Assessing capitalised maintenance income for Family Tax Benefit (FTB) 277-51110000

Denise is a Family Tax Benefit (FTB) customer born on 15 May 1956. Denise has 2 children, John, born 27 March 1977 and Mary, born 30 January 1981. Denise received  $99,000  capitalised maintenance income on 15 April 1992 under a consent order. The dates and rates used in the example may not be current.

The order stated that the amount was to be evenly apportioned between Denise and the 2 children but did not specify the capitalisation period. The following details show the capitalisation periods and the amounts assessed by the system. The customer's relevant period is the full financial year.

As there would be for most cases, there are 3 calculations done for this example:

• first financial year in which the customer received the child support payment
• last financial year
• all financial years in between

This is because the capitalisation period is different for the first and last years, but will be 365 days for years in between.

Note: the dates and rates used are example details only.

Capitalised maintenance income = $33 000

Full capitalisation period = 10,622 days (15 April 1992 - 14 May 2021, the day before the customer turns 65)

• First year: Relevant period = 77 days (15 April - 30 June)
• Step 1: $33,000 x 77 / 10 622 = $239.22
• Step 2: $239.22 x 365 / 77 = $1,133.96 annualised amount
• Last year: Relevant period = 318 days (1 July 2020 - 14 May 2021)
• Step 1: $33,000 x 318 / 10 622 = $987.95
• Step 2: $987.95 x 365 / 318 = $1,133.96 annualised amount
• Other years: Relevant period = 365 days
• Step 1: $33,000 x 365 / 10 622 = $1,133.96
• Step 2: $1,133.96 x 365 / 365 = $1,133.96

Capitalised maintenance income = $33,000

Full capitalisation period = 1,076 days (15 April - 26 March 1995, the day before John turns  18)

• First year: Relevant period = 77 days 15 April - 30 June 1992)
• Step 1: $33,000 x 77 / 1 076 = $2,361.52
• Step 2: $2,361.52 x 365 / 77 = $11,194.21
• Last year: Relevant period = 269 days (1 July 1994 - 26 March 1995)
• Step 1: $33,000 x 269 / 1,076 = $8,250.00
• Step 2: $8,250.00 x 365 / 269 = $11,194.23
• Other years: Relevant period = 365 days
• Step 1: $33,000 x 365 / 1 076 = $11,194.23
• Step 2: $11,194.23 x 365 / 365 = $11,194.23

Capitalised maintenance income = $33,000

Full capitalisation period = 2,481 days (15 April 1992 - 29 January 1999, the day before Mary turns 18)

• First year: Relevant period = 77 days (15 April - 30 June 1992)
• Step 1: $33,000 x 77 / 2,481 = $1,024.18
• Step 2: $1,024.18 x 365 / $4,854.87
• Last year: Relevant period = 213 days (1 July 1998 - 26 Jan 1999)
• Step 1: $33,000 x 213 / 2,481 = $2,833.13
• Step 2: $2,833.13 x 365 / 213 = $4,854.89
• Other years: Relevant period = 365 days
• Step 1: $33,000 x 365 / 2,481 = $4,854.89
• Step 2: $4,854.89 x 365 / 365 = $4,854.89

As the capitalised maintenance is for the customer and children, in this scenario the full amount ($99,000) is recorded at the group level and the end of the capitalisation period is the day before the customer turns 65.

The system will apportion the $99,000 equally between the 2 children. The capitalised maintenance income apportioned for each child will cease to be included in the customer's annualised maintenance income from the date the child turns 16 as maintenance income is only assessed for children who attract more than base rate FTB Part A.