Practitioner's Guide: Family Tax Benefit
Family Tax Benefit – common problems
Family Tax Benefit (FTB) is a payment made to parents, or people who have care, custody and control, of children. It is split into FTB A and FTB B. The structure of the payments, particularly the income tests and rates of payments is complicated. Detailed information can be found on the Centrelink website http://www.humanservices.gov.au/customer/services/centrelink/family-tax-benefit-part-a-part-b
This guide is about some common problems people experience with FTB.
FTB can be paid by fortnightly instalments during the financial year, or as a lump sum which is paid after you have lodged your tax return for that year.
Time limits for lodging your claim
The time limit for lodging a lump sum claim for FTB is 12 months after the end of year you’re claiming FTB for. So, if you want to claim for the 2013/2014 financial year, you must lodge your claim by 31 June 2015.
You can claim for fortnightly payments any time during the financial year by estimating your income for that year.
If you received fortnightly payments but you were paid less than you were entitled to (eg because you overestimated your income) the time limit for claiming a top up is the same as the time limit for claiming a lump sum.
Lodging your tax return
If you are not required by the ATO to lodge a tax return, you need to tell Centrelink that. To be safe, you should do this before the end of the financial year to be sure that you can receive the full amount you are entitled to.
Everyone else has to lodge their tax return before the end of the following financial year. This requirement applies both to people who already received the payments by instalments and people who are claiming a lump sum. If you can show that you have special circumstances, you may be granted an extension of another 12 months.
If you (or your partner) fail to lodge your tax return in time your current FTB payments will be stopped and all the FTB you received will be raised as a debt until the tax returns are lodged. You may also lose your entitlement to any top-ups and supplements.
FTB can be paid as a lump sum at the end of the financial year, or it can be paid in instalments throughout the year. If you want to receive your FTB by instalments, you will need to provide an estimate of your household income for the year. At the end of the financial year, when you do your taxes, your estimate will be reconciled with your actual income for that year. If you overestimated, you will receive the remainder of your entitlement as a “top-up” with your tax refund. If you underestimated, you will have to repay any amount you were overpaid. Overpaid amounts can be recovered from future FTB payments or tax refunds.
If you underestimate for two consecutive years by so much that you have to repay all the FTB you received, you won’t be able to get FTB instalments again until you can prove you re-qualify.
People who share care of children can split FTB in accordance with their care percentage, so long as both care for at least 35% of the time. If one person cares for less than this, that person is not entitled to any FTB and the person providing the majority of the care can receive the full FTB amount.
If there is a dispute about the caring arrangement, and how much care each carer is providing, an appeal can be lodged for internal review, then at the Social Security Appeals Tribunal. Decision-makers will look at and hear evidence from both parties, such as family law orders, parenting plans, receipts for expenses, social worker reports, evidence from teachers, lawyers, family friends etc.
Child Support & FTB
If you are receiving child support or maintenance, that money will affect your FTB entitlement. If you choose to collect child support privately, you will be deemed to receive your maximum entitlement, even if that is not what you are actually receiving. This means that if your ex-partner does their tax, and it turns out you were entitled to more child support than you actually got, you will probably get a FTB debt. Collecting child support formally through the CSA will avoid this problem.
Appeals & Debts
You can appeal most decisions about your family tax benefit to a Centrelink Authorised Review Officer within 52 weeks of receiving the decision. If you are still unhappy with the decision, you can appeal to the Social Security Appeals Tribunal within 13 weeks, and then to the Administrative Appeals Tribunal within 28 days.
Debts can be appealed at any time. There are four main grounds for appealing a FTB debt:
- if you dispute the facts giving rise to the debt (eg the percentage of shared care)
- if the overpayment was 100% Centrelink’s fault and you are in severe financial hardship
- if you have special circumstances
- if there are legal reasons why the debt can’t be recovered (eg bankruptcy)
For the first, you will need to explain why Centrelink has the facts wrong. For the second and third, you will need to show that you did not knowingly make a false statement, and that you received the money in good faith.