised until July 2024.

Arrears for Penny's Carer Payment from 1 June 2024 are paid to Penny when the Carer Payment claim is finalised on 16 July 2024.

As the Carer Payment arrears for the period 1 June to 30 June 2024 are paid in July 2024, it will be included on Penny's 2024-25 Services Australia payment summary, not the 2023-24 payment summary.

Penny contacts the agency to advise non lodgement for 2023-2024.

The Service Officer runs the Family Assistance Office Non Lodgement Exemption Workflow.

The workflow does not prefill Penny's Carer Payment arrears for 2023-24. This is correct because the payment was not paid in that financial year.

When running the workflow, the following message appears 'The customer was on Tax Free Pension / Benefit in the given financial year. The Tax Free Pension / Benefit amount must be present' and the workflow will not allow a $0 input.

In this case the Service Officer needs to cancel the workflow activity and update Penny's advice of non-lodgement manually, so the correct income amount can be recorded.