Maintenance Income Credit (MIC) 277-51190010

Bo became eligible for child support during the 2005-06 financial year. Bo was entitled to $6000 in child support for 2005-06, however only received $500.

The amount Bo received was less than the amount entitled to, and less than the Maintenance Income Free Area (MIFA) of $1182.60.

For 2006-07, Bo is entitled to $2000 in child support, however receives $3000. As the amount Bo received is more than the amount entitled to, the excess of $1000 is treated as arrears.

When FTB reconciliation for 2006-07 occurs:

• A MIC accrual of $682.60 is calculated for 2005-06 ($1182.60 less $500)
• The MIC balance as at 30 June 2006 is $682.60. This is lower than the amount of child support Bo is owed, $5000, therefore accrues the full $682.60
• As Bo received more child support than was due in 2006-07, the MIC balance is used to reduce the affect of the arrears on the FTB payment
• The MIC depletion amount for 2006-07 is $682.60, which is the lower of the MIC balance and the amount of arrears received ($3000 - $2000 = $1000)
• Bo's affecting maintenance income of $1784.55 ($3000 less MIFA of $1215.45) is reduced by the depletion amount, so that the affecting maintenance income = $1101.95 ($1784.55 - $682.60)
• The MIC balance is reduced to nil and this is carried over for the next financial year

Julie has one FTB child for the first 100 days and two FTB children for the remaining 265 days in a financial year.

The MIFA is $1182.60 for the first 100 days and $1576.80 for the remaining 265 days.

Julie is entitled to receive child support of $3000 in 2005-06 but receives nil.

The MIC daily accrual is:

• $1182.60 / 365 = $3.24 per day for the first 100 days ($324)
• $1576.80 / 365 = $4.32 per day for the remaining 265 days ($1144.80)
• This equals a total accrual of $1468.80 for 2005-06. ($324 + $1144.80)
• Rounding: The amount in each step is rounded to the nearest cent (0.5 cents rounded upwards)

The MIC accrual amount is the lower of global maintenance entitlement and the Maintenance Income Free Area (MIFA), less the actual maintenance income received.

• Betty has one child come in to care on 1 January 2006
• The child support entitlement for the child from 1 January is $5000
• In the period 1 January 2006 to 30 June 2006 (181 days), Betty receives $6000 child support
• The other parent of the child has also provided capitalised maintenance in providing the family home, equivalent to $1000 per annum

Betty's global maintenance entitlement is the sum of:

• annualised entitlement amount = $10 082.87 ($5000 x 365 / 181)
• capitalised amount = $1000
• disability percentage = $0
• private collection - $0
• non-cash agreement = $0
• Total = $11 082.87

Rounding: The amount in each step is rounded to the nearest cent (0.5 cents rounded upwards).

In 2006-07, Roberta is entitled to $4000 child support.

The MIC balance as at 30 June 2006 is $1500.

Roberta receives $5000 child support in 2006-07.

The arrears amount is $1000 (as amount received of $5000 is higher than entitlement amount of $4000).

The depletion amount is $1000. Roberta's affecting maintenance income for 2006-07 is reduced by $1000 to $4000.

The new MIC balance of $500 is carried over ($1500 - $1000).

MIC accrual and depletion can only occur in the same financial year if there is more than one child support entitlement.

Sue and partner Robert both have a child support case in 2006-07.

The MIFA for the family is $2759.40.

Sue was entitled to receive child support of $1000 but received $1500, therefore $500 is classed as arrears. The MIC balance at the end of 2005-06 was $1000.

The $500 arrears amount is depleted from the MIC balance. Nil arrears are counted in the 2006-07 reconciliation. Sue has a MIC balance of $500 at the end of 2006-07 ($1000 MIC - $500 arrears).

Sue's partner Robert was entitled to receive child support of $2000 from a child support case but received nil.

