The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia.

3.1.7.10 Maintenance income test - general provisions

Summary

This topic provides general information about the maintenance income test for FTB Part A, including the following:

  • general principles of the maintenance income test
  • review of child support entitlement - maintenance income taken to have not been received
  • maintenance income free area (1.1.M.21)
  • maintenance income for members of a couple (1.1.M.50)
  • maintenance income for more than one child, and
  • individuals receiving social security payments (1.1.S.80).

Note: For guidance on what constitutes maintenance income for the purposes of the maintenance income test, see 1.1.M.10, 3.1.7.11, 3.1.7.12 and 3.1.7.13.

Act reference: FAAct section 3(1)-'maintenance income'

General principles of the maintenance income test

The maintenance income test:

  • assesses whether an individual's maintenance income is greater than their MIFA, and
  • reduces the rate of FTB Part A by 50c for every dollar of maintenance over the MIFA until the base rate (1.1.B.10) is reached (the maintenance income test only affects the amount of FTB Part A over the base rate).

Maintenance income received for a child only reduces the FTB paid for that child.

Maintenance income received during the financial year is assessed for that year. This means that arrears are assessed in the financial year they are received, even if they relate to a previous financial year. The exception is when it relates to a private collect period for which a deemed amount applies. For details on when a deemed amount applies see 3.1.6.70 and 3.1.5.55.

Example: John has not received his full entitlement to maintenance for 4 years. In January of the current year, Child Support garnishees the payer's tax return and John receives arrears of $5,000. The whole amount is assessed for the current financial year as it was received in that year.

Note: In the case of arrears, individuals who have registered their child support for collection with Child Support may be able to access their MIC balance (3.1.7.05).

Maintenance income is estimated during the financial year for individuals receiving FTB as instalments (1.1.I.100) as the actual amount collected is not known until reconciliation occurs. The actual amount of maintenance received is assessed for past period claims (1.1.P.60) (except if there is a notional assessment, see 3.1.7.14).

Review of child support entitlement - maintenance income taken to have not been received

In some circumstances, the maintenance income received by an individual can be taken to not have been received. For instance, where an individual's child support entitlement for a particular income year is subsequently reviewed and revised downward by Child Support. Where this occurs, it means that the individual's FTB entitlement has been assessed on the basis of an amount of maintenance that they are now required to repay to the payer because of the revision by Child Support.

In these situations the individual can request a review of their FTB entitlement for the entitlement year in which they received the maintenance. If their request for review of their FTB entitlement is successful, the maintenance they are required to repay to the payer is considered never to have been received and therefore not subject to the maintenance income test. The individual's FTB entitlement for that year is adjusted accordingly. The request for review of their FTB entitlement must meet review timeframes in order to get full effect (6.2).

Example: Violet received maintenance income of $5,000 during the 2022-23 year based on an assessment by Child Support. In April 2024 Child Support receives up to date income information for the payer relating to the 2022-23 year and reviews the payer's child support assessment. As a result, the payer's assessed amount of maintenance for the 2022-23 year is reduced to $2,000 and Violet is required to repay $3,000 of maintenance received to the payer.

Violet's FTB entitlement for the 2022-23 year was assessed and paid on the basis of the original child support assessment of $5,000. As this no longer accurately reflects the amount of maintenance that Violet received, she seeks a review in May 2024 of her FTB entitlement for the 2022-23 year. Violet's review is successful and the $3,000 in maintenance she is required to repay is taken to never have been received and not subject to the maintenance income test. Violet's FTB entitlement for the 2022-23 year is adjusted accordingly and she receives arrears of FTB for that year.

An individual who is privately collecting their child support entitlement is deemed to be receiving their full entitlement. If they actually receive less than their full entitlement, any arrears received at a later date that relate to the deemed period are not counted when they are actually received. This is because the arrears have been deemed to have been received in the income year to which they relate.

Example: Wendy privately collects her child support assessment and is assessed to collect $4,000 in the 2022-23 financial year. While Wendy is only able to collect $2,000 from her ex-partner, as she privately collects her child support she is still deemed to have received the full $4,000 for the 2022-23 year. In 2023-24, Wendy has a new child support assessment amount of $1,000. Wendy is actually collecting $3,000, which is her $1,000 ongoing plus the $2,000 she is owed from the payer for the previous financial year. As Wendy was deemed to have received the full $4,000 for 2022-23, the $2,000 arrears she is collecting does not affect her in 2023-24.

Maintenance income free area

The MIFA is the amount of maintenance income that is disregarded under the maintenance income test. See 3.1.1.20 for the current annual MIFA and the amount allowed for each additional FTB child attracting child support.

When calculating MIFA, the following children are excluded:

  • children who are 16 years and older who are not senior secondary children, and
  • children who do not attract child support.

Both members of a couple must be receiving child support from former partners for children in their care to be eligible for the partnered MIFA amount.

Example: Both Troy and Simone receive child support from their former partners for children in their care. Troy receives child support for Kylie who is 8, and Blair who is 10, while Simone receives child support for Brooke, who is 17 and has completed her year 12 or equivalent qualification. Only Troy's children will be taken into account when calculating the MIFA, as Simone's daughter is more than 16 years old and is not a senior secondary school child (1.1.S.27). Therefore, their MIFA amount for the 2023-24 year is $2,511.20 (which is the sum of $1,883.40 and $627.80 for one additional child).

Act reference: FAAct Schedule 1 clause 22 How to calculate an individual's maintenance income free area, Schedule 1 clause 23 Only maintenance actually received taken into account in applying clause 22

Policy reference: FA Guide 3.1.1.20 Current FTB rates & income test amounts

Maintenance income received by members of a couple

When both members of a couple receive maintenance income, those incomes are added, and the total amount is used when applying the maintenance income test.

Example: Mark receives child support of $1,500 annually and Tracey receives child support of $2,500 annually from their former partners. Tracey receives FTB for all the children in their blended family (1.1.B.30). A maintenance income test ceiling is calculated using the FTB of Mark's children. The lower of the maintenance income test ceiling (3.1.7.03) and the child support amount of $1,500 is used in the maintenance income test. A similar calculation and comparison is made for Tracey's children.

Act reference: FAAct Schedule 1 clause 21 Maintenance income of members of couple to be added

Policy reference: FA Guide 3.1.7.03 Maintenance income test ceiling

Maintenance income for more than one child

If the individual or their partner receives child support for more than one child from a payer, it is assumed that the child support is divided equally for those children unless specifically stated otherwise by a:

  • court order
  • child support agreement (1.1.M.15)
  • Child Support Review Officer, or
  • payee (1.1.P.71).

Example: Centrelink is advised by Child Support that the payee is entitled to $20,000 for 4 children. This amount is split between the 4 children ($5,000 each). The payee provides Centrelink with a letter showing that due to the level of care for the individual children $4,000 each is applicable to the 3 youngest children and $8,000 is applicable to the payee's 17 year old senior secondary school child.

Individuals receiving social security payments

Maintenance income is not assessed under the income tests for social security payments.

Policy reference: SS Guide 4.3.9.10 Income from maintenance, property settlements & life interest

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