220.127.116.11 Calculating a Rate of FTB - Overview
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:
- FTB annual rate,
- calculating the annual rate of FTB for an individual,
- annual rate of FTB for an ACO,
- calculating FTB daily rate,
- rounding the FTB rate,
- minimum amount of FTB,
- FTB income tests, and
- effect of changes in relationship status.
FTB annual rate
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 if eligible.
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 for eligible individuals, they cannot be paid as fortnightly instalments.
From 1 July 2016, the FTB Part A supplement is subject to an income test. If an individual's ATI (which includes the ATI of their partner if any) is more than $80,000 for the relevant income year, then the individual's FTB Part A supplement in relation to that year will be nil.
Calculating the annual rate of FTB for an individual
The annual rate of FTB for an individual is calculated using FAAct Schedule 1. This schedule sets out the income tests for FTB Part A, FTB Part A supplement and FTB Part B respectively. These income tests assess, for an income year:
- the ATI (1.1.A.20) of individuals and their partners (1.1.P.30) for FTB Part A, FTB Part A supplement and FTB Part B, and if applicable,
- the maintenance income (1.1.M.10) of the individual and their partners for FTB Part A worked out using Method 1.
Note: Past period claims made for a period in the current financial year and payments made by instalment may be based on either the individual's estimate as agreed with Centrelink, the indexed current estimate (1.1.I.85) or the indexed actual incomes.
Explanation: Centrelink may use either:
- an estimate provided by the individual and assessed as reasonable by Centrelink, or
- the indexed current estimate (most recent estimate of income available to Centrelink adjusted by movements in average weekly earnings over the relevant 12 month period), or
- the indexed actual income, based on the most recent taxable income as determined by the ATO and adjusted by movements in average weekly earnings over the relevant 12 month period.
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
Annual rate of FTB for an ACO
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 FTB to approved care organisation
Policy reference: FA Guide 3.1.2 FTB Rate for ACOs
Calculating FTB daily rate
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:
- a fortnight when an individual or ACO is paid FTB by instalments, or
- a past period when an individual or ACO is paid FTB as a lump sum.
In general, the annual rate of FTB responds to changes in eligibility as they occur.
Example: The rate of FTB may change in the following circumstances:
- an individual's ATI is more than $80,000 (FTB Part A supplement is nil),
- the number of FTB children changes,
- an individual is receiving RA and the amount of rent they pay changes,
- the amount of maintenance income an instalment individual receives changes, and/or
- an individual separates or gets married.
Rounding the FTB rate
Each time an annual rate is converted to a daily rate, the new daily rate is always rounded to the nearest cent (e.g. 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 FTB
Minimum amount of FTB
After rounding, the minimum amount of FTB that can be paid is one cent per day or 14 cents per fortnight. Individuals receiving less than $100 a year are encouraged to claim their entitlement as a lump sum after the end of the financial year.
FTB income tests
The rate of FTB Part A for an individual is subject to an income test, except where the individual or their partner receives an income support payment (where employment income has reduced the income support payment to a nil rate, the FTB income test will apply) (1.1.I.50). The exemption from the Part A income test for income support payment customers does not apply to partnered income support payment customers under the following circumstances:
- both are in receipt of an income support payment and both are in an employment income nil rate period,
- only one member of the couple is in receipt of an income support payment and are in an employment income nil rate period.
The rate of FTB Part A may be calculated using Method 1 or Method 2, depending on the amount of the individual'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
Effect of changes in relationship status
Eligibility for FTB is based on the ATI of the individual, and their partner if they have one, for the period being claimed. If the individual's relationship 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 Centrelink 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 relationship, and his FTB payments are based on the combined family ATI for that income year.