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

Item

Example

1

Customer has 1 active child support case, income below Part A higher income free area (HIFA) - post 1 July 2019 example

Partnered customer with 3 children, all under 13.

Two children from previous relationship; customer receives $20,000 child support per year.

Pays $300 per week private rent.

Income estimate is $12,000 each. Combined adjusted taxable income (ATI) is $24,000.

FTB Part A rate calculation (calculation does not include the FTB Part A supplement, however, this will be factored into the calculations at the end of the financial year at reconciliation)

Max rate = 3 x $4,942.10 = $14,826.30

Energy Supplement (ES) = 3 x $91.25 = $273.75

Rent Assistance (RA) = $4,832.60

Total rate payable = $19,932.65

No income test reduction as combined ATI of $24,000 is below income free area of $55,626.00.

MIT Ceiling calculation (where maintenance income is being paid by only 1 payer)

MIT Ceiling = 2 x (above base standard portion + above base Energy Supplement / ES amount + RA portion) + Maintenance Income Free Area (MIFA) portion

Above base standard portion (FTB Part A maximum rate less the FTB Part A base rate for all the individual's child support children)

= 2 x ($4,942.10 - $1,587.75)

= 2 x $3,354.35

= $6,708.70

Above base ES amount (the sum of the maximum rate ES less the base rate ES for all the individual's child support children)

= 2 x ($91.25 - $36.50)

= 2 x $54.75

= $109.50

RA Portion (the difference between the maximum RA for all the children and the maximum RA for the non-child support children)

= $4,832.60 - $4,263.20

= $569.40

MIFA Portion (the individual's MIFA, calculated depending on their status)

= $1,686.30 + $562.10

= $2,248.40

Therefore, MIT Ceiling calculation

= 2 x ($6,708.70 + $109.50 + $569.40) + $2,204.60

= $14,775.20 + $2,248.40

= $17,023.60

Maintenance income used in the MIT is the lower of the MIT Ceiling ($17,023.60) and actual maintenance income ($20,000).

MIT reduction

= (lower of MIT Ceiling and maintenance income - MIFA ) x 0.5

= ($17,023.60 - $2,248.40) x 0.5

= $14,775.20 x 0.5

= $7,387.60

Income and Maintenance Income Tested FTB Part A rate

= Maximum rate FTB Part A, less income test reduction, less maintenance income test reduction

= $19,235.50 - $0 - $7,387.60

= $19,235.50 - $7,387.60

= $11,847.90

2

Customer has 1 active child support case, income above HIFA

This example shows the comparison between the rates of FTB Part A under Method 1 and Method 2. The method that results in the higher Part A rate is used.

Customer has 4 children, 2 are under 13 years and 2 are aged 13-15 years. The 2 children aged under 13 are child support children and the total amount of child support collected for them is $3,000 per year.

The family's ATI is $100,000.

Above HIFA Method 1 Calculation: ATI > HIFA

(Calculation does not include the FTB Part A supplement as the income test from 1 July 2016 to receive the supplement is below the HIFA)

Maximum rate (includes FTB Part A, RA and MBA if applicable)

= $9,884.20 (2 x $4,942.10 for children under 13)

= $12,855.30 (2 x $6,427.65 for children 13-15)

= Total $22,739.50

MIT Ceiling calculation (where maintenance income is being paid by only 1 payer and adjusted taxable income is above the HIFA)

MIT Ceiling = (2 x maximum rate portion) + MIFA portion

Maximum rate portion =

Sum of the standard Part A, MBA, ES amount, RA amount and MIFA portion

= 2 x ($4,942.10 + $91.25)

= $10,066.70

MIFA portion (the individual's MIFA, calculated depending on their status)

= $1,686.30 + $562.10

= $2,248.40

Therefore, MIT Ceiling calculation

= (2 x $10,066.70) + $2,248.40

= $20,133.40 + $2,248.40

= $22,381.80

Maintenance income used in the MIT is the lower of the MIT Ceiling ($22,381.80) and actual child support amount ($3,000), so $3,000 is the amount used in the MIT calculation.

