# 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 greater than the income free area and equal to or less than the higher income free area, their maximum rate of FTB Part A is reduced by 20% of the income excess. If a family's ATI is more than the higher income free area, a rate reduction of 30% of the income excess applies. Where the family's rate is calculated using Method 1 under Step 3 of the Method 2 income test, a rate reduction of 30% of the income excess above the higher income free area applies. This reduction applies to the maximum rate (1.1.M.26) and results in the individual's income tested rate.

Under Method 1, 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 and information about paying the higher rate of Method 1 & Method 2.

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), benefit (1.1.S.60), service pension (1.1.S.30), income support supplement, or DFISA (1.1.D.65), 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 or they are placed on an employment income nil rate period, 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 July 2019