Child support debt recovery from Family Tax Benefit (FTB) 277-51040040

Item

Description

1

Centrelink response - CRN XXXXXXXXXX

Include the following information in the body of the email:

• Customer's name
• Customer's CRN
• Designated child support child/ren who are FTB child/ren
• Maximum permissible amount]
• Centrelink Officer
• Date

2

Child Support deductions not on Cuba - CRN xxxxxxxxxx

Include the following information in the body of the email:

• Customer's name
• Customer's CRN
• Designated child support child/ren who are FTB child/ren
• Maximum permissible amount
• Centrelink Officer
• Date

3

Child Support deductions on Cuba, however now transferred to Centrelink - CRN xxxxxxxxxx

Include the following information in the body of the email:

• Customer's CRN
• Designated child support child/ren who are FTB child/ren
• Maximum permissible amount
• Centrelink Officer
• Date

4

Child Support Section 72B or 72A (delete which is not appropriate), however Section 120 notice not sent - CRN xxxxxxxxxx

Include the following information in the body of the email:

• Customer's name
• Customer's CRN
• Designated child support child/ren who are FTB child/ren
• Maximum permissible amount $
• Centrelink Officer
• Date
• Please email Section 120 notice so calculated of maximum permissible amount before deductions can be made

5

Centrelink advice - CRN xxxxxxxxxx

Include the following information in the body of the email:

• Customer's name
• Customer's CRN
• Designated child support child/ren who are FTB child/ren
• New maximum permission amount $
• Centrelink Officer
• Date
• Due to a change in this customer's FTB rate, the amount of FTB that may be deducted from a customer's FTB payments for a 'designated child support child'

Item

Example

1

Not all the customer's FTB children are designated child support children

The recoverable amount will be the lesser of:

• the amount of the child support debt owing, or
• the difference between the customer's total actual fortnightly FTB entitlement (Rate A) and the debtor's fortnightly FTB entitlement if each of the child support children were not the customer's FTB children (Rate B). Fortnightly FTB entitlement does not include the FTB Part A and Part B Supplements

Note: where Multiple Birth Allowance (MBA) is paid in Rate A, the full amount of MBA should be retained in Rate B.

Where Rate B is equal to nil ($0) a further calculation will be required to work out the rate recoverable per child.

2

MBA paid for non child support child

Multiple Birth Allowance (MBA) should not be included in the amount Child Support can recover from a customer. In these cases, (Rate B) includes the full MBA regardless of the child support child/ren being assessed as not in care.

Example:

• Customer has full care of 4 FTB children under 13 years, paid at maximum rate FTB Part A
• Customer also has 35% care of 1 FTB child under 13 who is the child support child, paid at 25% of maximum rate FTB Part A
• FTB Part B is paid for a 4 year old who is not a designated child support child

Calculation:

Rate A = the debtor's total FTB entitlement:

FTB Part A: ($182.84 x 4) + ($182.84 x 25%) = $777.07

Part A Energy Supplement: ($3.50 x 4) + ($3.50 x 25%) = $14.875

FTB Part B: $155.54

Part B Energy Supplement: $2.80

Total = $950.29 per fortnight (rounded)

Rate B = the debtor's FTB entitlement without the child support child:

FTB Part A: $182.84 x 4 = $731.36

Part A Energy Supplement: ($3.50 x 4) = $14.00

FTB Part B: $155.54

Part B Energy Supplement: $2.80

Total = $903.70 per fortnight

The amount is calculated by subtracting Rate B from Rate A:

$950.29 - $903.70 = $46.59 per fortnight

Therefore, the limit is the child support debt or $46.59, whichever is less.

3

Rate B is nil - how much of Rate A is paid for child support child?

The additional calculation is needed to work out the rate per child with the designated child support child/ren in care (Rate A).

Only the rate for the designated child support child will be offered for Child Support recovery.

