Automatic Uplift of income estimates 108-05030050

Default estimates examples

Every time a default estimate is calculated, it will display on the FAO Income Uplift Details (FIUD) screen, whether it is used to work out the customer's Family Tax Benefit rate. The indexation factor is also recorded on the FIUD screen.

The following are examples of how the default estimate is calculated for each stage of the Automatic Uplift process for Family Tax Benefit during the 2020-21 financial year, commencing 1 July 2020.

First stage Automatic Uplift - New Financial Year Assessment review

Table 1: this table explains the first stage of the Automatic Uplift on customer's income estimates. The most recent income estimate for the customer (and their partner) is adjusted by applying an indexation factor to each component of Adjusted Taxable Income (ATI).

Item	Most recent estimate for 2019-20	Indexation factor for 2020-21	Default estimate for 2020-21 (after rounding applied)
Taxable Income	$25,000	1.026	$25,650
Total Reportable Fringe Benefits and Exempt reportable fringe benefit adjusted amount	$5,000	1.026	$5,130
Reportable Superannuation Contributions	$8,000	1.026	$8,208
Total Net Investment Losses	$3,000	1.026	$3,078
Tax Free Pensions/Benefits	$2,225	1.026	$2,283
Foreign Income	$10,000	1.026	$10,260
Tax Exempt Foreign Income	$0	1.026	$0
Less Deductible Child Maintenance Expenditure	Less $3,000	1.026	Less $3,078
Total	$50,225		$51,531

Second stage Automatic Uplift - calculation of new default estimate

Table 2: this table explains how a default estimate that is being used to work out the customer's FTB and the actual ATO income details that are received from the Australian Taxation Office (ATO) for the customer or their partner, calculate to a new default estimate. Indexation that occurs under Uplift 2 only applies to the ATO confirmed income components.

Item	Actual income for 2019-20	Source	Indexation factor for 2020-21	New default estimate for 2020-21 (after rounding applied)
Taxable Income	$26,850	Actual Income from ATO	1.026	$27,548
Total Reportable Fringe Benefits and Exempt reportable fringe benefit adjusted amount	$5,460	Actual Income from ATO	1.026	$5,602
Reportable Superannuation Contributions	$7,522	Actual Income from ATO	1.026	$7,718
Total Net Investment Losses	$3,138	Actual Income from ATO	1.026	$3,220
Tax Free Pensions/Benefits	$2,327	Customer's most recent estimate	N/A	$2,327
Foreign Income	$10,460	Customer's most recent estimate	N/A	$10,460
Tax Exempt Foreign Income	$0	Actual Income from ATO	1.026	$0
Less Deductible Child Maintenance Expenditure	Less $3,340	Customer's most recent estimate	N/A	Less $3,340
Total	$52,417			$53,535

Examples of Automatic Uplift process

Table 3: this table explains the Automatic Uplift process.

Date	Example
April 2020	New Financial Year Assessment (NFYA) letter issued inviting the customer to give a reasonable estimate for 2020-21. It also advises the default estimate will apply from 1 July 2020 if they do not give their own estimate.
1 July 2020	Customer has not given an income estimate for 2020-21, and therefore the default estimate (Uplift 1) applied. Customer $52,134 - default estimate (Uplift 1) Partner $31,562 - default estimate (Uplift 1)
21 August 2020	The customer's actual ATO income for 2019-20 of $56,435 is advised by the ATO. A review is set for 14 days for receipt of their partner's actual ATO income.
5 September 2020	The partner's actual ATO income for 2019-20 has not been received by the end of the 14 day review period. A new default estimate is calculated for the customer. As the new default estimate is higher than their current default estimate, the customer is sent a letter advising the new default estimate to apply in 21 days unless they advise their own estimate.
27 September 2020	Customer $57,902 - default estimate (Uplift 2) Partner $31,562 - default estimate (Uplift 1)
23 November 2020	The partner's actual ATO income for 2019-20 becomes available after the new default estimate has been calculated for the customer. The partner's actual ATO income is $28,800. A new default estimate is calculated for the partner and is lower than their current default estimate, so the current default estimate continues to be used. The customer is not sent a letter, as there has been no change. Based on this estimate (after rounding is applied) is as follows: Customer $57,902 - default estimate (Uplift 2) Partner $31,562 - default estimate (Uplift 1)

Indexation factors for each financial year

Table 4: this table describes the indexation factors for each financial year.