Calculating Family Tax Benefit (FTB) Part A (Method 2) 007-07070030
Expand allThere are two methods used to work out the rate of Family Tax Benefit (FTB) Part A, depending on whether the family's adjusted taxable income (ATI) is above or below the Part A higher income free area (HIFA). This document outlines how the rate of Family Tax Benefit (FTB) Part A is calculated using Method 2.
Method 2
Method 2 is used to calculate a person's rate of FTB Part A when their family's ATI is above the Part A higher income free area (HIFA). See Part A higher income free area for the amount of the HIFA.
The maximum rate payable under Method 2 is the base rate which can include:
- the base FTB Part A child rate for each child
- Energy Supplement Part A at base rate where person is grandfathered (if shared care, multiply by shared care percentage)
- Large Family Supplement (LFS) if entitled. Note: LFS is not payable from 1 July 2016
- Multiple Birth Allowance (MBA) if entitled
- Newborn Supplement (NBS) if entitled
- Part A supplement. Note: Part A supplement is not included from 1 July 2016 onwards
Income test
When family income exceeds the higher income free area (HIFA), the system automatically applies the most favourable outcome for the customer by calculating the FTB Part A entitlement using:
- the Method 2 FTB Part A rate calculation and
- an above HIFA Method 1 FTB Part A rate calculation
Method 2 FTB Part A rate calculation
The Method 2 FTB Part A rate calculation reduces the base rate of FTB Part A by 30 cents in the dollar of ATI above the FTB Part A higher income free area until a nil payment is reached.
Above HIFA Method 1 FTB Part A rate calculation
Prior to 1 July 2019, the above HIFA Method 1 FTB Part A rate calculation reduced the customer's maximum rate by 20 cents in the dollar above the lower income free area and this applied up to and including any income above the higher income free area until a nil payment rate is reached.
From 1 July 2019, the above HIFA Method 1 FTB Part A rate calculation reduces the customer’s maximum rate by 20 cents in the dollar above the lower income free area up to and including the Part A higher income free area, then 30 cents in the dollar above the Part A higher income free area until a nil payment rate is reached. To balance the impact of increasing the taper rate for some families with higher incomes, a one-off increase to the HIFA applies from 1 July 2019. See Rates and Thresholds.
The References page contains a link to historical rates.
The Resources page contains examples of working out a person's FTB Part A rate using Method 2.
Related links
Calculating Family Tax Benefit (FTB) Part A (Method 1)
Separated couples and eligibility for Family Tax Benefit (FTB) for a period before separation
Rate of Family Tax Benefit (FTB)
Family Tax Benefit (FTB) Part A and Part B Supplements