MIT reduction

= (lower of MIT Ceiling and maintenance income - MIFA ) x 0.5

= ($3,000 - $2,248.40) x 0.5

= $751.60 x 0.5

= $375.80

Income reduction

= (HIFA – LIFA) x 0.2

= ($98,988 - $55,626.00) x 0.2

= $43,362.00 x 0.2

= $8,672.40 then plus

= (ATI - HIFA) x 0.3

= ($100,000 - $98,988) x 0.3

= $1,012 x 0.3 44,

= $303.60

= ($8,672.40 + $303.60)

= $8,976.00

Income and maintenance income tested FTB A rate

= Maximum rate - (ATI test reduction + MIT reduction)

= $22,739.50 - ($8,976.00 + $375.80)

= $13,387.70 per annum

= $513.50 per fortnight

Method 2 calculation ATI > HIFA

Maximum rate

= Base rate FTB A (excluding supplement) x 4

= $1,587.75 x 4

= $6,351.00

Income reduction

= ($100,000 - HIFA) x 0.3

= ($100,000 - $98,988) x 0.3

= $1,012 x 0.3

= $303.60

Income tested rate

= Base rate - income reduction

= $6,351.00 - $303.60

= $6,047.40 per annum

= $231.96 per fortnight

Comparison with above HIFA Method 1

Above HIFA Method 1 rate ($513.50) is higher and that is the rate paid.

Item

Example

1

Maintenance reconciliation - agreement for full year, child support underpaid

A partnered customer has a current agreement and is Child Support collect for the full financial year. The customer has 4 children, 1 aged between 13-15, 3 under 13, but only 3 children from a previous relationship in the 1 child support case.

Notional Assessment: $5,000

Amount payable under the agreement: $4,000

Amount collected: $1,250

Underpayment

= Amount payable under the agreement - Amount collected

= $4,000 - $1,250

= $2,750

Notional Assessed Amount

= (Amount collected / amount payable under the agreement) x Notional Assessment

= ($1,250 / $4,000) x $5,000

= $0.31 x $5,000

= $1,562.50

As child support was underpaid for the financial year, the Notional Assessed Amount is the received amount of maintenance income used for Maintenance Income Credit calculations.

Notional Factor

= (Notional Assessment - Notional Assessed Amount) / underpayment

= ($5,000 - $1,562.50) / $2,750

= $3,437.50 / $2,750

= 1.25

The first amount in the above formula ($5,000 - $1,562.50) represents the 'notional underpayment' and the second amount ($2,750) represents the 'real underpayment'.

Maintenance Income Credit (MIC)

As the Case Maintenance Entitlement ($5,000) is higher than the Notional Assessed Amount ($1,562.50), accrual can occur.

Maintenance Income Free Area (MIFA) = $2,645.25

Global Maintenance Entitlement (GME) = $5,000

Maintenance income received = $1,562.50

Current MIC balance = $200

Accrual amount = MIFA - maintenance income received

= $2,645.25 - $1,562.50

= $1,082.75

A daily accrual rate is calculated as accrual applies only for the Child Support collect period (in this case the whole financial year).

MIC balance = current MIC balance + accrual

= $200 + $1,082.75

= $1,282.75

Maintenance Income Test (MIT) Ceiling

Calculate FTB Part A component amounts for group.

• Above base rate portion = (Standard Rate Portion - Base Rate Portion) x number of Child Support Children of that age group

= ($4,942.10 - $1,587.75) x 2 + ($6,427.65 - $1,587.75) x 1

= ($3,354.35 x 2) + ($4,839.90) x 1

= $6,708.70 + $4,839.90 = $11,548.60

• Rent Assistance (RA) portion = nil
• MIFA = MIFA for 1 Child Support Child + (MIFA for additional Child Support Child x number of additional Child Support Children)

= $1,686.30 + ($562.10 x 2)

= $1,686.30 + $1,124.20

= $2,810.50

MIT ceiling = (Above base rate portion + RA Portion) x 2 + MIFA Portion

= ($11,548.60 + $0) x 2) + $2,810.50

= ($11,548.60 x 2) + $2,810.50

= $23,097.20 + $2,810.50

= $25,907.70

As received maintenance income of $1,562.50 is less than the MIT ceiling, $1,562.50 is the received maintenance amount used for the Maintenance Income Test.

Maintenance Income Test

As the received maintenance income amount of $1,562.50 is lower than the customer's MIFA ($2,810.50), affecting maintenance income is nil.

