Assessing capitalised maintenance income for Family Tax Benefit (FTB) 277-51110000

Capitalised maintenance is maintenance income provided by a lump sum payment or transfer of an asset or property settlement, where the amount or value exceeds $1500. To be assessed as maintenance income, it must be provided specifically as spousal maintenance or child support.

Customers may wish to register a child support agreement to include the lump sum payment or asset transfer.

If the customer has a child support agreement with the payer that has a start date of 1 July 2008 or later, the agreement is assessed by Child Support. No manual assessment or coding is required by Centrelink. There is an automated process for these agreements.

If the customer's child support case is registered for collection by Child Support, they should contact Child Support if they receive a lump sum payment or transfer or settlement of property from a payer and it is specified as child support as it may be credited towards the child support liability.

Child Support may treat it as a direct payment (often referred to as a non-agency payment) and will transfer details to Centrelink. If Child Support credits the direct payment:

• against child support arrears, the full amount of the direct payment is assessed for FTB in the year in which it is received
• towards future child support liability (only if the one off payment or value of the asset exceeds $1500), it may be treated as capitalised maintenance income for FTB and assessed over a longer period. In this case, the effect of the direct payment transferred to Centrelink will need to be manually adjusted

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

If a customer has a child support assessment that is collected privately, they do not need to contact Child Support about a lump sum payment. However, they need to contact Centrelink if the payee and payer agree the lump sum amount is not in lieu of the customer's normal child support entitlement but is over and above the normal entitlement. The amount can be recorded as capitalised maintenance income if its value exceeds $1,500.

Like all maintenance income, capitalised maintenance is apportioned over the period it applies, and the amount attributed to a financial year is annualised so that the Maintenance Income Test can be applied.

The capitalisation period starts when the child support was received and lasts until each child turns 18 years (or in the case of spousal maintenance, until the customer turns 65 years) unless a different period is stated in a court order or an agreement.