Maintenance Income Credit (MIC) 277-51190010

A Family Tax Benefit (FTB) customer may benefit from the Maintenance Income Credit (MIC) during FTB reconciliation/ lump sum claim assessment if they or their current partner:

• had a child support entitlement registered for collection by Child Support during the financial year, and
• have a MIC balance at the start of the financial year and received arrears of child support during the financial year

For an FTB instalment customer, the MIC is automatically calculated and applied as a part of the FTB reconciliation process.

For details of the MIC calculation for customers with a child support agreement accepted by Child Support, see the calculation examples in Maintenance Income Text (MIT) for Family tax Benefit (FTB).

Has FTB reconciliation or lump sum claim been completed for the financial year?

Check the FAO Reconciliation and Claim Summary (FRCS) screen.

• Yes, go to Step 2
• No, the MIC calculation will occur when the reconciliation/ lump sum claim is finalised. To check what information is needed for this to occur, see FTB reconciliation or lump sum claim pending. Procedure ends here

Code 'M' next to the completed reconciliation/ lump sum claim line for the relevant financial year to go to the FTB Lump Sum & Reco (LRMS).

The LRMS screen shows the result of maintenance reconciliation for all periods in the financial year. For FTB reconciliation it shows the difference between:

• the amount of child support used during the year for FTB instalments and the amount used at reconciliation, or
• the reconciliation amount and the re-reconciliation amount

If the Source field is CLS, the calculation was based on information provided by the customer for their lump sum claim.

Code 'M' next to an assessment period on the LRMS screen to go to the MIC Reco Adjustment (LRMJ) screen.

The LRMJ screen shows an overview of the MIC calculation for the financial year (even though a calculation period is shown). This screen shows:

• the affecting annualised maintenance income before the MIC is applied
• the MIC used to reduce affecting maintenance income, if child support arrears were received. This is the MIC depletion amount which is the lower of the amount received in excess of the customer's entitlement and the MIC balance. Separate amounts are shown for each group if there is more than one Child Support collect case
• annualised maintenance income after application of the MIC
• the MIC balance carried over from the previous financial year. This cannot exceed the child support amount owed, as advised by Child Support. Separate MIC balances are shown for each group if there is more than one Child Support collection case

Use the go to field on the LRMJ screen to go to the MNCX screen. The MNCX screen shows the MIC accrual or depletion amounts for the selected period for each group (Child Support collect case). Press [F10]/[F11] to view accrual/ depletion details for all periods in the financial year.

Apart from the accrual or depletion amount, other amounts are for the financial year.

For each group:

• previous year MIC balance
• amount of child support owed, per data transferred from Child Support. The MIC balance from the previous year cannot exceed this cap
• the Balance Used field which is the lower of the previous year MIC balance and the amount of child support owed (arrears)
• either:
• MIC accrual amount for the period if the person received less than the annualised amount due in the financial year. Go to Step 4
• MIC depletion amount for the period if the person received more than the annualised amount due in the financial year. Go to Step 5
• the ongoing MIC balance to be carried over to the next financial year, after MIC accrual or depletion

MIC accrual is worked out on a daily basis after the end of the financial year, based on annualised maintenance income and entitlement details for that financial year.

MIC accrual can occur for each day the customer or their partner is eligible for FTB if they received less than the child support amount due in the financial year. Accrual can occur only in relation to a child support child.

Accruals to a MIC balance represent the unused amount of MIFA.

The MIC accrual amount is:

• the lower of the customer's global maintenance entitlement and their Maintenance Income Free Area (MIFA)
• less the total maintenance income received

Where the customer is underpaid child support from two or more payers during an income year, the MIC accrual amount is apportioned between each MIC balance. An accrual to a MIC balance cannot exceed the underpaid amount for that child support case for the financial year.

Mixed collection customers

As a result of legislative amendments to the MIC from 1 July 2007, which were implemented in March 2009, periods of private collection are taken into account in calculating the global maintenance entitlement and annualised amount of maintenance income for MIC accrual and apportioning.

This change affects customers who change from Child Support collect to private collect (or vice versa) during the year. Customers can still only accrue for periods of Child Support collection, but this change ensures that the amount entitled and amount received are more accurately reflected. MIC accrual or depletion continues to apply to Child Support collect periods only.

Any disbursements received during a period of private collection (i.e. the customer changed from Child Support to private collect and Child Support collected outstanding arrears) are not included in MIC calculations.

Retrospective child support assessments

Assessments backdated to a previous financial year should not disadvantage customers with regard to their MIC balance. If a customer advises that their Child Support collect case has been retrospectively reassessed for a previous financial year, their MIC balance will need to be reviewed to determine if they are eligible for a higher level of accrual. See the Resources page for an example.

Go to Step 6

Depletion from a MIC balance will only occur after the end of the financial year at FTB reconciliation or lump sum claim processing.

The MIC depletion amount is the lower of:

• the arrears amount (the difference between the amount received and the child support entitlement)
• the MIC balance

The affecting maintenance income used in the reconciliation calculation is reduced by this amount.

Unlike MIC accrual, MIC depletion can occur during periods the customer is not eligible for FTB.

If tax returns are lodged more than two years after the relevant financial year, the customer cannot receive a top-up as a result of the application of the MIC because they have not satisfied FTB reconciliation conditions. The MIC balance can be depleted by arrears of child support to reduce a reconciliation debt, however no resultant top-ups would be paid.

Use the go to field on the MNCX screen to go to the MNCR screen.

The MNCR screen shows the MIC result for the period for each group (Child Support collect case) by comparing the:

• annualised child support entitlement amount for the period and
• annualised maintenance income received for the period

The MIC result is the daily accrual or depletion amount multiplied by the number of days in the period. The Notes field advises whether there was an accrual or depletion for the period.

Press [F10]/[F11] to scroll through all periods in the financial year.

MIC Child Details (MNAD) screen

'S'elect a group line from the MNCR screen to display global maintenance entitlement (GME) and the maintenance income received (REC) for each child in the group.

The information is displayed in period blocks for each child, with Child totals at the end for each child.

This screen is accessed directly and shows the outstanding child support arrears for each Child Support collect case for each financial year. These details are transferred from Child Support.

Access to request a refresh from Child Support is restricted to Child Support Unit staff.

The LRMI screen shows the MIC adjustment amount, which is the customer's total adjustment.

It also shows the entitlement group total which reflects the MIC adjusted maintenance income for the group.

Note: if no dollar amount is displayed for a child and 'Override' is displayed after the last child in the group, this is because a MIC balance has been manually coded on the Override Maintenance Income (MNOI) screen.

To go to the LRMI screen:

• 'S'elect a period from the LRMS screen to go to the FTB Lump Sum/Reco Maint Dtls (LRMD) screen
• 'I' next to a group line on the LRMD screen

The MNOI screen is used by selected staff to code a MIC balance for a financial year for a lump sum claim or where the initial MIC calculation is incorrect.

It shows details for a group.

If an override has previously been coded and confirmed, the amount is moved from the Manual Override field to the Auto Calculation field.

The MNOI screen can be accessed from the MNGS, MNAD or MNRA screens, or by coding 'O' next to a group line on the LRMD screen.