3.1.7.03 Maintenance Income Test Ceiling

Summary

This topic outlines the maintenance income test (MIT) ceiling. It covers:

  • background,
  • calculating the MIT ceiling,
  • Method 1,
  • Method 2, and
  • example - calculation of MIT ceiling.

Background

Child support payments received by a payee for one or more children only reduces the payee's FTB Part A to the base rate for the child support children only. Child support income does not reduce a payee's FTB Part A entitlement for other children.

Calculating the MIT ceiling

Where there are child support children and non-child support children in the family; or the payee has 2 or more child support cases, a MIT ceiling (1.1.M.22) must first be determined. The maintenance income is then compared to the MIT ceiling and the lower of the 2 is used in the MIT calculation. The MIT ceiling calculation depends on whether the ATI is above or below the high income free area (HIFA) (3.1.1.20).

Note: The ES ceased on 20 March 2017 for new FTB recipients. For individuals who became new recipients of FTB after 20 September 2016, they will no longer be paid ES after 19 March 2017. However, eligible individuals and ACOs may continue to be paid ES as part of their FTB rate under grandfathering rules. See 8.2.

Where an individual does not receive ES, that part of the formula is ignored.

Method 1

Where ATI is BELOW the HIFA, the MIT ceiling is calculated as follows:

  • [2 × (Above base standard amount for the income + Above base ES amount for the income + RA amount for the income)] + MIFA amount for the income.

Where maintenance income is being paid by ONLY ONE payer:

  • above base standard amount is the sum of the FTB Part A maximum rate less the FTB Part A base rate for all the individual's child support children, and
  • above base ES amount is the sum of the maximum rate ES less the base rate ES for all the individual's child support children, and
  • RA amount is the difference between the RA for all the children and the RA for the non-child support children, and
  • MIFA amount is the individual's MIFA, calculated depending on their status (3.1.1.20).

Where maintenance income is being paid by MORE THAN ONE payer:

  • above base standard amount is the sum of the FTB Part A maximum rate less the FTB Part A base rate for all the individual's child support children, and
  • above base ES amount is the sum of the maximum rate ES less the base rate ES for all the individual's child support children, and
  • RA using the formula (A ÷ B) × C:
    • A = Difference between RA for all children and non-child support children,
    • B = Total number of FTB children of whom either the individual or their partner is eligible to apply for maintenance income,
    • C = Number of FTB children in respect of whom the individual or the individual's partner, is entitled to apply for maintenance income from that maintenance payer.
  • MIFA amount using the formula (A ÷ B) + C × D:
    • A = Individual's no child MIFA amount, which is the individual's basic amount MIFA minus the individual's additional MIFA amount for one child (3.1.7.10),
    • B = Total number of maintenance payers in respect of whom either the individual, or individual's partner are entitled to apply for maintenance income,
    • C = Number of FTB children in respect of whom the individual is entitled to apply for maintenance income from the maintenance payer, disregarding any FTB child whose FTB child rate does not exceed the base rate,
    • D = Individual's additional MIFA amount for one child, depending on their status.

Method 2

Where ATI is ABOVE the HIFA, the MIT ceiling is calculated as follows:

  • 2 × (maximum rate portion) + MIFA amount.

Where maintenance income is being paid by ONLY ONE payer, the maximum rate portion is the sum of:

  • Standard amount - the FTB Part A standard rate that applies for all the child support children for a case (maximum rate based on age or base rate where that is the maximum rate for a child),
  • NBS amount - is the NBS paid for FTB children for whom the individual, or the individual's partner, is eligible to apply for maintenance income from the maintenance payer,
    MBA amount - MBA paid for FTB children for whom the individual is eligible to apply for maintenance income from the maintenance payer,
  • Supplement amount - the individual's FTB Part A supplement amount for the FTB children for whom the individual is eligible to apply for maintenance income from the maintenance payer,
  • ES - ES paid for FTB children for whom the individual is eligible to apply for maintenance income from the maintenance payer,
  • RA amount is the difference between the RA for all the children and the RA for the non-child support children, and
  • MIFA amount is the individual's MIFA, calculated depending on their status.

Where maintenance income is being paid by MORE THAN ONE payer, the maximum rate portion is the sum of:

  • Standard amount - the FTB Part A standard rate that applies for all the child support children for a case (maximum rate based on age or base rate where that is the maximum rate for a child),
  • NBS amount - is the NBS paid for FTB children for whom the individual, or the individual's partner, is eligible to apply for maintenance income from the maintenance payer,
  • MBA amount - MBA paid for FTB children for whom the individual is eligible to apply for maintenance income from the maintenance payer,
  • Supplement amount - the individual's FTB Part supplement amount for the FTB children for whom the individual is eligible to apply for maintenance income from the maintenance payer,
  • ES amount - ES paid for FTB children for whom the individual is eligible to apply for maintenance income from the maintenance payer,
  • RA amount is the difference between the RA for all the children and the RA for the non-child support children, and
  • MIFA amount is the individual's MIFA, calculated depending on their status.

Example - calculation of MIT ceiling

Stacey and Jim are married and have one child, aged 4. Stacey has 2 children, aged 8 and 10, from a previous relationship, for whom she is eligible to receive $16,000 maintenance income. The family's ATI is $80,000 for 2017-18. Because there is a mix of child support and non-child support children in the family, a MIT ceiling must be determined.

Stacey and Jim's family ATI is less than the higher income free area for their family ($94,316) so the Method 1 MIT ceiling calculation applies.

  • Above base standard rate = (2 × $4,766.90) − (2 × $1,529.35)
    • = $9,533.80 − $3,058.70
    • = $6,475.10
  • Above base ES rate = (2 × $91.25) − (2 × $36.50)
    • = $182.50 − $73.00
    • = $109.50
  • RA Amount - not applicable as they do not receive RA
  • MIFA amount = $1,587.75 + $529.25
    • = $2,117.00
  • Calculation:
    • = 2 × ($6,475.10 + $109.50) + $2,117.00
    • = $15,286.20

The MIT ceiling applies in the application of the MIT because the MIT ceiling ($15,286.20) is less than maintenance income ($16,000.00).

Act reference: FAAct Schedule 1 clause 3 Method of calculating Part A rate, Schedule 1 clause 20 Effect of maintenance income on FTB rate, Schedule 1 Part 2 Division 5 Subdivision C Maintenance income ceiling for Method 1, Schedule 1 Part 2 Division 5 Subdivision D Maintenance income ceiling for the purposes of comparison for Method 2

Policy reference: FA Guide 3.1.4 FTB Part A Rate Calculation - Method 1, 3.1.1.20 Current FTB Rates & Income Test Amounts

Last reviewed: 14 August 2017