Continuous adjustment of CCB and FTB payments

Continuous adjustment is the process by which your future payments are adjusted down to prevent an overpayment of either Child Care Benefit of Family Tax Benefit over the course of a financial year. Both of these payments are ANNUAL entitlements which are paid in instalments (CCB direct to the child care centre, FTB to customers) throughout the year, and changes to your income estimate may change your annual entitlement, meaning what you’ve already received for the year is higher than it should have been, so your payment will be adjusted for the balance of the year

Example 1 – CCB – optional continuous adjustment

NB: the percentages are random – they do not reflect actual CCB percentages – I’m using rounded numbers for ease of explanation

Customer has estimated 50000 family income from July 1, 2011. On March 1, 2012, customer calls up to advise that their income is actually going to be 70000 for the year and their estimate is updated.

From July 1, 2011 to February 29, 2012, customer has been paid their CCB percentage of 75%, based on income estimate of 50000

From March 1, 2012, the customer has a new ANNUAL legislative CCB entitlement to 50%, based on income estimate of 70000. Based on this update, the period from July 1, 2011 to February 29, 2012 has seen the customer overpaid for every hour their child has been in care.

The FAO computer system recognises this overpayment, and suggests the customer reduce their payment of CCB below their new entitlement (50%) to counter any over payment received for those first 8 months of the year, and reduce/eliminate any potential overpayment by the end of the financial year. A suggested reduction is made which, if the customer continues to use the same amount of child care from March 1, 2012 to June 30, 2012, should leave the customer with no overpayment.

In this circumstance, chances are that CCB would be reduced significantly from March to June. CCR will still be calculated exactly the same on any out of pocket expenses.

Come July 1, 2012, the customer has a clean slate, and if their income estimate remains at 70000, they would be reverted to the 50% CCB entitlement
Continuous adjustment is optional on CCB – but it is suggested in every circumstance to stop you getting an overpayment at the end of the financial year. If you over estimate, this will all be reconciled at tax time.

EXAMPLE 2 - FTB – Mandatory Continuous Adjustment

From July 1, 2009, the federal government introduced Mandatory Continuous Adjustment of FTB payments when income estimates are changed, to stop overpayments at the end of the financial year. The below link is the Act reference and breakdown. It includes examples of how it is calculated. I have put in a couple of examples here with very simplified numbers – these are NOT realistic numbers, they don’t take into account family income breakdown (ftba and ftbb incomes etc) – they are VERY simplified

4.3.1.30 Mandatory Continuous Adjustment of FTB Instalments

Basically, any change to your income estimate which increases it from a previous level will result in adjustment to all future payments to counter any previous overpayment. There is no choice with this – it is compulsory, is automatically applied, and cannot be overridden. It is ALWAYS advisable to contact FAO to update your income estimate as soon as you can to make sure your estimate is updated as early as possible to reduce overpayments and ensure that payments are corrected as soon as possible. This does not take into account the supplement payments – this is JUST the fortnightly entitlement

Using the same information as for the CCB example, a family contacts to advise a change of income estimate from 50000 to 70000, on March 1, 2012.

Prior to contact, the family were receiving payments each fortnight at a rate of $10 per day, $140 per fortnight, $3660 per year (2012 is a leap year)

The change of income estimate reduces their rate to $8 per day, $112 per fortnight, $2928 per year

However, for the period July 1, 2011, to February 29, 2012 (244 days), the customer has already received $2440 of their ftb $2928 entitlement for the year, for the balance of the year (122 days), they are only entitled to the balance of their ftb

= 2928 – 2440
= 488

This is divided over 122 days (balance of the year)
= 488/122

= $4 per day or $56 per fortnight


Over the course of the year, the customer still receives their full entitlement, but they get far less due to when the change was made. Had they put the estimate in at 70000 from July 1, 2012, they would have received $112 all year, instead of $140 for a while, and $56 after that

The date you change your income estimate can also make a change to this. In this same example, if the customer changed their estimate on January 1, 2012, the details would be different

July 1, 2011 – December 31, 2012 (184 days)
$10 per day, $140 per fortnight

January 1, 2012 – June 30, 2012 (182 days)
$8 per day, $112 per fortnight, $2928 per year

When estimate is changed on January 1, 2012, customer has already received 184 days at $10 per day. This comes out of their annual entitlement
= 2928 – 1840
= 1088 balance still to be paid

Divide that by the days remaining in the year (182)
= 1088/182
= $5.98 per day, $83.72 per fortnight

The income estimates in the two examples are exactly the same, but the timing of the change means the reduction for the customer from date of change through until June 30 of the relevant year are massively different!