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

For Families and Child Care Smart Centre Processing staff only

Customer lodges a claim for an annual lump sum payment of Family Tax Benefit (FTB) and has advised child support details on their claim.

Has the customer advised that they or their current partner had a child support entitlement registered for collection by child Support during the financial year?

• Yes, go to Step 2
• No, a Maintenance Income Credit (MIC) calculation is not necessary. Mixed delivery customers: If the customer also claimed FTB as instalments for the same financial year and there are Child Support collection details on their record, this should be investigated. Procedure ends here

The Use Child Support Agency data? Field will automatically default to ‘Y’. Do not attempt to change this, even if the customer has not taken action to obtain child support.

Where the customer has taken action to obtain child support during the financial year, information will be obtained directly from Child Support.

From 1 July 2012 MIC calculations extend to include children aged 16-18 years who are in full time secondary schooling to align with the Maintenance Action Test (MAT) and the Maintenance Income Test (MIT).

Mixed delivery customers: if the customer also claimed FTB by instalments for the same financial year, child support details declared on the lump sum claim will be used to reassess the customer's FTB entitlement for the instalment period, even if the lump sum claim is rejected. If there is a significant difference between details on the record and details advised on the lump sum claim, the Service Officer should follow this up with the customer.

The Resources page contains links to worksheets which are to be used when manually assessing the MIC. These are to be stored with the customer's claim.

If the customer was entitled to child support from more than one payer, or if both the customer and their partner were entitled to child support, a separate MIC balance will need to be calculated for each Child Support collect case.

The FAO system automatically calculated a MIC balance as at 30 June 2006 for all customers who claimed FTB by instalments for any period from 2000-01 where reconciliation conditions were met for that year. For more information about how the MIC balance is automatically calculated for instalment claims, see Maintenance Income Credit (MIC).

In Process Direct:

• Go to the Override Maintenance Income (MNOI) screen
• Select the relevant financial year

In Customer First:

• Go to the Maintenance Entitlement Group Summary (MNGS) screen
• 'S'elect the relevant group from the MNGS screen and code 'Y' in the Go TO: MNOI screen
• Press [Enter] to go to the Override Maintenance Income (MNOI) screen
• To find if the customer has had a MIC balance established for this group, press [F10] to scroll through the financial years. The most recent amount is the customer's MIC balance to be carried forward
• Press [F11], to go back to the claim year to get the Child Support arrears cap

See the Resources page for a link to the MIC calculation overview worksheet.

Is there a MIC balance or Child Support arrears amount available?

• If there is a MIC balance and Child Support arrears amount, the lower amount is the customer's starting MIC balance for the particular group as the MIC balance cannot exceed the amount of child support owed for the child support case. Go to Step 4
• If there is a MIC balance but no Child Support arrears amount, the MIC balance is used. Go to Step 4
• If there is a Child Support arrears amount but no MIC balance, the starting balance for the group is $0. Go to Step 5
• If there is no MIC balance or Child Support arrears amount, the starting MIC balance for the group is $0. Go to Step 5

Did the customer (or their partner) receive more than their child support entitlement in relation to the child support case?

If there is more than one case, work out the depletion amount for each case separately.

• Yes, see the Resources page for a link to the MIC depletion worksheet. The depletion amount is the lower of these two amounts:
• Case Global Maintenance Entitlement (GME) less total annualised maintenance income received for that case (RCD). GME is the total of all annualised maintenance income entitlements per case including registered entitlements, capitalised maintenance, other maintenance income and the excess amount of maintenance income received from a registered entitlement that is not disregarded in the Maintenance Income Test (MIT). Does not include periods of private collection
• MIC balance from the previous year
• No, go to Step 5

MIC accrual applies on a day if the customer is eligible for FTB and they or their partner received less than their full child support entitlement. MIC will only accrue in relation to a child support child.

See the Resources page for a link to the MIC accrual worksheet.

