(Cth) Remove the Maintenance Income Test from Family Tax Benefit Part A Payments

Abigail Ma, Stella Prassi & Chelsea Lee
8 hours ago
9 min read

Author: Abigail Ma, Stella Prassi & Chelsea Lee | Publish date: 12/3/2026

P: In Australia, families who receive child support may have their Family Tax Benefit Part A rate calculation reduced under the Maintenance Income Test.
S: The Minister for Social Services should amend Step 3 of Division 1, under Part 2, Schedule 1 of A New Tax System (Family Assistance) Act 1999 (Cth), to remove the Maintenance Income Test from the Family Tax Benefit Part A rate calculation.

Problem Identification:

Step 3 of Division 1, Part 2, Schedule 1 of A New Tax System (Family Assistance) Act 1999 (Cth) sets out the Maintenance Income Test (MIT). Under the MIT, Family Tax Benefit Part A (FTB-A) is reduced once assessed child support exceeds the Maintenance Income Free Area (MIFA) ($2,003.85). For every dollar of child support assessed above this threshold, FTB-A is reduced by 50 cents, until the payment reaches the base rate.

Single Mother Families Australia (SMFA, formerly the National Council of Single Mothers and their Children) stated that this often causes financial hardship for single-parent households and disproportionately penalises single-parent families compared with two-parent families.

Context:

FTB-A refers to a government payment for low- to mid-income parents with children. FTB-A is designed to help families with the cost of raising children and is paid per child. FTB-A is most often relied on by one-parent households.

Maintenance income refers to payments or benefits received by an individual for the upkeep of an FTB child after partner separation. Child maintenance, or child support, usually involves a payee parent (person who receives) and a payer parent (parent who pays).

For example, according to Services Australia, if a parent is entitled to $5,000 in child support in a year and their MIFA is $2,000, the remaining $3,000 is subject to the MIT. FTB-A is then reduced by 50 cents per dollar above the free threshold, resulting in a $1,500 reduction in their annual FTB-A payment.

Arguments:

According to SMFA, the MIT exposes low-income and single-parent families to ‘increased financial and living pressures’. SMFA reported that the MIT withheld $810 million in 2021-22 from 300,000 single parents and their children, removing substantial sums from families who are more likely to be financially vulnerable. The Women’s Electoral Lobby (WEL) warned that this ‘exposes [single mothers] and their children to ongoing risks of poverty [and] insecure accommodation’. The Economic Inclusion Advisory Committee (EIAC) further highlighted that FTB-A often makes it ‘impossible for families on very low incomes to budget or make ends meet.’

According to social policy researchers from Swinburne University of Technology, the MIT allows paying parents to use non-payment and irregular payment as a form of financial abuse. They noted that ‘payers who deliberately fail to lodge tax returns, actively seek to minimise their child support liabilities or fail to make payments’ may use the child support and Family Tax Benefit systems as ‘a financial weapon.’ The researchers from Swinburne also found that ‘64% [of single mothers] had experienced the deliberate withholding of child support’.

According to SMFA, the MIT penalises single-parent households more than a two-parent family. They highlighted that the MIT disproportionately reduces FTB-A for single-parents, while two-parent families with similar incomes are not affected in the same way. According to SMFA, ‘a single Mum who is assessed to receive child support of $100 a week for two children … will lose $25 from her family payments per week’ under the MIT. By contrast, SMFA noted that ‘a couple with 2 children (aged 10 and 13) don’t start to lose any family payments until their income … is higher than $1,254 per week and then it only reduces by 20 cents per dollar.’ The Ministerial Taskforce on Child Support found that, due to the MIT, ‘many separated parents receive less FTB Part A than they would if they were living together.’

Advice/Solution Identification:

The EIAC, Women's Economic Equality Taskforce, Working with Women Alliance, and SMFA have all called for the removal of the MIT from Family Tax Benefit Part A payments. The EIAC said that ‘The removal of the MIT would result in more certain FTB Part A payments for financially vulnerable families … and concurrently close a loophole that allows child support and FTB Part A to be used as vehicles for enacting financial abuse.’

Precedent:

There is international precedent for excluding maintenance payments from social-security income tests. In NZ, the UK and the USA, child support is not treated as income in the calculation of family benefit payments. In Ireland, any child maintenance a person receives is no longer assessed in the means or income test for any social welfare payments.

Public Support:

EIAC (2023-24)
Single Mother Families Australia
Women's Economic Equality Taskforce (2023)
Working with Women Alliance

This list reflects publicly stated positions and should not necessarily be taken as endorsement of this specific brief.

