Child support and your Family Tax Benefit Part A

Any child support you get can affect how much Family Tax Benefit (FTB) Part A you get.

If you or your partner get child support, these payments can affect your FTB. If the amount of child support you get changes, your FTB payments may change too.

Applying for child support while you receive FTB Part A

Where possible parents should take primary responsibility for the cost of looking after their children. This is why we ask you to apply for child support.

We consider a parent to be a:

  • biological or adoptive parent
  • person who is legally responsible for a child born through an artificial conception procedure or where a surrogacy court order is in place

If you or your partner care for a child from a previous relationship and get FTB, you must take reasonable steps to obtain child support. We call this the Maintenance Action Test. You can meet this test by applying for a child support assessment.

If you don’t do this you may only get the base rate of FTB Part A for the child.

Period of grace to take maintenance action

You or your partner must take reasonable steps to obtain child support within 13 weeks of the latest of the following. The date:

  • the child was born or entered your care
  • you or your partner separated from the child’s other parent
  • your percentage of care increased to 35% or more
  • you or your partner first became eligible to apply for child support

If you can’t apply for a child support assessment

If it’s difficult for you or your partner to apply for a child support assessment, please call us to talk about your situation. There may be other options available to you.

How child support affects FTB Part A

In general, the more child support you and your partner get or are entitled to, the less FTB you can get.

The following factors can affect how much FTB Part A you get:

  • the amount of child support you get
  • the way you collect child support
  • if you change how you transfer child support
  • if we update your child support assessment

Amount of child support you get

You can get 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 get over the threshold. We call this threshold the Maintenance Income Free Area. 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 household 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 for $5,000 this year.

Sally’s Maintenance Income Free Area is $1,565.85 a year. This means she can get $1,565.85 in child support before we’ll start reducing her FTB.

We reduce Sally’s FTB by 50 cents for every dollar of child support over $1,565.85. We work out her FTB payments by calculating:

  • the amount of child support over her Maintenance Income Free Area. This is $5,000 - $1,565.85 = $3,434.15
  • how much we’ll reduce her FTB payments by. This is $3,434.15 x 0.50 = $1,717.08
  • her annual FTB Part A payment for the year. This is Sally’s annual FTB payment, based on her income and other circumstances, of $4,423.80 - $1,717.08 = $2,706.72

The way you collect child support

How you collect your child support payments impacts your FTB and our ability to recover child support underpayments.

You can choose between 2 ways to receive child support:

  • Private Collect
  • Child Support Collect

Private Collect

Private Collect is where you and the other parent manage the transfer of child support payments. We’ll still calculate how much child support you should get.

Private Collect and FTB

When we calculate your FTB, we assume you collect your full child support assessment. We don’t look at the amount you actually get.

We can’t pay you more FTB if you don’t collect the full amount of child support we assessed you to get.

If you can’t collect your full amount of child support, call us.

If you think there may be retrospective changes to your child support assessment, you may prefer to use Child Support collect. For example, if the paying parent doesn’t regularly lodge a tax return.

Child Support collect

Child Support Collect is where we work out how much child support you or your partner is entitled to. We then collect and transfer the child support payments for you. This option means you don’t have to discuss child support payments with the other parent.

Child Support Collect and FTB

There are 2 ways to calculate your FTB:

  • modified entitlement method, or
  • disbursement method

You can swap between these methods at any time.

Modified entitlement method

Using this method, we’ll compare the amount of FTB you would get if you got your full child support assessment, to the amount of FTB you would get based on the amount of child support you actually get.

We’ll use which ever results in the most maintenance income 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

Using this method, we’ll work out your FTB Part A rate based on the child support you actually get throughout the financial year.

Each time you get a child support payment, we’ll adjust your FTB rate depending on how often and how much child support you actually get. This can result in your FTB Part A rate changing throughout the year. The amount your FTB Part A will change depends on how often and how much child support you get.

You must ask us before we’ll use this method. It may work for you if:

  • the amount of child support you get is substantially less than what you’re assessed for, or
  • you get irregular payments

Changing how you transfer child support

If you change how you collect child support, it could impact your FTB Part A and our ability to recover underpayments of child support.

