Disbursement Method 277-51080060

Item

Example

1

Disbursement Method calculation

Fiona has an annual child support entitlement of $2400 for her son, Jack.

Fiona has asked for the Disbursement Method to be used as she has not received any child support disbursements for some time. From 1 July 2006, Fiona's annual maintenance income is applied as nil.

On 1 August 2006, Fiona receives a Child Support disbursement of $100 and her annual maintenance income is recalculated:

• the year to date total = $100
• the higher of this month's payments and last month's is $100
• one-twelfth of the annual entitlement amount is $200, so the current month's total is used as it is lower than this figure
• this month's total of $100 multiplied by the remaining number of months in the year = $1000 as there are 10 months after August
• total maintenance income = $1100 ($100 year to date + $1000 estimated for the rest of the financial year)
• this is applied from 3 August 2006 as Fiona has been paid FTB up until 2 August

2

Customer chooses Disbursement Method and receives child support arrears

John has been receiving regular child support payments from Bonita through Child Support of $300 per month since August 2006, based on his annual entitlement of $3600.

John asked for the Disbursement Method to be used in June 2006 because he was not receiving child support payments at that time.

In October 2006, John receives a child support disbursement of $800; a regular payment of $300 plus an arrears payment of $500.

• from 1 July 2006, annual maintenance income is estimated as nil as John did not receive a child support disbursement in June
• when Child Support advises the disbursement details in August, annual maintenance income is recalculated for John's next fortnightly FTB payment:
  • year to date total = $300
  • estimate for rest of financial year = $3000 ($300 x 10 months left after August) based on the current month's disbursement
  • total = $3300)
• when Child Support advises disbursement details in October, annual maintenance income is recalculated for John's next fortnightly FTB payment:
  • the year to date total = $1400 ($300 x 3 + $500)
  • estimate for rest of financial year = $2400 ($300 x 8 months left after October) based on the current month's disbursement
  • total = $3800

As John continues to receive $300 per month, his estimated annual maintenance income continues to be $3800 for the rest of the financial year.

At FTB reconciliation, annualised maintenance income used is $3800 (11 x $300 + $500). John's FTB Part A entitlement may be adjusted for the period July - August as nil maintenance income was assessed during that period, and for September when $3300 was used.

3

Customer changes to Child Support collection, Modified Entitlement Method used

Monica has a current annual child support entitlement of $2400 as at 1 July 2006.

As she has not been able to collect the full amount privately, Monica asks Child Support to collect child support payments on 1 September 2006.

Monica receives no disbursements until December, when she receives $1000; regular payment of $200 and arrears of $800.

From January, she receives her monthly entitlement of $200 each month.

Estimated annual maintenance income:

• from 1 July: $2400 (Entitlement Method is used as Monica has chosen private collection)
• on 1 September, when Monica changes to Child Support collection, $2400 continues to be assessed using the Entitlement Method as no Child Support disbursements have been received
• when the disbursement for December is advised by Child Support, annual maintenance income is recalculated for Monica's next fortnightly FTB payment:
  • using Entitlement Method: $2400
  • using Disbursement Method: private collect period 1 July to 31 August an amount of $407.67($2400/365 x 62) + year to date disbursements of $1000 + estimate for rest of year of $1200 ($200 x 6 months after December) using current month's disbursement of $200 which is the same as one twelfth of her annual entitlement. Total = $2607.67
  • the Disbursement Method is used as it results in a higher amount of $2607.67

As Monica continues to receive regular Child Support disbursements of $200, annual maintenance income continues to be calculated as $2607.67 using the Disbursement Method for the rest of the financial year.

As the amount calculated under the Disbursement Method ($2607.67) is higher than the amount calculated under the Entitlement Method ($2400), under the Modified Entitlement Method the Disbursement Method is used in the ongoing assessment of FTB Part A.

At reconciliation, annual maintenance income is calculated as $2607.67, based on child support entitlement for the private collection period plus all Child Support disbursements received. Monica's FTB Part A entitlement may be adjusted for the period July - December as a slightly lower amount was estimated during that period.

From 1 July 2007, annual maintenance income will be $2400 using the Entitlement Method. This will be recalculated when Child Support advises disbursement details.