Debt arising from Family Tax Benefit (FTB) reconciliation 107-04090000

For customers who receive FTB and child care payments, reconciliation occurs once they (and their partner) lodge their Income Tax Returns, if required.

FTB reconciliation is the recalculation of a customer's FTB entitlement for customers who:

• received payments of FTB during the relevant financial year
• claim a lump sum at the end of the relevant financial year and who are paid at a rate based on an estimate of the partner's income at the time the claim is made

Comparison of the recalculated entitlement is against the FTB already paid for the relevant financial year. This results in:

• a top-up payment, where the customer was not paid enough FTB
• a debt, where the customer was paid too much FTB, or
• nil adjustment where the customer received the correct rate of FTB

The timing of FTB reconciliation depends on whether the customer:

• is single or partnered
• has any ex-partners
• shares care of the dependents
• or their partner or ex-partners are required to lodge a tax return, and
• when their tax returns are lodged and processed

Re-reconciliation of Family Tax Benefit (FTB) occurs when:

• a customer's FTB has already been reconciled for the relevant income year, and
• a change in circumstance or income details for the relevant income year occurs

This can happen when the Australian Taxation Office (ATO) makes changes to a Notice of Assessment (NOA) or Services Australia updates income or circumstance details. This can affect the customer’s FTB entitlement.

The ATO recovers debts during reconciliation and lump sum claim processing. Debt processing is automatic, with recovery from tax refunds. Services Australia raise any remaining amount as a debt.

Most reconciliation debts are because of a difference:

• between estimated and actual income and
• maintenance income

'Zero' overpayments resulting from the above to ensure they are included at reconciliation. Use the reason code FAM, finalised - 'no debt'.

FTB circumstance debts

A circumstance debt occurs from any changes, other than:

• income and
• maintenance income

Circumstance debts arise if a change in circumstances results in the customer losing qualification to a payment. Raise the debt at the time the change in circumstances is identified. Examples include:

• changes in shared care arrangements
• changes in dependent care (qualification debts) or
• a loss of entitlement to Rent Assistance (RA)

FTB qualification debts

Qualification debts occur when a customer receives a payment for which they were not eligible. These can occur if a customer:

• receives FTB and it is later determined that they were not a resident of Australia, or
• was in receipt of more than the base rate of FTB and has failed to meet the Maintenance Action Test (MAT)
• has an FTB child who is granted a disqualifying payment for a past period
• does not meet the eligibility requirements for:
• individuals
• grandparent carers
• children in foster care

Raise qualification debts as soon as the loss of qualification is identified. See Qualification Debt identified in FTB reconciliation result or when completing activity that triggers FTB reconciliation.

The Debt Management and Information System (DMIS) automatically creates a debt where an overpayment is calculated. Debt recovery commences.

If re-reconciliation results in a debt, the original debt ID is adjusted. Re-reconciliation debts less than $50 are auto-waived.

Re-reconciliation debts are not recovered from tax refunds. Recovery is through Services Australia. If the ATO provides amended information, re-reconciliation may result in a debt. Any debt must be held pending ATO advice. The ATO may advise there will be no recovery action from their end. If so, recovery will occur through Services Australia.