FTB/Supplements/Reco

Given there have been a few q's pop up on this topic lately, i figured i'd post a thread. This is a very brief run down of FTB with link to the relevant info on the human services website.

Family Tax Benefit is a payment made to parents or carers of children up to age 20, providing they meet eligibility criteria based on time in care (must have child in care more than 14% for add ons, 35% for payments), as well as income and education requirements.

Family Tax Benefit Part A and Part B

FTB is payable in either fortnightly installments, or at the end of the financial year, and is paid based on estimated income for the current financial year (for fortnightly installments) which is then reconciled against ACTUAL income at tax time. FTBA is based on total combined family income (both parents/partners within a household) and age/number of children in care, FTBB is based on the income of the lower income earner and age of the youngest FTB child only. FTBB is only payable where the higher income earner is earning less than $150k. Eligibility for other add on payments are also linked to FTB, as outlined in the above link – some based on income, some based on needing the child to be an “FTB child” in terms of residency etc


Income Test
Income test for Family Tax Benefit Part A



At the end of the financial year, all payments are reconciled to ensure what has been paid is accurate. essentially FAO receive confirmation of taxable income from the ATO, or via verbal or online updates from customers (if not required to lodge a tax return) – that information is measured against the estimated income – if a customer has underestimated, they may get a debt. if they have over estimated, they may get a top up to make them up to what they should have received.

An amount of FTB is “held” each year until tax time – these are called Supplements. They are basically a safety net in case of an underestimate, to reduce the chances of a debt being raised. Supplements are payable for both FTBA and FTBB (if you qualify for both payments) – FTBA is a “per child” rate, FTBB is a “one per family” payment. payments will not be generated until confirmation of your income is received (from ATO if you are required to lodge a tax return – online or over the phone if you don’t need to lodge a return). if you are notifying your income as you are not required to lodge a return with ATO, you MUST include any income from income support payments (parenting/newstart type payments), interest from bank accounts etc. if you notify online (which is preferred) keep in mind that thousands of other people will be doing the same, and these are generally all double checked by a consultant to make sure it goes through correctly – it won’t be an instant result that you will see online – it may take a similar amount of time as the ATO washup transaction outlined below.

for the current (12/13) financial year, the supplements are approx 725 per child for ftba, 350 per family for ftbb - if you have shared care, you'll get a shared amount of these payments. if you had a child enter or exit your care during the year, you'll get a pro rata payment for the time the child was in your care - supplements, like all payments, are calculated on a daily rate. if you have underestimated your income, the amount of supplement payable to you will be reduced to cover amounts you were over paid each fortnight. if you overestimated, you MAY get a top up on top of the supplements (there are no guarantees for top ups – depends on what your incomes are as there are some “plateau” areas where your payment entitlement is the same for several thousand dollars). once reconcilliation has occurred and your supplements/top ups generated, your payment will go through a “wash up” process with ATO - this is something i posted a couple of years ago – it’s still relevant now so figure i’ll just include it again now instead of re-typing it all up!

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when your acual taxable income (ATI) is calculated at the ATO, it is sent to FAO for reconciling. now, IF you process your payment well before your hubby, it will go through and there will be no delay. if it happens at same time or after, the following happens

ATI is sent to FAO, reconcilliation occurs. FTB supplements etc are processed and set up as pending on the system
the result is sent to ATO
now, there is no point paying you supplements if you owe the tax office (given supplements are a TAX payment) - same as no tax return will be generated if you owe the commonwealth via Family Assistance
so, your FAO reco result is sent to ATO - if you are due money from both ATO and FAO, the ATO computers say "thanks very much", send the info back to FAO, ATO delivers your income tax return (ITR) and, when the result comes back to FAO, FAO delivers your reco result

if you are owed FAO payments, but OWE ATO, the result is different. ATO computers see that you have money owed to you by FAO, they TAKE the amount owing for your ITR to be zeroed (if possible) or take it all if tax debt is higher than reco amount. the BALANCE is sent back to FAO, and if there is an amount still owing to you, it will be delivered. if there isn't enough FAO to pay out your ITR debt, you will be sent a bill from ATO

if you OWE FAO, but are owed an amount for your ITR by ATO, the info that reaches ATO asks that ATO covers any debt owed to FAO - if there is enough ITR to cover your FAO debt, it will be sent back to FAO with a nil result, you'll be sent a letter outlining this, and then you will get the balance of your ITR sent to you. if there isn't enough ITR to cover your FAO debt, you will be sent a bill from FAO

this all takes a bit of time (and can/will often hold up the FAO parents tax return/notice of assesment being delivered)

now, on top of that, there are some "circumstances" that trigger additional investigation which has to be manually done by a consultant. it's hard to know exactly what will trigger these investigations - sometimes if you have estimated very high and have a very low income, it will trigger it. being partnered/seperated/partnered or whatever during the financial year, returning to work for the first time since the birth of a child etc. the team that actions these is not big - they are only required at this time of year so are otherwise trained and work elsewhere during the rest of the year. at this time, they are needed for both processing these activities, but also needed on the phones (how many people are getting engaged tone when they try to contact FAO atm??). they churn through these activities as quickly as they can, but during this time, sometimes reconcilliation takes a backseat to dealing with IMMEDIATE customer needs. this can delay reconcilliation (and may cause hold ups with ATO - i'm not sure how much it impacts tax returns - but i'm guessing if your reconcilliation results are being held up then your ATO results may be as well)

this is why you will be told, if you call, that reco will take up to two weeks after you receive your Notice of Assessment (NOA) from the ATO. before then, it is within normal processing time frames. if it goes beyond that, it becomes reasonable to chase it up (before then, you will be told politely that there is nothing that can be done)


the mutual customer link between ATO and FAO generally isn't established until Mid July. all ITR's processed prior to that date are queued to be delivered later. once the link was established for this financial year, the normal daily flow of results was established, and everything from before that date had to be delivered over a period of time (couldn't deliver a couple of weeks worth of info at once). it takes time and is causing delays for early lodgers

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Please be aware - there is a limit to how long you have to lodge all the required information before you lose eligibility for payment. If you don't lodge your information within a set time frame, the entire amount you were paid in a financial year may be raised as a debt that you have to pay back to the Commonwealth - and if it's not then lodged within a short time after this happens, your current payments will also be cut off as well... once you lodge, your payments can be restored, and if it's found that you were entitled to the payment, the debt will be removed and supplements paid (if entitled) - but if you leave it too late, supplements/top ups may not be payable...


this is a very VERY brief summary – a lot of information is available via the link above – if you need clarification of anything, let me know - but have a look at the links below (particularly the first one) as there is a lot of info in them as well
BG






here are links to a couple of older threads on the same topic
https://www.bellybelly.com.au/forums...2011-a-165364/
https://www.bellybelly.com.au/forums...payment-17559/
https://www.bellybelly.com.au/forums...lement-138318/
https://www.bellybelly.com.au/forums...estion-182855/