The income test assesses whether an applicant/recipient's and their partner's (1.1.P.30) ATI (1.1.A.20) is greater than their income free area (1.1.I.40). If their income is more than the income free area, the rate of FTB is reduced accordingly.
Act reference: FAAct Schedule 1 clause 3 FTB Rate Calculator - Method of calculating Part A rate
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)
When a recipient's and their partner's ATI is more than the income free area, their maximum rate of FTB is reduced by 20% of the income excess until the base rate (1.1.B.10) is reached. This reduction is deducted from the maximum rate (1.1.M.26) and results in the recipient's income tested rate; that is, it reaches nil.
If the rate payable is lower than the base rate, and a recipient's income does not reach the higher income free area (1.1.H.10) the base rate should be paid.
When a recipient's and their partner's ATI is more than the higher income free area, their FTB is reduced by 30% of the income excess until FTB Part A is no longer payable.
Policy reference: FA Guide 188.8.131.52 Method 1 - Calculating the Maximum Rate of FTB Part A
If a recipient or their partner is receiving a social security pension (1.1.S.90) or benefit (1.1.S.60) or service pension (1.1.S.30), or income support supplement, or DFISA (1.1.D.65), or in an employment income nil rate period (during which they are taken to be receiving (1.1.R.05) their social security pension or benefit), the recipient's income excess is nil and they receive the maximum rate of FTB Part A subject only to the maintenance income test. When the pension or benefit being paid to the recipient or their partner is cancelled, FTB Part A is no longer payable free of the income test.
Act reference: FAAct Schedule 1 clause 38L Application of income test to pension and benefit recipients and their partners
Policy reference: SS Guide 3.1.12 Employment Income Nil Rate Period
Last reviewed: 1 December 2008