Calculating and recording the Maintenance Income Credit (MIC) for Family Tax Benefit (FTB) lump sum claims 277-51190020

For 2008-09 to 2010-11 financial years, customers can indicate on their FTB claim that they would like child support details to be obtained directly from Child Support rather than providing these details themselves. Where a customer does provide the details themselves the MIC is manually calculated for FTB lump sum claims.

From the 2011-12 financial year onwards, customers will no longer have the option to self-assess their child support. All details relating to child support will be transferred electronically via the Child Support Data Exchange process and the MIC will be automatically assessed.

The MIC is designed to ensure that FTB customers who receive child support payments on an irregular basis over more than one financial year receive the same level of FTB over time as those receiving child support payments on a more regular basis.

The MIC was not available to customers who claimed FTB as a lump sum through the Australian Taxation Office (ATO) before 1 July 2009.

The MIC first became available to customers during the FTB reconciliation or lump sum claim payment for the 2006-07 financial year, from July 2007.

When a customer receives arrears of child support, the MIC balance will be used to reduce the amount of arrears calculated under the maintenance income test during FTB reconciliation or lump sum claim assessment.

The MIC only applies to child support entitlements registered for collection by Child Support. The MIC is not available to private collect customers, who must collect their full child support entitlement to continuously meet the reasonable maintenance action test. Private collect customers unable to privately collect their full child support entitlement are required to swap to Child Support collection or apply for an exemption.

From March 2009, periods of private collection are taken into account for MIC accrual and accrual apportioning. This affects customers who change from Child Support collect to private collect (or vice versa) during the financial year. Customers can still only accrue for periods of Child Support collection, however this change ensures that the amount received and the amount entitled to receive are more accurately calculated. This change does not affect the overview or depletion calculations which continue to use the annualised amounts received and entitled to receive during Child Support collect periods.

From 1 July 2012 MIC calculations will extend to include children aged 16-19 years who are in full time secondary schooling to align with the Maintenance Income Test (MIT).

Accruals to a MIC balance represent the unused amount of MIFA. MIC will only accrue in relation to a child support child and can only accrue for periods the child support case was registered for collection by Child Support.

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

Where there is more than one MIC balance on the customer's record, the MIC accrual amount is apportioned between each MIC balance. An accrual to a MIC balance cannot exceed the underpaid amount for that child support case for the financial year.

Depletion from a MIC balance will occur if the financial year has ended and the amount of child support received in the financial year is more than the amount due.

The MIC depletion amount is the lower of:

• the arrears amount (the difference between the amount received and the child support entitlement)
• the MIC balance.
• The affecting maintenance income used in the reconciliation calculation is reduced by this amount.

Unlike MIC accrual, MIC depletion can occur during periods the customer is not eligible for FTB.

Parents who separated during the financial year each retain their MIC balance from the previous financial year for their child support case. The customer's MIC balance cannot be used to offset child support received by their ex-partner during the period they were a couple. The ex-partner's MIC balance may be depleted due to child support arrears they received in that period.