3.1.7.30 Application of the Maintenance Income Test

Summary

Maintenance (1.1.M.10) income for both instalment (1.1.I.100) and past period claims (1.1.P.60) is assessed for the relevant period (1.1.R.25) during the financial year to work out the individual's rate of FTB Part A. Maintenance income is estimated for individuals receiving instalments during the financial year. For past period claims, the actual amount of maintenance income received for the relevant income year is used.

The amount of maintenance income to be assessed is converted to an annualised amount before applying the maintenance income test.

Note: If the relevant period is the full financial year, the annualised amount is the full amount received in that financial year. If the relevant period is only part of the financial year, the formula annualises the amount.

Annualising maintenance income (other than capitalised maintenance)

The annualised amount of maintenance income is calculated using the following formula:

  • Amount received in relevant period × (Number of days in the financial year / Number of days in relevant period).

Example: If $1,000 is received over 70 days, the annualised amount is:

$1,000 × (365 ÷ 70) = $5,214.28

For the purposes of applying the maintenance income test, a financial year is always 365 days, including leap years.

Act reference: FAAct Schedule 1 clause 20A Annualised amount of maintenance income

Annualising capitalised maintenance

The appropriate period in an income year for annualising capitalised maintenance income is the part of the capitalisation period that falls within the financial year. The capitalised maintenance income is apportioned using the following formula:

  • Amount of Capitalised Maintenance Income × (Number of days in the capitalisation period in the income year ÷ Total number of days in the capitalisation period).

Example: Joanne receives $6,000 capitalised maintenance on 1 March. The capitalisation period is 600 days. The period from 1 March to the end of the income year on 30 June is 122 days so the apportioned amount of maintenance for that period is:

$6,000 × (122 ÷ 600) = $1,220.

The annualised amount for the income year is:

  • Apportioned amount × (Number of days in the income year ÷ Number of days in the capitalisation period in the income year)
  • $1,220 × (365 ÷ 122) = $3,650.

Act reference: FAAct Schedule 1 clause 24 Apportionment of capitalised maintenance income

Applying the maintenance income test

Only assessable maintenance is taken into account under the maintenance income test. Generally, the maintenance income test for FTB Part A is applied as demonstrated in the table below.

Step Action
1 Work out the individual's annualised maintenance income.
2 Work out the individual's MIFA (1.1.M.21).
3 Subtract the MIFA from the annualised maintenance income amount. The result is the maintenance income excess.

If the result is negative or nil, the individual's maintenance income excess is nil, and their FTB Part A rate is not reduced for maintenance income.

If the result is positive, go to Step 4.

4 Divide the maintenance income excess by 2 (as the maintenance income excess reduces FTB by 50%). The result is the individual's reduction for maintenance income.

The reduction for maintenance income is applied when calculating the rate of FTB Part A.

Maintenance income test 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 maintenance income test (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 is explained in 3.1.7.03.

Act reference: FAAct Schedule 1 clause 3 Method of calculating Part A rate, Schedule 1 clause 20 Effect of maintenance income on FTB rate

Policy reference: FA Guide 3.1.4 FTB Part A Rate Calculation - Method 1

Last reviewed: 3 January 2017