Maintenance Income Test (MIT) for Family Tax Benefit (FTB) 277-51080000

Maintenance income is advised electronically by Child Support or by the customer providing a court order with the details. The Maintenance Income Test (MIT) is automatically applied based on child support details on the customer's record.

A manual workaround applies where voluntary maintenance is received and the Maintenance Action Test (MAT) is 'DMA' (Deciding maintenance action), or where voluntary or court ordered child support is received after a child turns 18 where they are still receiving more than the base rate of FTB Part A, whilst in full-time secondary study to ensure that the MIT is applied correctly.

Is customer exempt from the MIT?

• Yes, check/update the Maintenance Action Test code if necessary, so that the customer's Family Tax Benefit (FTB) rate will not be affected by any maintenance income received. Note: this only applies for full maintenance exemptions, not partial maintenance exemptions. Procedure ends here
• No, go to Step 2

Is the customer legislatively entitled to receive more than the base rate of FTB Part A?

• Yes, go to Step 3
• No, maintenance income does not affect the customer's FTB rate. Procedure ends here

The system automatically calculates the maintenance income reduction.

Maintenance income cannot reduce the customer's FTB Part A rate below the base rate for each child support child.

For customers with children from more than 1 relationship, the MIT will limit the amount of child support that can reduce FTB Part A by creating a MIT Ceiling.

To view details:

• For a summary, go to the Rate Explanation (REXFTBA) screen, including:
• total annualised maintenance
• Maintenance Income Free Area (MIFA) (annual)
• maintenance income reduction (fortnightly)
• affecting income and maintenance income (fortnightly)
• For details of total annualised maintenance income, MIFA, MIT ceiling and maintenance income reduction, go to the FTB Maintenance Assessment Explanation (REXFTBM) screen
• For a detailed explanation of the maintenance income assessment, go to the MIT Explanation Summary (MNEX) screen
• For information about viewing the result of FTB reconciliation, see FTB reconciliation and lump sum calculation screens

When calculating the annual amount of maintenance:

• Include maintenance income received by partner
• Only include maintenance income received for any child support child. Maintenance income received for the following children is disregarded:
• children aged 18 or over who have reached their course end date and are no longer attracting more than base rate
• children who have been overseas for longer than 6 weeks
• Regular Care Children
• children for whom the customer has failed the maintenance action test
• Do not include maintenance received for a child's disability expenses

For FTB instalment customers

The annualised amount of maintenance income is estimated - using either the:

• entitlement method (private or Child Support collection customers) or
• disbursement method (Child Support collection)

If the customer has a child support agreement registered for collection by Child Support, maintenance income is calculated using the modified disbursement method. This is based on the proportion of the agreement amount received against the notional assessment. Child Support sends both the notional assessment and the child support agreement amounts to Centrelink.

If a projected reconciliation overpayment is identified due to reassessment of maintenance income, the customer's ongoing FTB rate may be reduced to offset the potential overpayment under mandatory continuous adjustment.

Only child support children are included when calculating the Maintenance Income Free Area (MIFA). Include shared care children if they would attract more than base rate if more than 35% care.

Non-parent carers may have more than one active child support case for a child, e.g. a grandparent may have a child support case against both the parents for a child. In these cases, to calculate the Maintenance Income Free Area (MIFA) amount, the child is counted twice as they are active in more than one child support case

Do not include:

• children aged 16 or over who have reached their course end date
• children who have been overseas for longer than 6 weeks
• Regular Care Children
• children for whom the customer has failed the Maintenance Action Test

Is annualised maintenance income above the customer's MIFA?

• Yes, go to Step 6
• No, the maintenance income reduction is nil. The customer's FTB Part A rate is not reduced by maintenance income. Procedure ends here

Reduction = (annual maintenance amount - MIFA) /2

Fortnightly reduction = annual reduction / 365 x 14

Customer's FTB Part A rate is the higher of:

• their income tested FTB Part A rate less the maintenance income reduction or
• the base rate of FTB Part A

During FTB reconciliation, annualised maintenance income is calculated based on actual maintenance income received during the financial year.

For customers with a child support agreement accepted by Child Support, if a Notional Assessment is in place it is used to assess FTB Part A.

During FTB reconciliation, customers with a child support entitlement registered for collection by Child Support may benefit from the Maintenance Income Credit (MIC).

From 1 July 2008, for customers with a child support agreement accepted by Child Support, Family Tax Benefit (FTB) Part A is assessed using the Notional Assessment as advised by Child Support.

If there is no Notional Assessment in place, for example for lump sum agreements or where a Provisional Notional Assessment is in place, the Administrative Assessment may be used.

Assessment details are electronically transferred by Child Support to Centrelink in the Entitlement Load. They will only send the actual details of the agreement with a Notional Assessment for Child Support collect customers.

