Family Tax Benefit · guide
The Family Tax Benefit income test, step by step
Two formulas, one payment: how Centrelink reduces Part A as family income rises, and why Part B works differently.
Checked by Radif Partners · Editorial policy · How we calculate
The Family Tax Benefit Part A income test reduces the payment by 20 cents for each dollar of family income above $69,131 and by 30 cents for each dollar above $123,078, in the 2026-27 income year. Centrelink applies it twice. Method 1 tapers the maximum rate and is never allowed below the base rate while income stays at or under $123,078; Method 2 starts from the base rate and only tapers above $123,078. The family is paid the higher result. For two children aged 3 and 9, Part A reaches the base rate at about $110,814 of family income and stops at about $136,218. Part B has its own test, on the higher earner first and then the lower earner alone. Neither test applies while a parent receives an income support payment such as JobSeeker or Parenting Payment.
Part A income test for 2 children (aged 3 and 9)
Part A for the year
$3,942
| Method 1 (maximum rate, tapered) | $2,105 |
| Method 2 (base rate, tapered) | $3,942 |
| Paid | Method 2 |
| Method 1 reduction | $10,174 |
The three income bands
Picture family income as a line with two marks on it. Up to the first mark, $69,131, nothing is taken off. Between the two marks, every dollar costs 20 cents of Part A, but only down to the base rate: once a family has lost everything above the base rate, extra income in this band costs nothing more. Past the second mark, $123,078, every dollar costs 30 cents, and this time the base rate goes too. Those three bands are the whole of the Part A test (Family Assistance Guide 3.1.4.40).
Family income here means adjusted taxable income for the financial year, both partners added together. It is not take-home pay: salary before tax, plus items such as reportable fringe benefits and reportable superannuation contributions, plus a net investment loss added back.
Why there are two methods
Method 1 and Method 2 are two ways of doing the same arithmetic. Method 1 starts high, at the maximum rate with any Rent Assistance and supplement, and applies the 20 cent and 30 cent tapers. Method 2 starts low, at the base rate, and applies only the 30 cent taper above the higher mark. Section 3.1.8.20 tells Centrelink to compute both and pay the higher. Below the higher income free area, Method 1 always wins or ties, because it cannot fall under the base rate. Above it, Method 2 often wins, since it has not already spent part of the income on the 20 cent band.
| Family income | Method 1 (year) | Method 2 (year) | Paid | Per fortnight |
|---|---|---|---|---|
| $60,000 | $14,220 | $5,884 | Method 1 | $471 |
| $80,000 | $12,047 | $5,884 | Method 1 | $388 |
| $100,000 | $6,105 | $3,942 | Method 1 | $234 |
| $123,000 | $1,505 | $3,942 | Method 2 | $151 |
| $135,000 | $0 | $365 | Method 2 | $14 |
| $150,000 | $0 | $0 | nothing | $0 |
| $170,000 | $0 | $0 | nothing | $0 |
Reading the table
At $80,000 the family is in the 20 cent band and still well above the base rate. By $100,000 Method 1 has fallen close to the base rate. At $123,000, just under the higher mark, both methods give the base rate of the two children. Above it, the two lines separate: at $150,000 Method 1 would pay $0 and Method 2 pays $0, so Method 2 is what reaches the bank account. The last dollar of Part A disappears around $136,218.
Notice the supplement. It belongs to the maximum rate and the base rate, but it is only included when family income is at or under $80,000. One dollar over that line removes the whole supplement for every child, which is the sharpest step anywhere in the Part A test.
Part B is tested differently
Part B ignores the family total. It first asks whether the higher earner is at or under $124,327; if not, nothing is paid. It then looks only at the lower earner, who can earn $7,154 before Part B starts to fall by 20 cents in the dollar. The two parts can therefore move in opposite directions: a second parent going back to work part time reduces Part B straight away but may barely touch Part A if family income stays under $69,131. See Family Tax Benefit Part B.
Estimates and the end-of-year check
Centrelink pays during the year on the income you estimate, then reconciles once both tax returns are processed. Under-estimate and the difference becomes a debt; over-estimate and you receive a top-up. Because the 20 cent band is wide, a $5,000 error in the estimate typically means about $1,000 of Part A to repay or receive. Services Australia's own description of the steps is in its Operational Blueprint for Method 2.