This topic provides an overview of how the rate of FTB is calculated, and the income tests that may be applied. The topic discusses the following:
The FTB rate is calculated as an annual rate. For individuals (1.1.I.90), this annual rate is the sum of FTB Part A and FTB Part B, including supplements.
Note: Although both the FTB Part A and FTB Part B supplement amounts are included in the annual rate of FTB Part A and FTB Part B respectively, they cannot be paid as fortnightly instalments.
The annual rate of FTB for an individual is calculated using Schedule 1 of the A New Tax System (Family Assistance) Act 1999. This schedule sets out the income tests for FTB Part A and FTB Part B respectively. These income tests assess, for an income year:
Note: Past period claims made for a period in the current financial year and payments made by instalment may be based on either the applicant/recipient's estimate as agreed with the FAO, the indexed current estimate (1.1.I.85) or the indexed actual incomes.
Explanation: The FAO may use either:
An individual's rate of FTB is calculated partly on the basis of family income. For ongoing instalment claims and past period claims made for periods in the current income year, FTB payments are determined by using an estimate of an individual and their partner's ATI and maintenance income, if applicable, for the current year. If the claim is for a previous income year payments are based on actual ATI.
Act reference: FAAct section 58(1) Annual rate of FTB for individuals
FA(Admin)Act section 20A Indexed estimates, section 20B Indexed actual incomes
Policy reference: FA Guide 1.1.I.85 Indexed income - actual or estimate (FTB), 3.1.4 FTB Part A Rate Calculation - Method 1, 3.1.8 FTB Part A Rate Calculation - Method 2, 3.1.9 FTB Part B Rate Calculation, 4.2 Claims for FTB
For ACOs (1.1.A.80), this annual rate is a flat rate. The annual rate of FTB for an ACO is not subject to an income test. The ACO rate is equivalent to the base rate (1.1.B.10) of FTB Part A for a child under 18. The FTB Part A supplement is only for individuals and cannot be paid to an ACO.
Act reference: FAAct section 58(2) Annual rate of family tax benefit to approved care organisation
Policy reference: FA Guide 3.1.2 FTB Rate for ACOs
The annual rate of FTB for an individual or an ACO is converted to a daily rate by dividing the annual rate by 365. A new daily rate is derived each time the annual rate of FTB for an individual is recalculated.
Note: In a leap year, the daily rate is still calculated by dividing the annual rate by 365.
The daily rate of FTB is used to pay for each day of eligibility during:
In general, the annual rate of FTB responds to changes in eligibility as they occur.
Examples: The rate of FTB may change in the following circumstances:
Each time an annual rate is converted to a daily rate, the new daily rate is always rounded to the nearest cent (for example rounding amounts ending in 0.5 cents upwards to the next whole cent). If the daily rate before rounding is above nil and below half a cent, round up to one cent.
Act reference: FAAct section 58(3) Daily rate of family tax benefit
After rounding, the minimum amount of FTB that can be paid is one cent per day or 14 cents per fortnight. Recipients receiving less than $100 a year are encouraged to claim their entitlement as a lump sum after the end of the financial year.
The rate of FTB Part A for an individual is subject to an income test, except where the applicant/recipient or their partner:
The rate of FTB Part A may be calculated using Method 1 or Method 2, depending on the amount of the applicant/recipient's ATI. If FTB Part A is calculated using Method 1, it is also subject to the maintenance income test. FTB Part B is calculated separately. Single parents who receive income support payments are not income tested.
SS Guide 3.1.12 Employment Income Nil Rate Period
Eligibility for FTB is based on the ATI of the recipient, and their partner if they have one, for the period being claimed. If the recipient's marital status changes during the period of the claim, the income assessment must also change for the relevant period.
Example 1: Suzanne lodges a lump sum claim for FTB for a previous income year. From July to September, Suzanne was partnered. From October to April she was a single parent, and from May to June she had a new partner. Her daily rate of FTB is calculated taking into account 3 different ATI assessments - the joint income with her ex-partner from July to September, her sole income from October to April, and the joint income with her new partner from May to June.
Example 2: Simon is a single parent who receives FTB by instalments. He notifies the FAO that he is moving in with his new partner, and he provides his partner's estimated ATI for the current income year. Simon's daily rate of FTB is reassessed from the date he commences the de facto relationship, and his FTB payments are based on the combined family ATI for that income year.
Last reviewed: 1 July 2009