Families, Community Services and Indigenous Affairs and Other Legislation (2006 Budget and Other Measures) Act 2006 (82 of 2006)

Schedule 5   Maintenance income credit balances

Part 1   Amendments

A New Tax System (Family Assistance) Act 1999

8   At the end of Division 5 of Part 2 of Schedule 1

Add:

Subdivision B - Maintenance income credit balances

24A Maintenance income credit balances

(1) A maintenance income credit balance , for a registered entitlement of an individual, is, at any particular time, the balance at that time of the accruals under clause 24B and the depletions under clause 24E in relation to that entitlement.

(2) Despite subclause (1), a maintenance income credit balance for a registered entitlement at any particular time cannot exceed the total arrears owing from that registered entitlement for all income years for which the entitlement has existed.

(3) If:

(a) but for the condition in subclause 24B(3) not being met in relation to an income year, there would be an accrual to a maintenance income credit balance of an individual for a day in that income year; and

(b) after there has been an accrual under clause 24C for a day in a later income year or a depletion under clause 24E for a later income year, that condition is met in relation to the earlier income year;

the maintenance income credit balance is recalculated, taking into account the accrual for the day in the earlier income year before taking into account the accrual or depletion mentioned in paragraph (b).

(4) This Subdivision continues to apply in relation to a maintenance income credit balance of an individual whether or not the individual or the individual's partner continues to be eligible for family tax benefit.

24B Accruals to a maintenance income credit balance

Accrual if conditions are satisfied

(1) There is an accrual to a maintenance income credit balance for a registered entitlement of an individual, for a day in an income year, of the amount worked out under clause 24C for that day, if all the conditions in this clause are satisfied.

Conditions that must be satisfied

(2) Either or both of the following must apply:

(a) the individual is eligible for family tax benefit for the day;

(b) if the individual is a member of a couple on the day - the individual's partner is eligible for family tax benefit for the day.

(3) The eligible person must have satisfied the FTB reconciliation conditions in section 32B of the Family Assistance Administration Act for all of the same-rate benefit periods (within the meaning of that section) that are included in the income year.

(4) The annualised amount of the maintenance income of the eligible person for the day must be less than the maintenance income free area that applied to the eligible person for that day.

(5) The maintenance income that the individual received in the income year from the registered entitlement must be less than the amount due in the income year from the registered entitlement.

24C Amount of accrual to a maintenance income credit balance

(1) This is how to work out the amount of the accrual under clause 24B, for a day in an income year, to a maintenance income credit balance for a registered entitlement of an individual who is, or is the partner of, an eligible person under subclause 24B(2):

Method statement

Step 1. Work out the global maintenance entitlement of the eligible person for the day using clause 24D.

Step 2. Identify the lower of:

(a) that global maintenance entitlement; and

(b) the maintenance income free area that applied to the eligible person for the day.

Step 3. Subtract from the lower amount identified in step 2 the annualised amount of the maintenance income of the eligible person for the day.

Step 4. Divide the result of step 3 by 365.

Step 5. Unless subclause (2) applies to the individual, the amount that accrues to the maintenance income credit balance of the individual for the day is the amount worked out under step 4.

If subclause (2) applies to the individual, take the amount worked out under step 4 and apply the method statement in subclause (2).

(2) If either or both of the following apply:

(a) the individual has more than one registered entitlement for the day in respect of which the condition in subclause 24B(5) is met;

(b) if the individual is a member of a couple on the day - the individual's partner has one or more registered entitlements for the day in respect of which the condition in subclause 24B(5) is met;

this is how to work out the amount of the accrual under clause 24B, for a day in an income year, to each of the maintenance income credit balances (the relevant balances ) for those entitlements:

Method statement

Step 1. Work out the daily cap for each relevant balance. The daily cap for a relevant balance is the excess of the amount due in the income year from the registered entitlement to which the balance relates over the maintenance income received in the income year from the registered entitlement, divided by 365.

Step 2. Distribute the amount worked out under step 4 of the method statement in subclause (1) equally among each relevant balance, up to the amount of the daily cap for the relevant balance.

Step 3. Distribute any remaining amount equally among each relevant balance for which the daily cap has not been reached, up to the amount of the daily cap for the relevant balance.

Step 4. Reapply step 3 to any remaining amount until:

(a) there is no remaining amount to distribute; or

(b) the daily cap for each relevant balance is reached.

Step 5. The amount that accrues to each of the relevant balances for the day is the sum of the amount distributed under step 2 and any additional amounts distributed under steps 3 and 4.

(3) To avoid doubt, clauses 24B and 24C apply only once for a day in relation to any relevant balance.

24D Global maintenance entitlement of an eligible person

(1) For the purposes of step 1 of the method statement in subclause 24C(1), the global maintenance entitlement of the eligible person under subclause 24B(2) for the day is the sum of:

(a) the amounts worked out using the formula in subclause (2) for:

(i) each registered entitlement for the day of the eligible person; and

(ii) if the eligible person is a member of a couple on the day - each registered entitlement for the day of the eligible person's partner; and

(b) any amounts worked out under subclause (3); and

(c) the annualised amount of any capitalised maintenance income of the eligible person and, if the eligible person is a member of a couple on the day, of the eligible person's partner, for the day; and

(d) the annualised amount of any maintenance income of the eligible person and, if the eligible person is a member of a couple on the day, of the eligible person's partner, for the day:

(i) that is not from a registered entitlement; and

(ii) that is not capitalised maintenance income.

(2) For the purposes of paragraph (1)(a), the formula is:

Amount due in the income year from the registered entitlement x (Number of days in the income year / Number of days in the income year for which the eligible person or partner had the registered entitlement)

(3) If:

(a) in respect of:

(i) a registered entitlement for the day of the eligible person; or

(ii) if the eligible person is a member of a couple on the day - a registered entitlement for the day of the eligible person's partner;

the maintenance income received by the eligible person or partner for the income year exceeds the amount due in the income year from the entitlement; and

(b) that excess, or any part of it (the relevant excess ), is not disregarded for the purposes of paragraph (c) of step 1 of the method statement in clause 20;

an amount for the purposes of paragraph (1)(b) is worked out by using this formula:

Amount of the relevant excess in respect of the registered entitlement x (Number of days in the income year / Number of days in the income year for which the eligible person or partner had the registered entitlement)

24E Depletions from a maintenance income credit balance

(1) There is a depletion from the maintenance income credit balance for a registered entitlement of an individual, for an income year, of the amount worked out under subclause (2), if:

(a) the income year has ended; and

(b) the maintenance income that the individual received in the income year from the entitlement is more than the amount due in the income year from the entitlement.

(2) The amount by which the maintenance income credit balance is depleted is the lower of:

(a) the excess of the maintenance income that the individual received in the income year from the entitlement over the amount due in the income year from the entitlement; and

(b) the amount of the maintenance income credit balance.

(3) For the purposes of paragraphs (1)(b) and (2)(a), in working out the maintenance income received in an income year or the amount of maintenance income due in an income year:

(a) disregard any maintenance income received or due for an FTB child for whom the FTB child rate under clause 7 does not exceed the base FTB child rate (see clause 8); and

(b) disregard the operation of clause 11 (sharing of family tax benefit) in applying paragraph (a).