Maintenance Income Test (MIT) for Family Tax Benefit (FTB) 277-51080000

The MIT ensures customers are better off financially if they receive maintenance income, despite any reduction to their FTB Part A rate. If the customer is exempt from the MIT, their FTB rate will not be affected by any maintenance income received (unless the customer has a partial maintenance exemption).

• Maintenance income is always converted to an annual amount so that the MIT can be applied. Only maintenance income received for a child support child is assessed
• The customer's Maintenance Income Free Area (MIFA) is calculated using only those FTB children who are also a child support child and attract above base rate FTB. Note: non-parent carers may have more than 1 active child support case in respect of a child, for example Grandparent may have a child support case against both parents in respect of a child or children. In these cases, for the purpose of calculating the Maintenance Income Free Area (MIFA) amount, the child is counted twice as they are active in more than 1 child support case
• If the customer's annual maintenance income is more than their MIFA, the maintenance income reduction is calculated: (annual maintenance income - MIFA) / 2
• The maintenance income reduction is applied to the customer's income tested FTB Part A rate. Note: maintenance income cannot reduce the customer's FTB Part A rate below the base rate for each child support child

For customers with children from more than 1 relationship, the MIT will limit the amount of child support that can reduce FTB Part A by creating an MIT Ceiling.

If a customer receives Rent Assistance (RA) with their FTB and maintenance income has reduced their FTB Part A to the base rate, the customer is not entitled to receive RA. This is unlike cases where FTB has been reduced due to the Maintenance Action Test (MAT), where RA can be paid with the income support payment.

For FTB instalment customers, annual maintenance income details are provided by Child Support or court order during the financial year.

If a projected reconciliation overpayment is identified due to reassessment of maintenance income, the customer's ongoing FTB rate may be reduced to offset the potential overpayment under mandatory continuous adjustment.

If potential FTB arrears are identified as a result of a retrospective change in a child support assessment, the arrears will be deferred and included in reconciliation.

During FTB reconciliation, annualised maintenance income is recalculated based on what the customer and partner actually received for Child Support collect periods, and the deemed amount for private collect periods.

For customers with a child support agreement accepted by Child Support, if a Notional Assessment (NA) is in place it will be used to assess FTB Part A.

For customers who claimed FTB via a lump sum claim for the 2008-09 to 2010-11 financial years, their maintenance income was assessed using details advised by the customer on their claim. From 2011-12 onwards, all claims are assessed using information from Child Support. Customers can no longer self-assess their child support.

Customers with a child support entitlement registered for collection by Child Support may benefit from the Maintenance Income Credit (MIC) during FTB reconciliation or lump sum claim assessment. The MIC allows customers to use their unused MIFA from previous years to offset the effect of child support arrears.

A summary of the assessment of the customer's maintenance income can be viewed on the Rate Explanation (REXFTBA) screen.

Details of the customer's total annualised maintenance income, MIFA, MIT ceiling and maintenance income reduction can be viewed on the FTB Maintenance Assessment Explanation (REXFTBM) screen.

A detailed explanation of the maintenance income assessment can be viewed from the MIT Explanation Summary (MNEX) screen.

When a child/case end is transferred by Child Support for a Child Support Collect customer on the Disbursement method, the system retrospectively changes the case to Private Collect and applies the full maintenance entitlement amount.

This retrospective change in assessment results in the customer having their annualised maintenance income assessed under the Entitlement Method. In the majority of cases, this will result in a decrease in the customer's ongoing rate of FTB Part A. This change in annualised maintenance income can also invoke Mandatory Continuous Adjustment, causing a further reduction to the customer's ongoing rate of FTB.

Note: this is not caused by incorrectly entered/ended case data or a system problem. However, it can lead to an unintended and unexpected reduction to the customer's ongoing rate. Occurrences of this issue must be reported to the Level 2 Policy Helpdesk for escalation. See the Resources page for a link.

Maintenance Action Test

For agreements with a start date on or after 1 July 2008, Child Support is responsible for assessing the agreement and will transfer details electronically to Centrelink for FTB Part A purposes. Once the agreement is accepted by Child Support, it satisfies the MAT.

Customers with a child support agreement may choose private collection or Child Support collection. Centrelink assumes private collect customers will receive the full agreement amount. If a customer advises they are not able to collect the full amount, they will need to apply for Child Support collection or seek a child support exemption to continue to satisfy the MAT.

Agreements with a start date prior to 1 July 2008 were assessed differently. For more information, see the References page for a link to the Family Assistance Guide, 3.1.6.50, Child Support Agreements (pre July 2008)

Payer in a child support agreement increases their level of care to more than 65%

Where a customer is a payer in a child support agreement and their level of care increases to more than 65% and they are receiving FTB for the child/ren, they must take reasonable steps to change from being the payer to the payee otherwise they may be deemed to fail the Maintenance Action Test (MAT). Maintenance Action Test (MAT) for Family Tax Benefit (FTB) customers provides further details on the reasonable maintenance action requirements in these cases.

Maintenance Income Test

From 1 July 2008, customers with a child support agreement in place have their FTB Part A assessed based on the Notional Assessment advised by Child Support. In some cases, the Administrative Assessment is used, for example, some lump sum agreements.

Annualised maintenance income at FTB reconciliation (for 2008-09 onwards):

• If the customer was private collect the Notional Assessment is used
• Child Support collect customers who have:
• no arrears collected, the value of the agreement collected will be applied in a formula to the Notional Assessment to produce a Notional Assessed amount, and this amount will be used
• collected arrears, the Total Maintenance Amount will be used. The formula is: Notional Assessment notional arrears (normal arrears x Notional Factor) + normal arrears
• If a Notional Assessment was not in place, the Administrative Assessment is used for private collect customers and the actual amount collected is used for Child Support collect customers

Maintenance Income Credit (MIC) calculations

For Maintenance Income Credit (MIC) calculations for Child Support collect customers, see Maintenance Income Credit (MIC).

Initial assessment - agreement for child support lodged

For information about the initial assessment when a customer lodges an agreement for child support payments with Child Support, see Family Tax Benefit customer wants to register a child support agreement.