Changing from Private Collect to Child Support Collect

You can ask us to collect child support on your behalf. We can collect:

  • up to 3 months of unpaid child support, or
  • up to 9 months of unpaid child support in some circumstances

If the paying parent won’t pay child support they owe for periods earlier than this, you can get legal advice about getting the money through court action. This will be at your own cost.

If you collect child support privately and you aren’t getting the full amount, call us. We’ll refer you to a family assistance specialist to talk about us collecting on your behalf and how this may impact your FTB Part A.

Changing from Child Support Collect to Private Collect

If we collect child support for you and you then decide to collect privately, we can continue to collect any overdue amounts for you. Or you can choose to collect any overdue amounts privately.

If you choose to collect the overdue child support yourself, we’ll assume you’ve collected the full amount. This may impact how much FTB we’ll pay you.

Call us first to understand the impact on your FTB.

If we update your child support assessment

If you or the other parent’s circumstances change, we’ll update your child support assessment. This means your FTB payments may change too.

Retrospective changes to your child support assessment could impact your past child support payments. This may result in your FTB payments being rebalanced using the new information.

If you collect privately and the other parent owes you child support as a result of this change, this may mean we’ve paid you too much FTB. This may result in an overpayment of FTB, or debt. We’ll start collecting this overpayment straight away. We can also use tax refunds to recover debts.

If your FTB changes due to your child support assessment changing, we’ll tell you in writing. If you have any questions, call us.

Example of FTB Part A changing when we update a child support assessment

Yvette collects her child support through Private Collect. We based her past child support assessment on the provisional income of the paying parent, Xavier. This is because he hadn’t lodged a tax return in 3 years.

When we got Xavier’s actual income details from the Australian Taxation Office, his income was higher than the provisional income we used. The child support assessment for that period changes and Xavier now owes Yvette child support.

Since the amount of child support Yvette was entitled to increased, we reassess her FTB Part A for that period. We do this because we assume she received the child support Xavier owes her. Yvette gets an FTB overpayment of $500. This happens because Yvette’s child support case is Private Collect. This means we base her FTB on the amount of child support she’s assessed to get, not the amount she actually collects.

We raise an FTB debt of $500 which Yvette has to start repaying immediately. She can appeal, and ask us to collect child support on her behalf, including up to 3 months of unpaid child support.

If you have a child support agreement

If you have a child support agreement, we’ll:

  • assess how much child support you could get if the agreement wasn’t in place – we call this a notional assessment
  • use this to calculate how much FTB Part A you can get

If we accepted your agreement before 1 July 2008

We’ll assess your FTB Part A rate on the actual value of the agreement.

Balancing your FTB payments

At the end of the financial year, we balance your family assistance payments. This tells us if you got the right amount of FTB.

Balancing your payments when you use Private collect

We use the amount of child support we assessed you to receive. We can’t pay you more FTB if you didn’t collect the full amount.

If we change your child support assessment then the amount of child support you were eligible for may increase. If this happens we’ll rebalance your FTB Part A. This may happen whether or not you get the child support owed to you by the payer. This could result in an FTB overpayment, or debt, that you need to repay.

Example

When a paying parent lodges a tax return for a previous financial year, we get their actual income details. Their income may be higher than the income we used in the child support assessment. If this happens, the child support payable for that period will go up.

Balancing your payments when you use Child Support collect

We balance your FTB Part A based on the actual amount of child support you got during the financial year. If you got less child support than the amount we assessed you to get, you may get a FTB top up. If you got more, you may get an overpayment, which we’ll start collecting immediately. We can also use tax refunds to recover the overpayment.

If you don’t use all of your Maintenance Income Free Area, you may be able to access the Maintenance Income Credit. If you have a Maintenance Income Credit and get arrears of child support, we can use this credit to reduce an overpayment.

Change in circumstances

If your circumstances change, you must update your child support assessment. Changes to your circumstances may affect the child support you get.

Read more about the changes that affect your child support.

How to update your child support assessment

You can:

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Page last updated: 5 July 2017

This information was printed Friday 21 July 2017 from humanservices.gov.au/customer/enablers/child-support-and-your-family-tax-benefit-part It may not include all of the relevant information on this topic. Please consider any relevant site notices at humanservices.gov.au/siteinformation when using this material.