Non-payment of Family Tax Benefit (FTB) instalment payments to zero entitlement customers 007-11010150

From 1 July 2012, customers who repeatedly underestimate their income for FTB and have no entitlement at reconciliation will no longer be entitled to receive fortnightly instalment payments of FTB Part A and/or FTB Part B.

A separate procedure applies where a customer's fortnightly payments have been cancelled due to non-lodgement of tax returns under the Sunset Clause. If a customer is subject to PIP and the zero entitlement measure, the zero entitlement measure preclusion overrides any entitlement to related ancillary payments available under PIP. Note: for the zero entitlement measure, PIP periods will be counted as part of the 2 consecutive years of non-entitlement due to income.

Preclusion will apply where all the following has occurred for 2 consecutive financial years from 2009-10:

• the customer was entitled to FTB Part A or FTB Part B as fortnightly instalments with a legislative rate greater than zero based on their estimate of income (including where the customer was on zero rate due to payment choice or PIP), and
• at reconciliation, the customer had zero entitlement for that component for the entire claim period, and
• at reconciliation there is at least one day in the instalment period where there is no entitlement to that component due to income, resulting in the component being cancelled (CAN-INC) for that period and during the CAN-INC period:
• for FTB Part A only, all of the income estimates provided during the claim period were less than the ATI amounts, or
• for FTB Part B only, the zero entitlement is due to the underestimation of the primary income earner

These are referred to as zero entitlement years.

Not considered to be zero entitlement years for this measure are any years the customer has zero entitlement due to non-lodgement of tax returns or a non-income related reason, where they are entitled to more than zero rate for any day for that component, or where there was no instalment period (for example, the customer claimed via lump sum only).

Any preclusion will also apply to the customer's partner (if applicable), including members of a blended family couple.

Customers will only lose access to fortnightly FTB Part A or FTB Part B if they had zero entitlement at reconciliation for the relevant financial years.

If both FTB Part A and FTB Part B are precluded, the customer's FTB will cancel, see further details below:

• If Part A instalments are precluded, the customer loses access to all FTB Part A components, and is no longer deemed eligible for assistance such as:
• Child Dental Benefit Schedule (CDBS) administered by Medicare
• the lower threshold of the extended Medicare Safety Net
• Schoolkids Bonus
• FTB Part B instalments are only precluded if the underestimation of income is due to the primary income earner's estimate. Secondary income earners are not affected by this measure

Once the preclusion is applied, the customer and their partner will not be able to access FTB Part A and/or Part B instalments until they can demonstrate that they are again eligible, or a change in circumstances has occurred and an exemption is granted.

FTB will cancel when:

• both FTB Part A and FTB Part B instalments have been precluded
• FTB Part A is already cancelled and FTB Part B is precluded
• FTB Part B is already cancelled and FTB Part A is precluded, or
• FTB is currently at zero rate due to care of a Regular Care child and FTB Part A is precluded

When FTB is cancelled any unpaid FTB advance payment amount will be raised as a debt.

If only FTB Part A or FTB Part B is precluded and the customer remains FTB current, any entitlement to the precluded payment will be automatically assessed at reconciliation.

If the customer's FTB has cancelled as a result of this measure, the customer must lodge an FTB lump sum claim to be assessed for the precluded FTB payment.

An exemption from this initiative can be granted if:

• a customer demonstrates that they have regained entitlement to instalment payments due to a reconciliation, re-reconciliation or lump sum claim result, or
• an FTB child who was not an FTB child of the customer (or their partner) during the 2 consecutive zero entitlement years has come into the customer's care, this can include any of the following:
• newborn or adopted child
• Regular Care child that has since become an FTB child
• partner's child that has become an FTB child of the customer since becoming partnered
• the customer has become separated or is no longer a member of a couple with the person who was their partner at the end of the second zero entitlement year
• the customer (or their partner) has received or been granted an income support payment, the customer has a deemed entitlement to FTB
• the customer (or their partner) has an entitlement to FTB greater than zero for a later financial year due to reconciliation, re-reconciliation or the assessment of a lump sum claim
• special circumstances for a non-payment of FTB instalments preclusion exist in relation to the customer or their partner that did not exist at the end of the 2 consecutive zero entitlement years

An exemption allows FTB instalments to continue or recommence.

If the customer applies for a formal review of the decision to preclude FTB payments, the normal review and appeal processes apply. If a customer is requesting a reassessment because of a change in circumstances, an appeal is not recorded and eligibility for a preclusion exemption must be assessed.

A warning error or Manual Follow-up (MFU) will be created in an activity that results in possible eligibility for preclusion or exemption. A determination as to whether the customer meets the rules for a preclusion or exemption must be made.