To view details

Go to the Child Support Agreement/Lump Sum (MNAL) screen after selecting the group from the Maintenance Entitlement Group Summary (MNGS) screen.

The MNAL screen shows the annual Child Support Agreement amount, or the lump sum payment amount, only if either exist.

It shows the cash, non-cash and agreement amounts as provided by Child Support.

The Lump Sum Offset Amount: field will only display for Child Support collect customers, as provided by Child Support.

Customers who enter into a limited or binding child support agreement with a Notional Assessment and choose to collect their child support privately will have their Family Tax Benefit (FTB) Part A assessed and reconciled against the Notional Assessment.

It is assumed that private collect customers collect 100% of their child support entitlement.

The Notional Assessment will be used whether or not the agreement amount is higher or lower than the Notional Assessment.

Child Support only transmits to Centrelink the Notional Assessment, not the Provisional Notional Assessment. However, prior to a Notional Assessment (NA) issuing, the child support amount payable under the agreement will be used in calculating the relevant amount of FTB Part A payable. Child Support will transfer the actual agreement amount (displays as an Administrative Assessment) in the entitlement load to Centrelink. This amount will be used in the Maintenance Income Test (MIT) until the NA is received via the data exchange. This applies to Child Support collect and private collect cases equally.

It is assumed that private collect customers receive 100% of their entitlement (all the Notional Entitlement amount).

This applies to reconciliation of Family Tax Benefit (FTB) for the 2008-09 financial year onwards for customers with a child support agreement accepted by Child Support.

When calculating annualised maintenance income for the period the agreement applied:

• If the customer is privately collecting the agreement, the Notional Assessment is used. It is assumed that the full agreement amount was collected
• If the customer is Child Support collect and no arrears have been collected, a Notional Assessed Amount is used (Agreement amount received / Agreement entitlement x Notional Assessment)
• If the customer is Child Support collect and arrears have been collected, the Total Maintenance Amount is used: Notional Assessment + notional arrears (arrears x Notional Factor) + normal arrears

Notional Factor = (Notional Assessment - Notional Assessed Amount) / underpayment amount.

The notional factor is used to ensure that child support arrears are treated as though they were received in the year in which child support was underpaid. If a Child Support collect customer has collected:

• less than their agreement amount, the Notional factor is calculated and stored for future financial years
• more than their agreement amount, any previous year's Notional factor is added to the child support income amount received

When calculating the Maintenance Income Credit (MIC), the amount received is the Notional Assessment, Notional Assessed Amount or the Total Maintenance Amount, as explained above.

See the Resources page for examples of the automatic assessment of maintenance income for Child Support collect customers.

This applies to reconciliation of Family Tax Benefit (FTB) for the 2008-09 financial year onwards for customers with a child support agreement accepted by Child Support.

If there is no Notional Assessment in place, for example for lump sum agreements, the Administrative Assessment may be used.

If an Administrative Assessment is in place:

• for private collect customers, the Administrative Assessment is used
• for Child Support collect customers, annualised maintenance income is calculated using the value of the lump sum offset plus any cash disbursements and non-cash as advised by Child Support

If a customer moves from an Administrative Assessment to a Notional Assessment or vice-versa during the financial year, daily rates are calculated and multiplied by the number of days in the Notional Assessment period. The apportioned Notional Assessment for the agreement period is then added to the amount collected under the Administrative Assessment, and this amount is applied across the whole financial year.

If no Notional Assessment is in place at any time during the financial year, Notional Assessment calculations will not be undertaken.

See the Resources page for examples of the automatic assessment of maintenance income.

An agreement can be made to pay child support in a lump sum. The agreement must be a binding agreement and the value of the lump sum must be equal to or more than the value of the annual child support assessment, that is there must be a child support assessment in place.

A Lump sum binding agreement is fully administered by Child Support.

• If the agreement is for a lump sum and periodic payments, Child Support will issue a Notional Assessment which will transmit to Centrelink along with the agreement amount
• If the agreement is for a lump sum only, the lump sum amount will be transmitted

Child Support will credit the total value of the lump sum against the child support rate each year until the credit runs out. The residual value of the lump sum will be adjusted by CPI by Child Support on 1 July each year to protect the value of the lump sum over time. Once the lump sum has been depleted, ongoing child support payments will resume.

Where the agreement is for periodic payments and a lump sum credit, a Notional Assessment will be transmitted to Centrelink. Generally, the lump sum will offset against 100% of the annual child support liability, however in some cases the lump sum agreement may specify a percentage less than 100%. If this occurs, the notional assessment will be used to calculate Family Tax Benefit for the receiving parent (or their partner).

When calculating annualised maintenance income for Child Support collect customers, see the Resources page for examples of the automatic assessment of maintenance income.

The Lump Sum Offset Amount: field on the Child Support Agreement/Lump Sum (MNAL) screen shows the amount for the case as provided by Child Support for Child Support collect customers only.