2

Maintenance reconciliation - agreement for full year, child support arrears

A partnered customer has a current agreement and is Child Support collect for the full financial year. The customer has 3 children under 13, but only 2 children in the child support case.

Notional Assessment: $9,600

Amount payable under the agreement: $4,000

Amount collected: $8,644

Arrears

= Amount collected - amount payable under the agreement

= $8,644 - $4,000

= $4,644

Arrears are used to offset the oldest child support underpayment first, then the next oldest and so on. However, as there is no underpayment recorded, the arrears are treated as normal arrears.

Total Maintenance Amount

= Notional Assessment + total of notional arrears + normal arrears

= $9,600 + $0 + $4,644

= $14,244

As the customer received arrears for the income year, the Total Maintenance Amount of $14,244 is the received amount of maintenance income used for the Maintenance Income Credit.

Maintenance Income Credit (MIC)

As the total maintenance received ($14,244) is higher than the Case Maintenance Entitlement ($9,600), the possible depletion amount is $4,644.

However, the current MIC balance is $791, so this is the depletion amount and the new MIC balance will be nil.

Received maintenance income amount for the Maintenance Income Test (MIT) Ceiling

= $14,244 - $791

= $13,453

MIT Ceiling

Calculate FTB Part A component amounts for group.

• Above base rate portion = (Standard Rate Portion - Base Rate Portion) x number of Child Support Children of that age group

= ($4,942.10 - $1,587.75) x 2

= $3,354.35 x 2

= $6,708.70

• Maintenance Income Free Area (MIFA) = MIFA for 1 Child Support Child + (MIFA for additional Child Support Child x number of additional Child Support Children)

= $1,686.30 + ($562.10 x 1)

= $1,686.30 + $562.10

= $2,248.40

MIT ceiling = (Above Base Rate Portion + RA Portion) x 2 + MIFA Portion

= ($6,708.70+ $0) x 2 + $2,248.40

= $6,708.70 x 2 + $2,248.40

= $13,417.40 + $2,248.40

= $15,665.80

As the MIT ceiling ($15,665.80) is more than received maintenance income ($13,453), the received maintenance amount is used for the Maintenance Income Test.

Maintenance Income Test

Customer's MIFA = MIFA for 1 Child Support Child + (MIFA for additional Child Support Children x number of additional Child Support Children across groups)

= $1,686.30 + ($562.10 x 1)

= $1,686.30 + $562.10

= $2,248.40

Maintenance income excess = MIT received amount - customer's MIFA

= $13,453 - $2,248.40

= $11,204.60

Maintenance income reduction = Maintenance income excess / 2

= $11,204.60 / 2

= $5,602.30

Affecting maintenance income = $5,602.30

3

Maintenance reconciliation - agreement not in place for full year

Customer is partnered with 6 children including 2 child support children, aged 15 and 14.

• For the first 184 days of the financial year (1 July - 31 December 2010), there is an administrative assessment in place, Child Support collect.
• Entitlement for period $1,250
• Amount collected for period $1,300
• For the second 181 days of the financial year (1 January - 30 June 2010), there is an agreement in place, Child Support collect.
• Notional Assessment for period $2,460
• Amount payable under the agreement for period $2,000
• Amount collected for period $2,100

As the child support agreement was not current for the entire year, daily rates are calculated for the amount that should have been collected under the agreement and the amount that should have been collected under the Notional Assessment.

Amount actually collected during the agreement period = $2,100.

Amount due under the Notional Assessment

= (Notional Assessment / 365) x number of days in the agreement period

= ($2,460 / 365) x 181

= $6.74 x 181

= $1,219.89

Amount due under the agreement

= (amount payable under the agreement / 365 days) x number of days in the agreement period

= ($2,000 / 365) x 181

= $5.48 x 181

= $991.79

Arrears amount

= Amount received under the agreement - amount due under the agreement

= $2,100 - $991.79

= $1,108.21

Arrears are taken to pay off the oldest underpayment first, then the next oldest, and so on. However, as the customer does not have an underpayment recorded, the arrears are treated as normal arrears.

