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

Fiona has an annual child support entitlement of $2400 for son, Jack.

Fiona has chosen the Disbursement Method to be used as Child Support disbursements have not been received for some time. From 1 July 2014, Fiona's annual maintenance income is applied as nil.

On 1 August 2014, Fiona receives a Child Support disbursement of $100 and the annual maintenance income is recalculated:

• the year to date (YTD) total = $100
• the higher of this month's payments and last month's is $100
• one-twelfth of the annual entitlement amount is $200 ($2400 assessment / 12), so the current month's total is used as it is lower than this figure
• this month's total of $100 multiplied by the remaining number of months in the year = $1000 as there are 10 months after August
• total maintenance income = $1100 ($100 YTD + $1000 estimated for the rest of the financial year)
• this is applied from 3 August 2014 as Fiona has been paid FTB up until 2 August

John asked for the Disbursement Method to be used in June 2014 because child support payments weren't being received at that time.

In August 2014, John starts receiving regular child support payments from Bonita through Child Support of $300 per month, based on John's annual entitlement of $3600.

In October 2014, John receives a Child Support disbursement of $800; this is made up of a regular payment of $300 plus an arrears payment of $500.

• from 1 July 2014, annual maintenance income is estimated as nil as John did not receive a Child Support disbursement in June
• when Child Support advises the disbursement details in August, annual maintenance income is recalculated for John's next fortnightly FTB payment:
• YTD total = $300
• estimate for rest of financial year = $3000 ($300 x 10 months left after August) based on the current month's disbursement
• total = $3300
• when Child Support advises of the $800 October disbursement, annual maintenance income is recalculated for John's next fortnightly FTB payment:
• YTD total = $1400 ($300 x 2 + $800)
• estimate for rest of financial year = $2400 ($300 x 8 months left after October) based on the current month's disbursement
• total = $3800

As John continues to receive $300 per month, the estimated annual maintenance income continues to be $3800 for the rest of the financial year.

At FTB reconciliation, John’s annualised maintenance income is $3800 (11 x $300 + $500). John's FTB Part A entitlement may be adjusted for the period July - August as nil maintenance income was assessed during that period, and for September when $3300 was used.

Monica has a current annual child support entitlement of $2400 as at 1 July 2014.

As Monica has not been able to collect the full amount privately, Monica asks Child Support to collect child support payments on 1 September 2014.

Monica receives no disbursements until December, when $1000 is received; this is made up of a regular payment of $200 and arrears of $800.

From January, Monica receives a monthly entitlement of $200 each month.

Estimated annual maintenance income:

• from 1 July: $2400 (Entitlement Method is used as Monica has chosen private collection). Monica is assumed to have collected the assessed amount during the private collect period
• on 1 September, when Monica elected for Child Support collection, $2400 continues to be assessed using the Entitlement Method as no Child Support disbursements have been received
• when the disbursement for December is advised by Child Support, annual maintenance income is recalculated for Monica's next fortnightly FTB payment:
• using Entitlement Method: $2400
• using Disbursement Method: private collect period 1 July to 31 August an amount of $407.67 ($2400/365 x 62) + YTD disbursements of $1000 + estimate for rest of year of $1200 ($200 x 6 months after December) using current month's disbursement of $200 which is the same as one twelfth of the annual entitlement
• total = $2607.67
• under the Modified Entitlement Method, the Disbursement Method is applied as the calculated amount of $2607.67 is higher than the $2400 calculated under the Entitlement Method

As Monica continues to receive regular Child Support disbursements of $200 each month, the annual maintenance income continues to be calculated as $2607.67 using the Disbursement Method for the rest of the financial year.

As the amount calculated under the Disbursement Method ($2607.67) is higher than the amount calculated under the Entitlement Method ($2400), under the Modified Entitlement Method the Disbursement Method is used in the ongoing assessment of FTB Part A.

At reconciliation, annual maintenance income is calculated as $2607.67, based on child support entitlement for the private collection period plus all Child Support disbursements received. Monica's FTB Part A entitlement may be adjusted for the period July - December as a slightly lower amount was estimated during that period.

From 1 July 2015, annual maintenance income will be $2400 using the Entitlement Method. This will be recalculated when Child Support advises disbursement details.

Mary has two children and as of 1 July 2014 ex-partner Peter is required to pay Mary $3000 child support per year.

Mary has chosen to have the maintenance income worked out using the Entitlement Method.

Peter regularly pays $250 per month via Child Support, however did not pay any money during 2012 or 2013.

In November 2014, on top of the regular $250 payment, Child Support collects and pays to Mary an amount of $5000 as arrears for 2012 and 2013.

When Child Support advises Centrelink of this arrears payment, Mary’s annual maintenance income is worked out using both the Entitlement and Disbursement Methods and it is found that the Disbursement Method results in the higher annual maintenance income, therefore this amount is used to work out the ongoing FTB Part A rate.

Entitlement Method: $3000 annual child support entitlement

Disbursement Method: YTD $5000 + $250 per month (5 months from 1 July to November)

• YTD = $6250 (5 x $250 (July – November)) + $5000 in November
• $250 x 7 months December to 30 July
• $6250 + $1750 = $8000
• $8000 for financial year

As the arrears payment Mary received will affect the FTB Part A entitlement for the full financial year, Mary may incur an FTB reconciliation debt for the period 1 July to November 2014.

As at 1 October 2014, Karen's annual child support entitlement is $4000. Karen is receiving child support payments through Child Support.

Annual maintenance income = $4000 using the Entitlement Method as it is the higher of these two amounts:

• Entitlement Method: $4000 based on annual entitlement from 1 July 2014
• Disbursement Method: $3000 based on disbursements received up to the end of September 2014

Child Support advises on 20 October 2014 that Karen's child support entitlements are going to decrease with a date of effect of 1 September 2014. This results in a new assessment:

• Entitlement Method: $2500
• Disbursement Method: $3000

The new annual maintenance income estimate of $3000 is used from 13 October as Karen has been paid FTB up to 12 October.

As at 1 October, Jane's annual child support entitlement is $4000. Jane is receiving child support payments through Child Support.

Annual maintenance income = $6000 using the Disbursement Method as it is the higher of these two amounts:

• Entitlement Method: $4000 based on annual entitlement
• Disbursement Method: $6000 based on disbursements received up to the end of September 2014

Child Support advises on 20 October that Jane's child support entitlements are going to increase with a date of effect of 1 September. This results in a new assessment:

• Entitlement Method: $7000
• Disbursement Method: $6000

The new annual maintenance income estimate of $7000 is used from 13 October as Jane has been paid FTB up to 12 October when Child Support information is received on 20 October. The date of effect of the new child support entitlement is not later than 13 October.

As at 1 October 2014, Gary's annual child support entitlement is $4000. Gary is receiving child support payments through Child Support.

Annual maintenance income = $6000 using the Disbursement Method as it is the higher of these 2 amounts:

• Entitlement Method: $4000
• Disbursement Method: $6000 based on child support received up to the end of September 2014

Due to nil child support received in October 2014, maintenance income is reassessed after the last Child Support disbursement load for October:

• Entitlement Method: $4000
• Disbursement Method: $2000 based on child support received up to the end of October 2014. This is reduced because the payment for the most recent month is nil and this is used to estimate the amount to be received for the rest of the financial year

The new annual maintenance income estimate of $4000 using the Entitlement Method is used from 29 October, as Gary has been paid FTB up to 28 October at the time of the last Child Support disbursement load for October.