220.127.116.11 Method 2 - calculating the maximum rate of FTB Part A
When to use Method 2
Method 2 applies when an individual's ATI (1.1.A.20) is more than their higher income free area (1.1.H.10). It applies a 30% reduction on ATI over the higher income free area to the individual's maximum rate.
The maximum rate of FTB Part A under Method 2 equals the base rate under Method 1.
From 1 July 2016, the FTB Part A supplement is only included in Method 2 calculations where the combined ATI is less than or equal to $80,000 for the relevant income year.
From 20 March 2017 ES ceased 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. Therefore, ES will only be included in Method 2 calculations for grandfathered individuals. See 8.2.
Act reference: FAAct Schedule 1 clause 1(2) To work out the individual's 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)
Components of maximum rate of FTB Part A using Method 2
The components are:
- the standard rate for Method 2
- the standard rate for ES Part A for Method 2
- newborn supplement
- multiple birth allowance, and
- FTB Part A supplement.
Paying the higher rate of Method 1 & Method 2
An individual whose ATI exceeds the higher income free area is assessed under Method 2. However, in certain circumstances, such as larger families, the individual may be entitled to a higher rate under Method 1 than under Method 2. To ensure these individuals are not disadvantaged, the income and maintenance tested rate calculated using Method 1 and the rate calculated using Method 2 is compared and the higher of the 2 rates is paid.
Note: From 1 July 2019, if a family's ATI is more than the higher income free area, their maximum rate of FTB part A is reduced by 30% of the income excess. This applies both when the family's rate is calculated using Method 2 and when it is calculated using Method 1 under Step 3 of the Method 2 income test.
Policy reference: FA Guide 18.104.22.168 Method 1 - calculating the maximum rate of FTB Part A
An individual's standard rate is the sum of their FTB child rates (1.1.F.57).
Policy reference: FA Guide 22.214.171.124 Current FTB rates & income test amounts, 126.96.36.199 Current ES rates
Effect of shared care on the FTB child rate
If a determination has been made under FAAct section 59 because care of an FTB child is shared, the percentage of care is translated into an FTB shared care percentage which is then applied to the FTB child rate for that child. However, NBS is not affected by a shared care determination.
Policy reference: FA Guide 188.8.131.52 Shared care rate for FTB