Foreign income for family assistance and Paid Parental Leave scheme payments 108-03040060

Will the customer (or their partner) receive foreign income:

• in the relevant financial year, for Family Tax Benefit (FTB) or Child Care Subsidy (CCS)?
• in the six months beginning on the day of delivery of a stillborn child, for Stillborn Baby Payment (SBP)?
• in the previous financial year for a Parental Leave Pay (PPL) claim?

For information on foreign income for customers receiving payments other than family assistance, see Foreign income and assets.

The Australian tax year is used, even if this is different from the source country's tax year.

Customers with income from foreign business interests can deduct allowable business expenses from that income amount.

Discretion is needed when deciding to verify a customer's declared target foreign income.

If a customer is unsure whether the foreign income is taxable in Australia, the Australian Taxation Office (ATO) can clarify the customer's taxation status.

Will they receive foreign income during the relevant period above?

• Yes, and if the customer wants to provide or revise their estimate of target foreign income for:
• Child Care Subsidy (CCS) only, see Updating foreign income estimates in Process Direct for CCS
• A previous financial year, go to Step 2
• The current financial year, go to Step 3
• Their SBP claim, the foreign income estimate should be included in the customer's estimate of combined adjusted taxable income for the 6 month period beginning on the day the stillborn child was delivered. The SBP income estimate screen can be accessed using navigation key 'S5IEST'. Procedure ends here
• Their PPL claim, see Paid Parental Leave income test and previous financial year income estimate. Procedure ends here
• No, procedure ends here

Exchange rate: Services Australia uses the exchange rate at 1 July of the relevant financial year.

The Australian dollar value can be manually calculated by dividing the foreign currency amount by the exchange rate at 1 July of the relevant financial year obtained from the Foreign Exchange Summary (RDFXS) screen:

Process Direct

• Go to the Foreign exchange summary (RDFXS) screen
• Select the Relevant Country or Currency
• Select Search

Customer First

• 'S'elect the relevant currency from the RDFXS screen
• Scroll down to locate the historical rates on the Foreign Exchange Details (RDFXD) screen

The customer should not revise their estimate just because the exchange rate has changed since the ATO may transfer tax exempt foreign income details electronically as part of a customer's actual adjusted taxable income.

Note: confirm that the customer's foreign income has not already been included as part of their taxable income or as a reportable fringe benefit before revising their estimate. If customer is unsure they will need to contact the ATO to discuss how their foreign income has been assessed for taxation purposes.

Check that the revised estimate is reasonable before updating on the FAO Income for Previous Year (FIPY) screen.

For help and what to do if the estimate does not seem reasonable, see Updating previous financial year incomes for Family Tax Benefit (FTB), Child Care Subsidy (CCS) and Child Care Benefit (CCB).

At reconciliation or for a previous year lump sum claim, income assessment details can be viewed on the FAO Income Component Summary (FICS) screen.

Go to Step 5.

When coding foreign income, the customer will need to confirm how it is being assessed for Australian taxation purposes. If customer is unsure, they will need to contact the ATO for more information.

In Customer First, if the foreign income is:

• assessed as taxable income, it is recorded as part of the customers taxable income estimate on the FAO Taxable Income (FTI) screen
• assessed as a reportable fringe benefit, record the income on the FAO Fringe Benefit (FFB) screen
• not assessed for Australian taxation purposes, record the income on the FAO Foreign Income (FFI) screen or the FAO Tax Exempt Foreign Income (FEF) screen

Where appropriate customers should be encouraged to use their online account or the Centrelink Mobile Express Plus app to update their estimate.

Go to Updating income estimates for the current financial year.

In Customer First, select the following screens from the FAO Income Task Selector (FITS) screen:

• FAO Foreign Income (FFI) screen - to record an estimate of foreign income
• FAO Tax Exempt Foreign Income (FEF) screen - to record an estimate of tax exempt foreign income

If the FFI or FEF screen does not exist for the current financial year, type 'I'nsert in the Action: field and press [Enter]. Type the relevant year in the Financial Year: field

Some data is protected when:

• it is supplied by the ATO, or
• if a customer and their partner become unlinked, the partner's details will be protected, or
• when a page has been created for a financial year

An estimate can be inserted, corrected or deleted:

• 'I'nsert - a change in circumstance that results in a change to the customer's and/or partner's (if applicable) foreign income or tax exempt foreign income should be inserted on the first available blank line
• 'C'orrect - should only be used when the original entry is incorrect. It can be used to correct any item except date of event (DOV)
• 'D'elete - delete a line only when the details should not have been recorded on the customer's record