The MIC accrual for Robert's child support case:

• MIFA of $2759.40 is less than global maintenance entitlement of $3000 ($1000 for Sue + $2000 for Robert, the $500 arrears that Sue received is disregarded as it was depleted from the MIC balance)
• Subtract the child support received from the MIFA: $2759.40 - $1000 = $1759.40. (Again, the $500 arrears received by Sue is disregarded as it was depleted from the MIC balance)
• Sue does not have an underpaid child support entitlement for 2006-07 (as was paid arrears of $500), so the accrual amount is attributed in full to Robert's MIC. The amount does not exceed Robert's underpaid entitlement of $2000 for the year, so accrues $1759.40

Shannon has a MIC balance of $2000 at the end of the 2004-05 financial year.

FTB reconciliation conditions have not been met for the 2005-06 financial year.

In October 2007, FTB reconciliation conditions for 2006-07 financial year are satisfied.

For 2005-06, it is known that there is a potential MIC accrual of $1500 financial year.

For 2006-07, child support arrears of $2500 have been received.

Reconciliation for 2006-07 proceeds on the basis that the MIC balance before depletion is $2000 (not $3500, as reconciliation conditions for 2005-06 have not been met so accrual cannot occur).

The MIC balance is depleted to $0, and $500 of the arrears continues to be counted in the maintenance income test at reconciliation.

Subsequently in December 2007, the reconciliation conditions for 2005-06 are satisfied. An additional accrual of $1500 can now occur in respect of the 2005-06 financial year.

The reconciliation calculation for 2006-07 would be revisited, substituting a MIC balance before depletion of $3500.

Therefore, the $2500 of child support arrears received in 2006-07 is offset against the new MIC balance of $3500, leaving a balance of $1000 and adjusting Shannon's FTB entitlement for 2006-07 as no part of the child support arrears is counted in the maintenance income test.

Judy (FTB customer) and Roger (partner) both have a registered child support entitlement for a child from a previous relationship.

There is no child from the relationship between Judy and Roger, and Judy receives FTB for all children.

Judy has a MIC balance of $2000 and Roger has a MIC balance of $5000.

The payer in the child support case for Judy pays regular child support payments. The payer in the child support case for Roger pays irregular child support payments.

During the financial year Roger receives a large payment of child support (this could be due to the payer in the case having their tax return garnished for instance). Judy's FTB Part A rate is reduced due to the application of the Modified Entitlement Method to working out the amount of child support to use for the fortnightly FTB rate.

In January of the same financial year, Judy and Roger separate.

Roger claims FTB by instalments for a child in care and Judy is paid FTB for a child in care.

For the period that Judy is a single person, the maintenance income received affects the FTB rate.

At FTB reconciliation:

• Judy's MIC balance cannot be used to offset Roger's child support arrears, therefore Judy may incur a debt due to the arrears
• Roger will have the MIC balance depleted due to the receipt of the arrears

A Child Support collection customer has had an annual child support entitlement of $1000 for the previous financial year.

Child Support then determines a retrospective increase in entitlement for the past year, increasing the child support liability from $1000 to $2000.

As the customer is Child Support collect, Child Support will pursue the child support debt on the customer's behalf.

However, the backdated increase in child support entitlement is not automatically taken into account for MIC purposes. If the customer receives child support arrears, they would not have received the full benefit of their Maintenance Income Free Area (MIFA) that they would have received, had the child support been paid on time.

If the customer contacts to advise they have had their Child Support collect case retrospectively reassessed for a previous financial year, their MIC balance will need to be reviewed to determine if they are eligible for a higher level of accrual.

In this example, the system would have calculated the customer's MIC accrual amount for the previous year as $1000 as that was the customer's global maintenance entitlement and it is lower than their MIFA.

As their child support entitlement for that year is now $2000, their MIC accrual should be $2000.

The customer's MIC balance is updated accordingly on the Override Maintenance Income (MNOI) screen.

If Child Support transfers details of child support arrears received by the customer for this child support case, the system will automatically calculate the MIC depletion amount, adjust the MIC balance, and trigger re-reconciliation to pay any extra FTB entitlement for the previous year due to the new maintenance income calculation.