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There are factors that can affect how much Family Tax benefit (FTB) Part A you get. These factors include:
- the amount of child support you receive
- the way you collect child support
- if you change how you receive child support
- if we update your child support assessment.
Amount of child support
You can receive a certain amount of child support before it affects your FTB. We use a Maintenance Income Test to work this out.
We reduce your FTB by 50 cents for every dollar of child support you’re entitled to get over the threshold. We call this threshold the Maintenance Income Free Area (MIFA). We apply these automatically.
Your child support won’t reduce your FTB below the base rate of FTB Part A. However, other factors like your family’s adjustable taxable income may also affect how much FTB you can get.
Example of child support affecting FTB Part A
Sally has a 3 year old child from a previous relationship. Sally’s child support assessment is $5,000 for this year.
The amount of child support over her Maintenance Income Free Area (MIFA) is calculated as follows: $5,000 - $2,000.00 (MIFA)= $3,000.00.
We then reduce Sally’s FTB by 50 cents for every dollar of child support over the MIFA. This is $3,000.00 x 0.50 = $1,500.00
Sally’s annual FTB Part A payment based on her income and other circumstances is $6,000.00 - $1,500.00 = $4,500.00
This means Sally’s FTB Part A is now $4,500.00 for the year.
How you collect your child support
How you collect your child support payments may affect your FTB and our ability to recover child support underpayments.
You can choose between 3 ways to receive child support:
- Child Support Collect
- Private Collect
- Self management.
Find out more about how to compare your child support collection options.
Child Support Collect and FTB
Child Support Collect is where we collect and transfer the payments to you. There are 2 ways to calculate your FTB:
You can swap between these methods at any time.
Find out more about Child Support Collect
Private Collect and FTB
Private Collect is where you and the other parent manage the transfer of payments. We calculate how much child support you should receive.
When we calculate your FTB, we assume you collect your full child support assessment. We don’t look at the amount you actually receive.
If you choose a private collect arrangement, we will apply the entitlement method.
Under the entitlement method, we assume you will collect the full child support entitlement you are assessed to receive.
We can’t pay you more FTB if you don’t collect the full amount of child support you’re assessed to receive.
If you can’t collect your full amount of child support, call us on the Child Support enquiries line.
If you’ve experienced or fear family and domestic violence, or other types of abuse call the Families line. We can discuss your situation in more detail. You may be eligible for an exemption from seeking child support. In some cases, exemptions need to be assessed by a social worker. We’ll let you know if this applies to you.
Find out more about Private Collect.
If changes are made to your child support assessment and it’s backdated, you may want to change to Child Support Collect. For example, if the paying parent doesn’t regularly lodge a tax return.
Self management and FTB
If you choose to self-manage your child support, you may not meet the Maintenance Action Test. This means your FTB Part A may be reduced to base rate for the child, even if the other parent is making payments. Read more about if you choose to self-manage your child support.
How we apply different calculation methods
Depending on how you collect your child support, we’ll calculate your FTB payment using either the:
Modified entitlement method
We compare the following:
- the amount of FTB you would get if you got your full child support assessment
- the amount of FTB you would get based on the amount of child support you actually receive.
We then apply the higher child support amount to work out your ongoing FTB Part A rate. We do this to reduce the risk of an overpayment.
We’ll use this method unless you ask us to use the disbursement method.
Disbursement method
We work out your FTB Part A rate based on the child support you actually receive.
We’ll adjust your FTB rate depending on how often and how much child support you actually receive. This can result in your FTB Part A rate changing throughout the year.
You must ask us before we use this method. It may work for you if either:
- the amount of child support you receive is substantially less than what you’re assessed for
- you get irregular payments.