Record the details in either the customer's or partner's fields:

• Event Date: field: the date of event (DOV) of the change in foreign income
• Amt A$: field: the estimated amount in Australian dollars (AUD) (must be in whole dollars). The exchange rate listed on the RDFXS screen can be used if necessary to convert to Australian dollars

Process Direct

• Go to the Foreign exchange summary (RDFXS) screen
• Select the relevant Country or Currency
• Select Search

Customer First

• 'S'elect the currency from the RDFXS screen
• Scroll down to locate the relevant 1 July historical rate on the Foreign Exchange Details (RDFXD) screen. Note: tax exempt foreign income is paid to the customer in Australian dollars
• Type: field: 'EST'imated foreign income
• From: field: 'CUS'tomer advised

Press [Enter].

Customer First

• Finalise activity on Activity Results (AR) screen
• Record details on a DOC

Note: this process applies to Child Care Subsidy or Additional Child Care Subsidy only customers. If a customer also receives FTB, the family income estimate must be updated using the Family Income and Choices workflow. See the Coding foreign income for family payments table.

As Child Care Subsidy (CCS) is income tested, all customers are required to provide an income estimate irrespective of whether they receive an income support payment.

Have a discussion with the customer about how the foreign income is being assessed for Australian taxation purposes. If customer is unsure, they will need to contact the ATO for more information.

Only code the overseas income as foreign income if it is not to be included in the customers ITR as taxable or a fringe benefit.

Encourage customers to update their estimate using their Centrelink online account through myGov or the Express Plus Centrelink mobile app.

Is the customer able to update their income estimate as well as their foreign income estimate using online channels?

• Yes, remind the customer to review their activity details as these may have changed. These can be updated via online channels. For more information, see Activity Test for Child Care Subsidy (CCS). Procedure ends here
• No, go to Step 2

In Process Direct, select the Customer Summary tile, and locate the customer's record using the Search Criteria. Select the customer's record from the Search Results page.

Go to the FAO Income Summary Details (FISD) screen. Check the customer's current income estimate and identify which income components currently have a value. This is to make sure any income components no longer applicable can be updated with a nil value.

Ask the customer which income components have changed or are no longer applicable.

Discuss the estimate with the customer to confirm it is reasonable. For more information, see:

• Helping families provide a reasonable annual income estimate for family assistance payments
• Taxable income for family assistance and Paid Parental Leave scheme payments
• Assessment of adjusted taxable income for family assistance and Paid Parental Leave scheme payments

Does the customer wish to update any components of their income estimate as well as their foreign income estimate?

• Yes, see Updating Income estimates for the current financial year. Procedure ends here
• No, remind the customer they must update their estimate whenever their circumstances change. Encourage the customer to update their estimate via their online account. Go to Step 3

Go to the Annual Income (FTI) screen.

• In the FAO Taxable Income table, select the Add new row
• On Create FAO Taxable Income, select New Row and complete the following fields:
• Start Date: is the date the customer notified of the change and will default to today's date
• Income source: will default to Customer Provided (no change required)
• Income Amount: enter the amount of the income component to be updated in whole dollars
• Financial Year: select the relevant year from the dropdown menu. For example, select 2022 for the 2021/22 financial year
• Income Type field: select the income component from the dropdown menu:
  - Foreign income, and/or
  - Tax exempt foreign income
  If an income component is already recorded for $1 or more, and the revised amount is now $0, a new row is to be created with the income amount entered as '0'. Service Officers are not to edit or delete the existing line.
  Note: Service Officers are not required to record '0' income for components which haven't been recorded previously or are already recorded as '0'
• Income Status: will default to Estimated Income (no change required)
• Select Save

Repeat the above steps for each income component to be updated.

The new rows created in the update will be used to re-assess the customer's CCS percentage entitlement.

Note: if the customer is partnered, select the partner from the Relationship menu to update their income details.

• Once all required foreign income components have been updated:
• select Assess and address any errors/warnings
• Select Assess again, then select Finish. Record details of the update
• select Finalise to complete the transaction
• for CCS purposes, the income estimate will take effect from the start of the next CCS fortnight
• advise the customer of their new CCS subsidy percentage as a result of their updated income estimate and the date this will take effect
• if they have increased their estimate, advise the customer they can increase their CCS withholdings to reduce the risk of an overpayment at reconciliation

Go to Step 4.

When a customer updates their income estimate, it is possible their (or their partner's) level of activity may also have changed.

See Activity Test for Child Care Subsidy (CCS) for more information about reviewing activity details.

Procedure ends here.