Financial Improvement Agreements (FIA) 002-02070040

The FIA:

• is a measurable, incremental planning tool for each FHA customer (farmers or their partners) to work towards improving their capacity for financial self-reliance and long-term financial security
• is negotiated between the FHA customer and the FHCO. If a customer is engaged with a Rural Financial Counsellor (RFC) who has Permission to Enquire, the RFC may also attend FIA negotiations
• considers the customer's needs, goals, resources, and any barriers that limit the customer's ability to take action to improve their circumstances
• is based on the customer's long-term goal and sets out objectives and activities designed to help them achieve their objectives and make progress towards their goal

Objectives are based around one of the following prescribed goals:

• increasing capacity to generate income on-farm
• increasing capacity to generate income off-farm
• increasing capacity to generate income from a mixture of on-farm and off-farm activities, or
• preparing to exit farming

FIA goals and objectives should be appropriate for a customer’s circumstances and set using the SMARTA principles. The FHCO can find information on the financial position of the farm enterprise in the:

• Farm Financial Assessment (FHA)
• Tax returns and financial statements

The Farm Financial Assessment (FFA) provides useful details on the financial position of the farm enterprise. This can help FHCOs identify suitable areas to be addressed by the FIA goals and objectives. FIA goals and objectives should be appropriate for a customer’s circumstances and set using the SMARTA principles.

Regular FIA reviews ensure the customer is meeting their mutual obligations (outlined in the FIA) to stay eligible for payment.

The FIA forms part of the customer's mutual obligations.

To be granted FHA, a customer agrees in their claim to enter into a FIA.

To stay eligible for FHA, customers must negotiate and agree to an FIA and complete activities by the agreed date.

Failure to enter into an FIA and undertake activities agreed to in the FIA, result in the FHA payment being stopped, unless an approved exemption applies.

Customers granted an exemption from the activity test are still required to enter into an FIA. A customer will be considered as complying with their mutual obligations for the length of the exemption period. See Activity testing.

The payment of FHA is available for a cumulative period of 1,460 days. Customers can choose to preserve their entitlement by claiming the payment several times over this period. They can claim FHA when they need it and cancel it when their financial position improves. The FHCO will re-negotiate the FIA with the customer each time they claim.

Customers must enter into an FIA within 28 days of being issued the written request. This period may be extended once by no more than 28 days if the circumstances support this.

Customers negotiate the FIA with their FHCO. FHCOs assist customers to determine suitable activities that will help them improve their financial circumstances.

The FIA is based on the:

• assessment and recommendations in the Farm Financial Assessment (FFA)
• tax returns and financial statements including:
• profit and loss statement
• balance sheet in conjunction
• information provided in the claim
• customer's capacity to comply with the requirements
• customer's needs, and
• other relevant details given by the customer and, if Permission to Enquire exists, by the Rural Financial Counsellor (RFC) engaged with the customer

When the FFA is returned a request to enter into an FIA will issue. The FFA must be completed and returned to Services Australia within 2 months of the initial request. In cases where this does not occur, unless there are special circumstances, the FHCO must manually start the FIA.

The goals, objectives and activities should be:

• a realistic assessment of the customer's current financial position
• achievable with measurable strategies that help the customer improve their circumstances within their 4-year entitlement to FHA
• focusing on the use of FHA to improve a customer's capacity to become financially self-reliant from farm or off-farm activities or activities related to exiting farming

The FIA:

• specifies the agreed milestones and due dates
• is used to determine if the customer has met the requirements of the activity test

From 27 April 2020 customers can make a verbal declaration to agree to the FIA. The negotiated FIA does not need to be signed and returned. The agency sends the customer a copy of the new or updated FIA and the customer can logon to their Centrelink online account view:

• FIA activities
• activity due date
• activity supplement balance

Each member of a couple must enter into and comply with their own FIA. Their goals and activities may complement each other. They may also be different. Both members of a couple can participate in a joint review, but one recipient cannot complete the review for both.

When a partner of a farmer has little or no involvement in the farming operation, the objectives and activities in the FIA will reflect the circumstances and aspirations of the individual. For example, if the partner of a farmer works off-farm and wants to gain new skills for employment, the FIA should include activities that support this outcome.

If a person does not enter into an FIA, they will not be eligible to receive FHA.

The FHCO:

• plays an integral role in the success of the customer's time in receipt of FHA, by ensuring the FIA is constructed to meet key requirements, which help focus the customer to improve their circumstances
• must have meaningful conversations with the customer to help build measurable FIA's, which drive the customer towards genuine improvements
• is responsible for ensuring a customer complies with their FHA mutual obligations. This is done through regular reviews to make sure the customer is meeting their agreed requirements outlined in their FIA

The FIA is developed in 3 stages: The FHCO:

• before meeting with the customer, reviews the:
• FFA and notes the Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis
• Financial Assessor's assessment of the farm business
• tax returns and financial statements, for example, profit and loss statement and balance sheet in conjunction with the information provided in the claim This information can support the FFA and may provide additional points of discussion for the FIA
• completes the FIA Questionnaire on the customer's record, gathering information about the customer to help with negotiating the FIA
• meets with the customer(s) and RFCS if requested, to negotiate, and agree on goals, objectives, and activities in the FIA

Meeting with the customer

The FHCO can arrange the meeting in the way that best suits the situation, a:

• phone interview
• face to face interview in a service centre or another site
• Video Chat (VC) appointment can be used in place of face to face or phone interviews

Do not hold face to face interviews at the customer's home or farm. A face to face meeting should take place at least once:

• during the first 2 years of receiving FHA, and
• in the final year

Wherever possible, include the customer's Rural Financial Counsellor in the interviews.