Example:

• Customer and partner have combined income of $105, 000
• There are 2 children: Ben is under 13, in 100% care. Adam is under 13, in 35% care and is a designated child support child

Rate A

FTB entitlement is calculated as:

Income reduction = (Total Income - Higher Income Free Area) x 0.3

Higher Income Free Area is $98,988.

($105,000 - $98,988) x 0.3 = $1,803.60 pa

Base rate:

For Ben = $1,587.75 Part A + $91.25 Energy Supplement = $1,679.00

For Adam = ($1,587.75 + $91.25) x 25% = $419.75 pa

Total income tested rate:

($1,679.00 + $419.75) - $1,405.20 = $693.55 pa or $26.60 per fortnight (annual/365 x 14)

Rate B

If Adam was not in care, the FTB entitlement is $0 (income is above limit for fortnightly FTB for 1 child).

In this case Rate A minus Rate B would suggest $26.60 could be recovered by Child Support.

As Rate B = $0, an additional calculation needs to be done to determine how much of the $26.60 is paid for Adam.

To determine the % of FTB paid to each child (note: % is rounded to nearest whole %, that is, 17.5% = 18%, 17.3% = 17%)

Ben: $1,679.00 / $2,025.75 = 83%

Adam: $419.75 / $2,025.75 = 21%

Ben: $693.55 x 80% = $554.84 pa or $21.28 per fortnight

Adam: $693.55 x 20% = $138.71 pa or $5.32 per fortnight

Therefore, only $5.32 per fortnight can be recovered by Child Support from the customer.

4

Blended families

In a blended family case, the calculations remain the same. The difference in the family rate is established first, and then the blended family percentage is applied to the difference.

Example:

A family's FTB rate with designated child support children is $200 pf.

The family's FTB rate without the designated child support child is $160 pf.

The difference is $40.

The blended family percentages are: Customer 20%, Partner 80%.

In this case, the debt recovery amount would be:

20% (that is, the debtor's percentage) of the difference ($40) = $8 pf

Where the family's rate without the designated child support children is $0, then the additional calculation (using the first example above) is required to establish the per child rate and this is then apportioned to the customer according to their blended family percentage.

5

Customer is on income support and all children are designated child support children - shared care

The recoverable amount from FTB will be the lesser of:

• the amount of the child support debt owing
• the difference between the debtor's FTB entitlement and the 'foregone amount'

The foregone amount is the difference between:

• customer's income support, assuming no entitlement to FTB
• customer's income support, assuming entitlement to FTB

The effect of this formula is to isolate from recovery any Rent Assistance (RA) which would be paid with the income support if the person ceased to receive FTB.

Example:

Debtor is single parent on JobSeeker Payment (JSP), receiving maximum rate RA. Customer has 35% care of 1 FTB child under 5. 35% care equates to 25% entitlement to FTB.

Debtors FTB part A entitlement per fortnight

25% of $4,942.10 (annual FTB part A rate for child aged under 13) = $1,235.53 / 365 = $3.39 x 14 = $47.46 per fortnight

Rate A = the debtor's FTB entitlement

FTB Part A: $47.46

RA: $161.14 (single 1 child rate, that is, the higher of the relevant shared carer RA rate and the non-shared carer rate of RA.)

FTB Part B: $38.88 (Shared care % of the maximum FTB part B rate per fortnight, that is, 25% of $155.54 per fortnight.)

Total = $247.48 per fortnight

Rate B = 'foregone amount'=

income support (assuming no FTB) - income support (with FTB paid)

JSP: $595.10 + RA: $135.80 (RA paid under Social Security Act single no child rate) - JSP: $595.10 = $135.80per fortnight

The FTB debt recovery amount is calculated by subtracting Rate B from Rate A:

$244.19 - $135.80 = $108.39 per fortnight.

Therefore, the debt recovery amount is the child support debt or $108.39 per fortnight.

6

Customer is not on income support and all children are designated child support children

The recoverable amount from FTB will be the lesser of:

• the amount of the child support debt owing
• the customer's total FTB entitlement