Modified Entitlement Method 277-51080030

Is Family Tax Benefit (FTB) claim for the current financial year (instalments or past period)?

• Yes, go to Step 2
• No, for an FTB lump sum claim for a previous financial year, go to Step 8

The FAO system estimates the customer's annual maintenance income during the relevant financial year using the Entitlement or Disbursement Methods.

A different assessment method may be used for separate payer groups depending on how the customer has chosen to collect child support from each paying parent.

Mixed collection: Some customers may have different collection methods for children within the same payer group. In this case, the system can use different assessment methods for the children.

If a customer changes collection methods during the year, the system works out maintenance income for each collection period separately.

The Mtce Entitlement Group Detail (MNGD) screen displays the collection method and maintenance assessment method.

Has customer chosen private collection?

• Yes, the Entitlement Method must be used. It is assumed that customers will receive their full child support entitlement unless they advise otherwise. Go to Step 5
• No, go to Step 3

Has the customer asked for the Disbursement Method to be used?

• Yes, annualised maintenance income is worked out based on actual disbursements (child support payments) collected by Child Support. See Disbursement Method. Go to Step 5
• No, go to Step 4

At the start of each financial year, maintenance income is assessed using the Entitlement Method.

When Child Support advises disbursement details or changed child support entitlement for the customer, the system calculates the amount under the Entitlement Method and Disbursement Methods and uses the method that results in the higher annual maintenance income. If the amounts are the same under the two methods, the Entitlement Method is used.

See the Resources page for examples.

• The assessment method may change during the financial year depending on the result of this comparison. The MIT Explanation Details (MNED) screen indicates when the Disbursement Method has been applied due to this process
• MEM override: In cases where the customer may be disadvantaged if the Disbursement Method were to be used, Child Support Unit staff may override the MEM process to use the Entitlement Method instead. If this has occurred, the MEM Override field on the MIT Assessment Method - Group (MNGM) screen will display 'Y'. This override ceases to apply at the end of the financial year or if the amount using the Entitlement Method becomes higher

View details from the MIT Explanation Summary (MNEX) screen. This screen shows the history of annual maintenance income amounts used to work out the customer's FTB Part A instalment rate.

From the MNEX screen, go to the MIT Explanation Details (MNED) screen to view details of the annual maintenance income assessments for the financial year. To find out the assessment method used, view the Calculation Rule.

The MNED screen does not provide a history of amounts used to work out FTB Part A. Each assessment is for the full financial year (year to date amount, plus an amount for the rest of the year) and replaces the previous assessment.

Each entitlement amount is apportioned for the period it applies:

• entitlement x number of days/ 365

Maintenance income is annualised:

• total amount from payer x 365/ number of days in year the customer was entitled to child support from payer

Capitalised maintenance is worked out in a slightly different way.

If maintenance income is received from more than one person, the customer's total annualised maintenance income is the sum of the annual amounts for each payer group.

For more information, see Relevant period for maintenance.

The Rate Explanation (REXFTBA) screen shows the total annual maintenance income and its effect on the customer's ongoing FTB Part A rate. It also allows access to the MNEX screen for previous financial years.

A breakdown of the annualised amount of maintenance income by maintenance entitlement group can be viewed on the FTB Maintenance Assessment Explanation (REXFTBM) screen.

Date of effect for ongoing FTB Part A payments is no earlier than date paid to plus one day (DPT + 1):

• under the Entitlement Method, the later of DPT +1 and the date of effect of the new child support entitlement
• under the Disbursement Method, if maintenance income:
• increases, DPT + 1 at the time of Child Support disbursement load
• decreases, DPT + 1 after the final disbursement load for the month

If the MEM process results in a change:

• from Entitlement Method to Disbursement Method, DPT + 1 at the time of the load
• from Disbursement Method to Entitlement Method due to:
• decreased disbursements, DPT + 1 after the final Child Support load for the month
• increased entitlement, later of DPT + 1 at the time of the disbursement load and the date of effect of the new entitlement

Annualised maintenance income will be worked out based on the actual dates of any child support payment changes advised by the customer and Child Support. Customers may have their FTB Part A entitlement adjusted if the recalculation of maintenance income results in a different FTB Part A rate than what they were paid during the year.

Child Support collection customers may benefit from the Maintenance Income Credit during FTB reconciliation.

At reconciliation, annualised maintenance income from each payer will be recalculated by taking into account:

• all Child Support disbursements
• entitlement/actual amounts for private collection periods
• non-agency payment
• non-cash maintenance
• capitalised maintenance

For customers with a child support agreement, the Notional Assessment is used if there is one in place.

For more information, see Maintenance reconciliation.

Procedure ends here.

Maintenance income details provided by the customer with the claim are used to work out annualised maintenance income, even if FTB reconciliation has occurred for the relevant financial year.

For 2008-09 to 2010-11 financial years, customers had the option to give Centrelink permission to obtain child support payment details directly from Child Support rather than self-assessing. From 2011-12 onwards, all claims will be assessed using information from Child Support. Customers can no longer self-assess their child support.

Child Support collection customers may benefit from the Maintenance Income Credit when their lump sum claim is assessed.

For customers who received instalments in the previous year (mixed delivery customers), special rules apply for determining which child support data is used at reconciliation. See Maintenance reconciliation

Maintenance income from each payer is worked out:

• amounts are apportioned for the period each amount applied - amount x number of days it was received/ 365
• the total is converted to an annual amount if the customer was not entitled to child support from payer for the whole year - total amount x 365/ number of days in year entitled

Annualised maintenance income is the sum of the annualised amounts from each payer.

To view annual maintenance income details,

• for a claim lodged at Centrelink, see Maintenance details for a previous year FTB claim or
• for a tax delivery claim, see ATO FTB claim screens

For the claim result, see FTB lump sum and reconciliation calculation screens.