A customer can access the Rural Financial Counselling Service (RFCS) regardless of the outcome of their FHA claim.

The RFCS provides free, independent, and confidential assistance to eligible farmers to:

• help them better understand their financial situation
• offer a range of services and information to support customers assess their business finances and plan for the future
• access government and industry programs as well as help with short term issues like negotiating loans, debt mediation and succession planning
• prepare and lodge claims for FHA
• access professional services to assist them manage and cope with stress

A customer must provide express consent for Services Australia to disclose their personal information to the RFCS and for them to attend meetings with the FHCO. Person Permitted to Enquire (PPE) has been agreed as a minimum requirement for sharing information from the FFA and FIA.

The RFC:

• may offer suggestions for activities to be included in the FIA
• meets the qualification or expertise criteria for a Financial Assessor and can complete the FFA
• does not agree, authorise, or approve any activities in the FIA
• does not do the activity test or approve payment of the Activity Supplement

Case Notes provide free text capability to enable staff in Services Australia to capture and view customer information not recorded in other areas of the system.

FHCOs can record 2 types of Case Notes 'Sensitive' and ' Non-sensitive'.

Sensitive Case Notes - used by the FHCO to record information that contain sensitive or personal information.

Non-sensitive Case Notes - used by FHCOs to record information relevant to and supports decisions relating to a customer's FIA and activity testing. Non-sensitive FHA Case Notes will replicate each time an update is made on a DOC in the customer's record. DOC guidelines and 'Getting it Right' standards apply to FHA Case Notes.

The FIA must contain at least one measurable activity that is due within the next 90 days, and subject to the activity test. The activity is assessed at the next review (unless an exemption applies). Activities align with the SMARTA principles, providing customers with clear directions giving them a realistic opportunity to achieve their goals. The customer must undertake an activity from one of the following categories:

• undertaking training
• obtaining professional advice
• undertaking study
• actively seeking, or being willing to undertake paid work in Australia (other than paid work that is unsuitable for the person)
• any other activity approved by the FHCO that focuses on a direct improvement to the customers circumstances, excluding activities that are not approved or BAU in nature

FHA customers are not required to undertake activities for a minimum number of hours to satisfy the activity test. This recognises the substantial workload of running a farm which may vary over time, and between different types of farms.

The FIA must not require the customer to undertake:

• unlawful activities
• activities outside Australia, or
• an activity that would aggravate a disability, illness, or medical condition

The FIA can include activities not subject to the activity test. These activities:

• represent additional efforts a customer wants to undertake to improve their situation
• must be recorded in the Activity to be completed free text field to show whether the activity is being undertaken for the purposes of the activity test or as an additional voluntary activity

Counselling services can be confirmed by the FHCO verbally with the customer. These services are only added:

• if the person has exhausted funding received through the Better Access Initiative Commonwealth Government mental health program, or
• to cover the gap payment for the Better Access Initiative

While receiving FHA, customers can claim an activity supplement to help pay for activities agreed in their FIA.

From 11 June 2020, the total amount to support FIA activities increased to $10,000 (including GST). This $10,000 is the total available over the customer's lifetime. The supplement can be used to cover reasonable travel and accommodation associated with the improvement activity.

Not all activities included in the FIA are eligible for the activity supplement. Activities that are not eligible include:

• activities considered a part of normal farm operations
• expenses incurred implementing any advice or training

For more details about eligible activities, how to claim the activity supplement and the maximum amount payable, see Activity supplement and voucher for Farm Household Allowance (FHA).

Customers should tell their FHCO:

• when they have completed an activity from their FIA
• if they cannot comply with their FIA. The FHCO can check if they can grant an exemption from the activity test. The FIA must be updated to consider the customer's change in circumstances. Note: if there are family and domestic violence indicators, see Family and domestic violence.

If a customer fails to enter into an FIA and undertake activities agreed to in the FHA payments will stop:

• unless an exemption has been granted, or
• the customer has a reasonable excuse

Customers granted an exemption from the activity test are still required to enter into an FIA. See Mutual obligations, failures and exemptions from the activity test for FHA customers.

Regular reviews of the FIA must be done to assess the customer's progress towards financial self-reliance. Where the customer is not on track to improve their financial circumstances by the end of their 4-year FHA entitlement, the goals and objectives in the FIA must be reassessed.

The FHCO will review the FIA and current activities at least once every 90 days, or more often if needed.

The customer can:

• give consent for their RFC to be invited to attend the review
• have their nominee attend the review with them

At the review the FHCO will:

• check progress or completion of mandatory activities
• follow up on progress towards financial self-reliance
• review how well the current strategy is working

The FIA can be varied or replaced in consultation with the customer.

It may be appropriate to negotiate a new FIA:

• to include the customer's changed goals and objectives if these have changed significantly for the customer of farm enterprise
• if there is a significant change to the farm business structure or operations. A new Farm Financial Assessment (FFA) may be needed to support the development of the new FIA

At the final quarter FIA review, the FHCO:

• checks if the customer has a current farm business income in place
• provides the customer with the options to update their estimate. Farm business losses can reduce the assessable amount of non-farm income

The Resources page contains links to FarmHub, Better Access Initiative, User Guides, letter, email and facsimile templates and historical information.