Responsible Economic Management - Better targeting and delivery of Family Tax Benefit - continuous adjustment to reduce over-payments of Family Tax Benefit 

Key elements

From 1 July 2009 Family Tax Benefit (FTB) customers submitting an increased income estimate during the year will have their FTB rate adjusted automatically to ensure they do not have an overpayment on reconciliation at the end of the financial year ("Continuous Adjustment").

Making Continuous Adjustment mandatory will prevent around $15 million of reconciliation debt for 28,500 families for the 2009-10 entitlement year, with another 29,000 customers receiving an increased top up as a result of being paid their entire supplement.

Background

Around 2.2 million families with 4.3 million children receive FTB during a financial year. Of all families with children under 16, approximately 80 per cent receive FTB. FTB expenditure for 2007-08 is estimated to be around $16 billion.

As a response to the high level of FTB reconciliation debt following the introduction of the FTB system, measures were introduced in 2002 aimed at reducing debts. This allowed the Family Assistance Office (FAO) to adjust, with consent, the ongoing payments of customers who advise of an increase in their income estimates during the year. This process corrects for potential overpayments due to previous lower estimates.

Families were also given the option of deferring part of their payment.

Both elements were progressively introduced from November 2002 on a voluntary basis without amendment of the legislation.

A subsequent measure introduced in July 2006 allowed customers to negotiate a lower level of rate adjustment than they would have received under the continuous adjustment option. This reduced, rather than eliminated, overpayment.

Around 1.4 million of the 1.8 million families receiving fortnightly payments of FTB have already elected to have Continuous Adjustment.

Implementation

The measure will commence on 1 July 2009.


Total Government Funding

This measure will reduce government expenditure by $12.5 million over four years.
Content Updated: 1 June 2012