Total Maintenance Amount

= Notional Assessment + total of notional arrears + normal arrears

= $1,219.89 + $0 + $1,108.21

= $2,328.10

Maintenance Income Credit (MIC)

Received amount

= amount collected during non-agreement period + Total Maintenance Amount during agreement period

= $1,300 + $2,328.10

= $3,628.10

Entitlement amount

Amount entitled for non-agreement period + Notional Assessment

= ($1,250 / 365 x 184) + $1,219.89

= $1,850.02

As the Received amount is higher than the Entitlement amount, depletion occurs.

Depletion amount

= Received amount for Child Support collect period - Entitlement amount for Child Support collect period

= $3,628.10 - $1,850.02

= $1,778.07

The current MIC balance is $2,000.

The new MIC balance

= $2,000 - $1,778.07

= $221.93

Received maintenance income amount for the Maintenance Income Test (MIT) Ceiling

= $3,628.10 - $1,778.07

= $1,850.03

MIT Ceiling

Calculate FTB Part A component amounts for group.

• Above base rate = (Standard Rate Portion - Base Rate Portion) x number of Child Support Children of that age group

= ($6,427.65- $1,587.75) x 2

= $4,839.90 x 2

= $9,679.80

• Maintenance Income Free Area (MIFA) = MIFA for 1 Child Support Child + (MIFA for additional Child Support Child x number of additional Child Support Children)

= $1,686.30 + ($562.10 x 1)

= $1,686.30 + $562.10

= $2,248.40

MIT ceiling = (Above Standard Rate Portion + RA Portion) x 2 + MIFA Portion

= ($9,679.80 + $0) x 2 + $2,248.40

= $9,679.80 x 2 + $2,248.40

= $19,359.60 + $2,248.40

= $21,608.00

As the received maintenance income ($1,850.03) is less than the MIT ceiling ($21,608.00), the received maintenance amount is used for the Maintenance Income Test.

Maintenance Income Test

As the received maintenance income amount ($1,850.03) is lower than the customer's MIFA ($2,248.40), affecting maintenance income is nil.

4

Maintenance reconciliation - 2 child support cases

A customer is partnered with 2 children - both from previous relationships and are in shared care 65%.

• Group 1: One 14 year old child. Child Support Assessment current and Child Support collect for full year
• Entitlement amount: $1,000
• Amount collected: $500
• Group 2: One 10 year old child. Child Support Assessment current and Child Support collect for full year
• Entitlement amount: $100
• Amount collected: $400

Maintenance Income Credit (MIC)

As the Case Maintenance Entitlement for both groups is higher than the amount collected, accrual occurs.

Maintenance Income Free Area (MIFA) = MIFA for 1 Child Support Child + (MIFA for additional Child Support Children x number of additional Child Support Children across groups)

= $1,653.45+ $551.15

= $2,204.60

Global Maintenance Entitlement (GME) = $1,100 for both groups. This is the amount that they were entitled to receive. In this case, the entitlement amount for Group 1 ($1,000) plus the entitlement amount for Group 2 ($100).

Maintenance income received = $900 for both groups

A MIC depletion occurs as the amount collected ($400) was more than the entitlement amount ($100).

$400 - $100 = $300 arrears

MIC balance = $200

$300 arrears - $200 MIC balance = $100 assessed for the reconciliation calculation

Accrual = amount collected Group 1 + amount collected Group 2 – amount remaining after MIC depletion

Accrual = $500 + $400 - $100

Accrual = $800

As the accrual amount is lower than the GME, a MIC accrual occurs A daily accrual rate is calculated as accrual applies only for Child Support collect period (full year in this case).

Daily accrual = ((GME – Accrual) / 365)

= (($1,100 - $800) / 365) = $0.82

MIC accrual = $0.82 x 365 = $299.30

Group 1 Calculations

Maintenance Income Test (MIT) Ceiling

Nominal Maintenance Income Free Area (MIFA) = (MIFA for 1 child - MIFA amount for additional child) / number of groups:

= ($1,686.30- $562.10) / 2

= $1,124.20 / 2

= $562.10

Calculate FTB Part A component amounts for group.

