3.1.4.40 Income Test - FTB Part A Method 1

Income test - FTB Part A Method 1

The income test assesses whether an individual and their partner's (1.1.P.30) ATI (1.1.A.20) is greater than the 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)

Reduction after reaching the income free area

When a family's ATI is more than the income free area but less than the higher income free area (1.1.H.10), their maximum rate of FTB Part A 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 individual's income tested rate.

If the income reduction results in a rate that is lower than the base rate, the base rate should be paid.

Note: See 3.1.8 for reduction after reaching the higher income free area.

Policy reference: FA Guide 3.1.4.10 Method 1 - Calculating the Maximum Rate of FTB Part A, 3.1.8 FTB Part A Rate Calculation - Method 2

Individual's in receipt of income support or supplement

If an individual 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 individual's income excess is nil and they receive the maximum rate of FTB Part A subject only to the maintenance income test. If the pension or benefit being paid to the individual 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: 11 May 2015