• Calculate the GME
• Identify the lower of the person's GME
• Maintenance Income Free Area (MIFA)
• Subtract the total amount of child support received from the lower amount worked out above. This gives the accrual received (ACCRCD). Note: do not include any MIC depletion amount calculated at Step 4 (for a separate child support case) in the total amount received, as this has already been depleted from the MIC balance
• Divide the result by 365 to obtain a daily amount. This gives the daily accrual before apportioning (ACCDAY)

See the Resources page for an example of this calculation.

Is there more than one child support case?

• Yes, go to Step 6
• No, go to Step 7

See the Resources page for a link to the MIC accrual apportioning worksheet.

• Note the ACCDAY from Step 5
• Work out the daily cap (underpaid amount) for each case: (Annualised entitlement for case less the annualised amount received for case) / 365
• Rank the daily caps worked out above from lowest to highest
• Divide the daily MIC accrual amount from step a) by the number of child support cases to obtain the maximum daily MIC accrual amount for each case
• Start with the case with the lowest daily cap amount and repeat for each case:
• If the daily cap for the case is less than the daily accrual amount from step d), the daily cap amount applies to that case. Any remainder (daily accrual amount less daily cap) may be equally apportioned between the other cases, up to the daily cap for each case
• If the daily cap for the case is more than the daily accrual amount, the daily accrual amount is apportioned to that case
• Multiply each result from step d) by the number of days in the relevant period

Note: each MIC balance cannot exceed the underpaid amount for the child support case in the financial year.

See the Resources page for an example of this calculation.

From 2011-12 onwards, claims will be assessed using information from Child Support. Customers can no longer self assess their child support. If the customer indicated that they have not taken action to obtain child support for the child/ren, and they have not supplied a reason which may indicate that an exemption may be applicable (e.g. other parent overseas, family and domestic violence, parentage unknown etc.), the customer fails the Maintenance Action Test (MAT) for the relevant child/ren for the relevant financial year. See Recording child support details for a previous year Family Tax Benefit (FTB) claim.

From 2008-09 up to and including 2010-11, child support income is coded by selecting the child on the Maint LSC Group Summary (MLGS) screen and coding details on the Mtce LSC Income Details (MLID) screen in Customer First.

Coding on the Maint LSC Maint Action (MLMA) screen must be completed prior to completing the MLID screen.

For 2007-08 and earlier years, in Customer First 'S'elect the recipient on the FMPYS screen and code the total maintenance they received for the year on the Maintenance Recipient Details (FMPYD) screen.

The amount received is:

• total maintenance income received by the person for the group in the financial year

less

• any depletion amount calculated at Step 4 in relation to the person's child support case

For help, see Recording child support details for a previous year Family Tax Benefit (FTB) claim.

For each child support case, the ongoing MIC balance is:

• MIC balance from previous year
• less depletion amount

or

• plus accrual amount

For a particular child support case, accrual and depletion cannot both occur in the same financial year.

If there is more than one child support case, accrual could apply to one case and depletion from another.

Code the carry over MIC balance for each case

If using:

• Customer First, 'S'elect the group from the MNGS screen and go to the Override Maintenance Income (MNOI) screen for the child support case
• Process Direct, go to the MNOI screen within the FTB claim, select the relevant financial year

On the MNOI screen for the claim year, code the new MIC balance in the MIC Total Result For This Year manual override field.

Repeat this step for each child support case by returning to MNGS and selecting the next payer, etc.

Ensure all action taken to obtain child support and maintenance income details are coded correctly before finalising the claim activity.

Record details on a DOC.

Lump sum claim recalculation

It may be necessary to manually recalculate the MIC for the lump sum claim if one of the following occurs:

• the customer advises new child support income details
• FTB reconciliation occurs for a previous financial year (e.g. as a result of tax returns being lodged, or because maintenance income details or other circumstances are updated). This may create or amend the MIC balance to be carried over to the next financial year