• Above base rate portion = (Standard Rate Portion - Base Rate Portion) x number of Child Support Children of that age group

= ($5,504.20-$2,266.65) x 0 (children in age group 0-12) plus $6,938.65 - $2,266.65) x 1 (children in age groups 13-15)

= ($0) + ($4,672 x1)

= $4,672

• Group MIFA portion = Nominal MIFA + (MIFA for additional Child Support Child x number of Child Support Children in group)

= $562.10+ ($562.10 x 0)

= $562.10 + $0

= $562.10

MIT ceiling = (Above Base Rate Portion + RA Portion) x (number of groups) + MIFA Portion

= ($4,672 + $0) x 2 + $562.10

= ($4,672 x 2 )+ $562.10

= $9,344 + $562.10

= $9,906.10

As received maintenance income of $500 is less than the MIT ceiling, $500 is the received maintenance amount used for the Maintenance Income Test.

Group 2 Calculations

Maintenance Income Test (MIT) Ceiling

Calculate FTB Part A component amounts for group.

• Above base rate portion = (Standard Rate Portion - Base Rate Portion) x number of Child Support Children of that age group

= ($5,504.20 - $2,266.65) x 1 (children in age group 0-12) plus ($6,938.65 - $2,266.65) x 0 (children in age group 13-15)

= $3,237.55 + 0

= $3,237.55

• Group MIFA portion = Nominal MIFA + (MIFA for additional Child Support Child x number of Child Support Children in group)

= $562.10 + ($562.10 x 0)

= $562.10 + $0

= $562.10

MIT ceiling = (Above Base Rate Portion + RA Portion) x (number of groups) + MIFA Portion

= ($3,237.55 + $0) x 2 + $562.10

= $3,237.55 x 2 + $562.10

= $6,475.10 + $562.10

= $7,037.20

As received maintenance income of $200 ($400 - $200 depletion of previous MIC balance) is less than the MIT ceiling, $200 is the received maintenance amount used for the Maintenance Income Test.

Maintenance Income Test

Total maintenance income received for both groups = $500 + $200 = $700

Customer's MIFA = $2,087.80

As the MIFA is more than the amount received, affecting maintenance income is nil.

Item

Example

1

Lump sum agreement, Administrative Assessment (partial offset), Entitlement Method, Child Support collects more than total Administrative Assessment

Agreement (or court order) is for lump sum payment to offset the Administrative Assessment by 50%.

Remaining lump sum payment at the start of the financial year is $20,000.

Administrative assessment annual rate for financial year is $5,000.

Amount payable under administrative assessment for financial year

$5,000 / 365 = $13.69

$13.69 x 365= $4,996.85

Amount offset against administrative assessment

$4,996.85 x 50% = $2,498.42

Child Support advises this amount to Centrelink.

Amount of child support Child Support is required to collect

Amount payable - amount credited

= $4,996.85 - $2,498.42

= $2,498.43

Total child support assessed under Entitlement Method

Administrative Assessment = $4,996.85

FTB reconciliation

Amount of child support used at reconciliation = Lump sum offset amount + amount Child Support collected

If Child Support collects $100 in the financial year, the total child support used at reconciliation =

$2,498.43 (lump sum offset) + $100 (amount Child Support collected) = $2,598.43

2

Lump sum agreement, Notional Assessment (partial offset), Child Support collect, Entitlement Method, Child Support collects less than total notional factor

Agreement is for periodic payments, plus lump sum payment that is to be offset against 50% of the amount payable under the private child support agreement.

Remaining lump sum payment at the start of the financial year is $50,000.

Agreement annual rate for whole financial year is $10,000.

Notional Assessment annual rate for whole financial year is $5,000.

After crediting of lump sum, remaining amount payable is Child Support collect.

The Child Support collect amount received is $1,000. This is an underpayment for the financial year.

Notional Assessment

$5,000 / 365 = $13.69

$13.69 x 365 = $4,996.85

This is the Notional Assessment for the financial year. As payment is being assessed under the Entitlement Method, this is the amount the customer will be assessed on during the financial year.

The following steps are needed for reconciliation for a customer being paid under the Entitlement Method.

Agreement entitlement

$10,000 / 365 = $27.39

$27.39 x 365 = $9,997.35

This is the amount payable under the agreement for the financial year.

Lump sum amount offset against private child support agreement

$9,997.35 x 50% = $4,998.67

Amount Child Support should collect under agreement

= Amount payable under the agreement - lump sum offset/credited

= $9,997.35 - $4,998.67

= $4,998.68

Amount received under agreement

= Amount offset/credited + amount Child Support collected

= $4,998.68 + $1,000

= $5,998.68

This is the amount received under agreement for financial year

Notional amount paid

= (Agreement received / Agreement entitlement) x notional assessment

= ($5,998.68 / $9,997.35) x $4,996.85

= $2,998.24

This is the notional amount paid for financial year, and is the amount used at reconciliation.

