# 1.1.S.105 Standard reduction (FTB)

## Definition

The standard reduction for an FTB advance (1.2.8.10) is the amount worked out using the following formula:

When an individual receives FTB advance, the individual's annual FTB Part A is reduced by the standard reduction amount during the repayment period (1.1.R.33) as calculated above, unless the Secretary has determined that a shorter repayment period applies (1.2.8.20).

The practical effect of the reduction of the individual's annual FTB Part A during the repayment period is that the individual's daily rate of FTB Part A is reduced by the outstanding amount of the advance payment divided by the number of days remaining in the repayment period.

**Example:** Ian has 2 children aged 10 and 11. His annual FTB Part A entitlement is $8,358.50. He requests a $500 advance to be repaid over a period of 182 days.

The standard reduction for the advance is $500 ÷ 182 × 365 = $1,002.74…

Ian's annual FTB Part A rate is then reduced by the standard reduction $8,358.50 - $1,002.74… = $7,355.75…

This is then converted to a daily rate, and applies for the 182 day repayment period $7,355.75… ÷ 365 = $20.15.

For the remaining 183 days in the year, Ian's daily rate is his annual entitlement divided by 365: $8,358.50… ÷ 365 = $22.90.

## Blended families

When an FTB advance is paid to a member of a couple in a blended family (1.1.B.30), the standard reduction for the advance is the amount worked out using the following formula, and the reduction is applied to the family's total annual FTB Part A rate:

The family's total FTB Part A rate is then apportioned to the individual members according to their individual blended family percentage; however the reduction in FTB Part A is only actually applied during the repayment period to the individual who was paid the advance.

**Example:** Ian and Anne are members of a blended family with 2 children aged 10 and 11. Their combined annual FTB Part A entitlement is $8,358.50, and they each receive 50%. Ian requests a $500 advance to be repaid over a period of 182 days.

The standard reduction for the advance is $500 ÷ 182 × 365 = $1,002.74… and as Ian is a member of a blended family, this is divided by his blended family percentage $1,002.74… ÷ 50% = $2,005.49…

The family's combined annual FTB Part A rate is then reduced by the standard reduction $8,358.50 - $2,005.49 = $6,353.00…

This amount is then split according to the blended family percentage $6,353.00… × 50% = $3,176.50…, converted to a daily rate $3,176.50… ÷ 365 = $8.70… and applies to Ian's payment for the 182 day repayment period.

For the remaining 183 days in the year, Ian's daily rate is his blended family percentage of the family's annual rate divided by 365: $8,358.50 × 50%… ÷ 365 = $11.45.

As Anne did not request an advance payment her daily FTB rate remains as $11.45 throughout the year.

**Act reference:** FAAct Schedule 1 clause 40 Reduction for FTB advance, Schedule 1 clause 41 Standard reduction, Schedule 1 clause 42 Secretary determines shorter repayment period

FA(Admin)Act section 35C Amount of FTB advance

**Policy reference:** FA Guide 1.2.8.10 FTB Advance Payment - Details, 1.2.8.20 Variations to FTB Advance Repayment Period