Child Support collection customer wants to change assessment method: effect on Family Tax Benefit (FTB) 277-51130090

The default method for estimating maintenance income for a Child Support collect case is the Modified Entitlement Method. The modified entitlement method compares the amounts worked out using the entitlement method and the disbursement method and uses the method that results in the higher amount of maintenance income. This reduces the risk of being overpaid FTB Part A due to changes in maintenance income during the financial year.

Child Support collect customers can ask Centrelink to use the Disbursement Method, which is based on the disbursements (child support payments) the customer receives from Child Support. Customers not receiving their full child support entitlement may want this method to be used so that their ongoing FTB Part A rate is not based on their child support entitlement amount. However, if child support arrears are received during the financial year, it is likely that the customer will have been overpaid FTB Part A unless they have taken up a More Choice for Families option.

Customers do not have to specifically ask for the Disbursement Method before it is discussed, it can be discussed as an option at any time. This method should also be discussed with Private collect customers who advise they are unable to collect their full child support entitlement. These customers should be advised they can consider changing to Child Support collect, and if they do change to Child Support collect, the Disbursement Method is then available to them.

The pros and cons of changing assessment methods should be discussed with customers that are not collecting their full child support entitlement.

When discussing the most appropriate assessment method (Entitlement or Disbursement) with a customer, based on their circumstances, particular consideration should be given to the following reasons for requesting a change. FTB customers who:

• May need more FTB during the year to assist with managing their budget due to child support regularly being underpaid (or not paid at all), may benefit from being assessed under the Disbursement Method. Customers should be made aware of the risk of overpayment associated with the Disbursement Method if they receive arrears of child support later in the financial year
• Tend to receive arrears of child support later in the financial year may benefit from the Entitlement Method, to try to minimise the risk of an overpayment
• Receive irregular payments of child support but who find it more difficult to manage/budget with fluctuating rates of FTB may be better off on the Entitlement Method
• Receive regular child support payments which are less than their assessed amount, but then receive arrears later in the financial year may be better off remaining on the Entitlement Method to minimise the risk of overpayment

The Resources page contains examples using the Disbursement and Entitlement methods.

After the end of the financial year, during the reconciliation process, regardless of which method was used during the year, maintenance income for Child Support collect period is recalculated using the actual disbursements received. FTB reconciliation may result in an adjustment to the customer's FTB Part A rate if the actual maintenance income received is different to the maintenance income estimated during the financial year.

When a customer asks to change the assessment method being used, their FTB Part A rate may change from the start of their next fortnightly payment, depending on the new annual maintenance income calculation.

The assessment method can be changed at any time for Child Support collect customers.

The Resources page contains examples showing how child support is estimated during the financial year (using Disbursement and Entitlement method calculations) for Child Support collect customers.