Notional factor

As there is an underpayment for the financial year, the notional factor relating to that underpaid amount has to be calculated. This is used to calculate the value of arrears received in the future.

Underpaid amount

= Agreement entitlement - Agreement received

= $9,997.35 - $5,998.68

= $3,998.67

Notional factor

= (notional assessed amount - notional amount paid) / underpaid amount

= ($4,996.85- $2,998.24) / $3,998.67

= 0.49

3

Lump sum agreement, Notional Assessment (partial offset), Child Support collect, Modified Disbursement Method

Agreement is for periodic payments, plus lump sum payment that is to be offset against 50% of the amount payable under the private child support agreement.

Remaining lump sum payment at the start of the financial year is $46,800 (this amount will not be transmitted to Centrelink).

Agreement annual rate for whole financial year is $10,000.

Notional Assessment annual rate for whole financial year is $5,000.

After crediting of lump sum, remaining amount payable is Child Support collect.

The Child Support collect amount received is $7,000. This includes payment of arrears for the previous financial year. In the first 6 months of the financial year Child Support collects $4,000.

Notional assessment

$5,000 pa / 365 = $13.69

$13.69 x 365 = $4,996.85

Agreement entitlement

$10,000 pa / 365 = $27.39

$27.39 x 365 = $9,997.35

This is the amount payable under the agreement for the financial year.

Lump sum amount offset against private child support agreement

$9,997.35 x 50% = $4,998.67

Recalculating the rate under the Modified Disbursement Method

The next 5 steps will be constantly recalculated throughout the financial year. To demonstrate this, the next 4 steps have been divided into assessment during the year and assessment after the end of the financial year.

Rate calculation at January

Amount Child Support should collect under agreement to January

Amount payable under the agreement - lump sum offset/credited

= $9,997.35 - $4,998.67

= $4,998.68 / 12 months x 6 months

= $2,499.34

Agreement received to January

The value of the lump sum apportioned for the financial year will remain unchanged. The amount of child support received will need to be annualised under the Modified Disbursement Method.

Child Support collects $4,000 in the first 6 months of the financial year.

This is above the $2,499.34 that Child Support was required to collect.

The extra $1,500.66 is arrears and needs to have the notional factor applied.

Annual amount received under agreement

= Annual amount offset/credited + annualised amount Child Support collected (excluding arrears)

= $4,998.67 (lump sum) + ($2,499.34 / 6 months x 12 months)

= $4,998.67 + $4,998.67

= $9,997.34 (amount received under agreement for financial year, before arrears).

Notional assessed amount paid to January

(Annualised amount received under agreement / annualised amount payable under agreement) x annualised Notional Assessed Amount

= ($9,997.34 / $9,997.34) x $4,996.85

= $4,996.85

This is the annualised notional amount paid to January.

The notional amount paid $4,996.85 is used unless arrears have been paid.

Arrears received (excess payment) to January

Annualised arrears amount received

= Child support already collected in the financial year + lump sum offset

= ($4,000 / 6 months) x 12 months + $4,998.67

= $12,998.66

Annualised arrears amount

= Annualised amount received - annualised amount payable

= $12,998.66 - $9,997.34

= $3,001.32

Notional arrears received to January

= Annualised arrears x notional factor

= $3,001.32 x 0.5

= $1,500.66

Total child support amount to January

= Annualised notional arrears + annualised notional amount paid to January

= $1,500.66 + $ 4,996.85

= $6,497.51

Rate calculation at end of financial year

Amount Child Support should collect for financial year

= Amount payable under the agreement - lump sum offset/credited

= $9,997.34 - $4,996.85

= $5,009.49

Agreement received for financial year

The value of the lump sum apportioned for the financial year remains unchanged.

Child Support collected $7,000 for the financial year.

This is $2,001.33 ($7,000 - $4,998.67) above what Child Support was required to collect.

The extra $2,001.33 is arrears and needs to have a notional factor applied to it.

Annual amount received under agreement

= annual amount offset/credited + amount Child Support collected (excluding arrears)

= $4,998.67 + $4,998.67

= $9,997.34

This is the amount received under the agreement for the financial year, excluding arrears.

