New Seniors Health Card and Family Payment Compliance

New rules and compliance checks for Family Tax Benefit (FTB) payments and Commonwealth Seniors Health Cards will ensure payments and concessions are correctly targeted to those who are entitled to them.

The changes ensure compliance requirements are met.

New FTB rules will help stop families getting into cycles of overpayment and debt. These will help prevent around 40,000 families a year from potentially losing control of their household budgets.

The Government understands that working families need the family payments system to help them, not complicate and frustrate their lives.

Under the current system, FTB recipients who fail to lodge tax returns can continue to incur significant debts indefinitely. From 1 July 2009, families who fail to lodge tax returns will have their fortnightly payments temporarily suspended until their entitlement is properly reconciled.

Tax returns are needed so a family’s income is accurately recorded and their FTB entitlement can be reconciled at the end of the financial year. If income is inaccurate families can receive too little or too much FTB.

The Government will temporarily suspend fortnightly payments of FTB if customers have not lodged a tax return, or advised they are not required to lodge, within 18 months of the end of the financial year.

For example, if a family has failed to lodge their tax return for the financial year ending June 2008, they will have until January 2010 to lodge before their instalments of FTB are stopped. If they still haven’t lodged by then, their fortnightly payments will be temporarily suspended until they submit their tax return.

Families affected by this measure will still be entitled to FTB. To reinstate their payments they will simply need to lodge their tax returns or confirm with Centrelink that they are not required to lodge. The alternative will be that they obtain an end of year lump sum payment of FTB once their income is verified.

No family will lose any FTB entitlement as a result of this measure, only payment methods will change.

The measure will ensure that FTB is not open to abuse and it will help families to get their full entitlement. Some families currently lose access to all FTB top-ups (including their supplements) by failing to lodge tax returns within two years.

The Commonwealth Seniors Health Card will also be subject to new compliance checks and the income test will be changed.

There is presently no compliance program for this concession card. This measure will ensure concession cards are held by people who are genuinely entitled to them. Previously, once granted, there was no mechanism to check that an individual with a card earns below the $50,000 a year income limit or $80,000 for couples.

The Government is also implementing changes to the income test of the Commonwealth Seniors Health Card. From 1 July 2009, the income test for the card will include income from superannuation streams with a taxed source and salary that is sacrificed to superannuation. This additional measure will ensure that all income received by seniors is treated in the same way, and will ensure that the income test is applied to all card holders consistently.

The new Commonwealth Seniors Health Card compliance measures, which will include data matching and eligibility reviews, will be progressively rolled out from 1 July 2008.

These new compliance measures will ensure the system remains fair.