Notional assessed amount

= (Amount received under agreement excluding arrears / amount payable under agreement) x notional assessed amount

= ($9,997.34 / $9,997.34) x $4,998.67

= $4,998.67

The notional assessed amount paid $4,998.67 is used unless arrears have been paid.

As arrears have been paid the following 3 steps must occur:

• Arrears received (excess payment)

= Annualised amount received - amount payable

= $7,000 (amount Child Support collected) + $4,998.67 (lump sum offset) - $9,997.34

= $11,998.67 - $9,997.34

= $2,001.33

• Notional arrears received

= Arrears x notional factor

= $2,001.33 x 0.05

= $1,000.66

• Total child support amount

= Notional arrears + notional amount paid

= $1,000.66 + $4,998.67

= $5,999.33

As there is no underpayment there is no notional factor calculation required.

Item

Example

1

Notional Assessment, Child Support collect arrears, arrears less than stored underpayment

Notional and agreement value unchanged for the full income year.

Notional Assessment: $6,000

Agreement value: $4,000

Amount collected: $5,000

Stored underpayment: $2,000

Notional factor: 1.25

Arrears amount

= Amount collected - amount payable under the agreement

= $5,000 - $4,000

= $1,000

Any arrears taken will offset the oldest underpayment first.

Balance of underpayment

= Arrears amount - stored underpayment

= $2,000 - $1,000

= $1,000

Notional arrears for the underpayment

= Notional factor x amount of underpayment

= 1.25 x $1,000

= $1,250

Total maintenance

= Notional assessment + total of notional arrears + normal arrears

= $6,000 + $1,250 + $0

= $7,250

As the total received amount of $7,250 is higher than the notional assessment, Maintenance Income Credit (MIC) depletion calculations occur. The excess is considered arrears of maintenance income.

= maintenance received - notional assessment

= $7,250 - $6,000 = $1,250

Current MIC balance = $791.30

The maintenance income for the income year will be depleted by the MIC balance. The new MIC balance will be zero.

Received amount of maintenance income for Maintenance Income Test credit

= arrears of maintenance income - current MIC balance

= $1,250 - $791.30

= $458.70

2

Notional Assessment, Child Support collect arrears, arrears more than stored underpayment

Notional and agreement value both changed on 1 January.

Notional assessment from 1 July 2009 - 31 December 2009: $3,575 (184 days)

Notional assessment from 1 January 2010 - 30 June 2010: $4,960 (181 days)

Agreement value from 1 July 2009 - 31 December 2009: $4,000 (184 days)

Agreement value from 1 January 2010 - 30 June 2010: $2,999 (181 days)

Amount collected: $10,485

Stored underpayment: $1,500

Notional factor: 0.81

Formula for determining the Notional Assessment

= ($3,575 / 365 x 184) + ($4,960 / 365 x 181)

= $1,802.19 + $2,459.61

= $4,261.80

Formula for determining the Agreement value

= ($4,000 / 365 x 184) + ($2,999 / 365 x 181)

= $2,016.43 +$1,487.17

= $3,503.60

Arrears amount

= Amount collected - amount payable under the agreement

= $10,485 - $3,503.60

= $6,981.40

Any arrears taken will offset the oldest underpayment first and therefore will repay the stored underpayment of $1,500.

Normal arrears

= Arrears amount - arrears amount offset against underpayment

= $6,981.40 - $1,500

= $5481.40

Notional arrears amount for the underpayment

= Notional factor x amount of underpayment

= 0.81 x $1,500

= $1,215

Total maintenance

= Notional assessment + total of notional arrears + normal arrears

= $4,261.80 + $5,481.40

= $10,958.20

As the total received amount of $10,958.20 is higher than the notional assessment, Maintenance Income Credit (MIC) depletion calculations occur. The excess is considered arrears of maintenance income.

= maintenance received - notional assessment

= $10,958.20 - $4,261.80 = $6,696.40

Current MIC balance = $2,744.30

The maintenance income for the income year will be depleted by the MIC balance. The new MIC balance will be zero.

Received amount of maintenance income for Maintenance Income Test credit

= arrears of maintenance income - current MIC balance

= $6,696.40 - $2,744.30

= $3,952.10