News Coverage:

The Adviser - “Government urged to put financial literacy on the curriculum.” This article noted calls for improved financial literacy to help individuals navigate complex systems, including welfare and family financial entitlements. By Annie Kane | 25 Oct 2023 - Read the article here.
The Guardian - “Child support used as ‘tool of violence’ for economic abuse of women in Australia, report finds”. This article reported on research concerning child support systems being weaponised to control and economically abuse women, including deliberate withholding or reduction of payments. By Tory Shepherd | 6 May 2024 - Read the article here.
The Guardian - "Single parents in Australia are owed $3.7bn in child support. Anne says no leader has been ‘brave enough’ to fix it.” This article reported that large sums of unpaid child support debt contribute to poverty for single parents, with one mother’s experience illustrating systemic failures to enforce payments. By Amy Remeikis | 8 Oct 2024 - Read the article here.
ABC News - “The child support payment system is outdated and not fit for modern parenting, according to critics.” This article reported that critics argue the child support calculation framework disadvantages parents, has substantial unpaid debt and fails to keep pace with cost-of-living pressures. By Conor Duffy and Alison Branley | 15 Mar 2024 - Read the article here.
The Sydney Morning Herald - “‘Middle incomes miss out’: Why fewer families are eligible for tax benefit.” This article reported that repeated indexation freezes have reduced the reach and value of Family Tax Benefits, shifting them from supporting low- and middle-income families to primarily assisting low-income households. By Mary Ward | 3 December 2023 - Read the article here.

Where to go to learn more:

(2023) 2023–24 Report to the Australian Government | Interim Economic Inclusion Advisory Committee - The report by the Interim Economic Inclusion Advisory Committee examined how income-testing settings, including the interaction between child support and Family Tax Benefit, affected financial security, income stability and economic participation for low-income families and identified problems created by the Maintenance Income Test. Read the report here.
(2025) Child Support Briefing Paper | Single Mother Families Australia - This briefing paper by Single Mother Families Australia analysed how the Maintenance Income Test reduced Family Tax Benefit Part A for single-parent households and quantified the amount of income removed from families through the policy. Read the briefing paper here.
(2023) Financial Abuse: The Weaponisation of Child Support in Australia | Social policy academics from Swinburne University - This report by social policy academics from Swinburne University documented how the interaction between child support and Family Tax Benefit enabled financial abuse, including through deliberate non-payment and system design flaws that exposed women and children to financial harm. Read the report here.
(2011) National Tax Forum | National Council of Single Mothers and their Children - This report by the National Council of Single Mothers and their Children outlined the financial pressures facing single-parent families and argued that the Maintenance Income Test produced inequitable and harmful outcomes for primary carers and their children. Read the report here.
A New Tax System (Family Assistance) Act 1999 (Cth) - Read the full Act here.

Human Perspective:

Trigger warning: Financial stress.

Rachel is raising two school-aged children on her own. She works part-time and brings in about $600 a week, with another $250 from child support and roughly $250 in Family Tax Benefit Part A. On paper, her income sits around $1,100 a week. But it rarely feels stable. Once child support goes over $125 a week, her FTB-A drops by 50 cents for every extra dollar, even when child support payments are late or don’t arrive. A reassessment can cut $70 or $80 from her payments overnight, making budgeting from one fortnight to the next feel impossible. She works around school hours and can’t easily pick up more shifts. There have been weeks she’s relied on charities for groceries and friends just to keep up with rent. Next door, Mark and Anna have two children of similar ages and earn about the same overall. When their income rises, their family payments reduce by about 20 cents for every dollar, and only once their earnings are higher. Rachel feels this is deeply unfair and almost wishes she were living with a partner just so she could be treated the same and have more funds for her kids.

Trigger warning: Financial abuse and stress.

Mike and Linda are separated and have a child together. Linda receives child support from Mike, the paying parent, which she uses to cover everyday essentials like rent, food, school costs and childcare. Mike does not lodge his tax returns and instead gives Services Australia an income declaration saying he earns $100,000. Over the years, Linda has been paid FTB-A based on this figure, and she builds her household budget around it. Eventually, Services Australia discovers Mike was actually earning $200,000 and recalculates how much child support should have been paid. Because child support reduces FTB-A, Linda is told she was overpaid FTB-A and is issued a debt. Linda feels confused as she tries to understand how the money she used for rent, groceries, and school expenses could now be considered an overpayment. The debt feels frightening as she realises she does not have savings to cover it. What troubles her most is the sense that she is still financially exposed to decisions made by a former partner, choices she had no control over and did not know were untrue.

To protect the anonymity of those involved, this is a fictionalised account drawn from an amalgamation of real-life stories, experiences and testimonials gathered during the research process for this brief. Any resemblance to actual individuals is purely coincidental.

Conflict of interest/acknowledgment statement:

N/A

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Reference list:

Australian Bureau of Statistics. (2018). Government benefits, taxes and household income, Australia, 2015-16. https://www.abs.gov.au/statistics/economy/finance/government-benefits-taxes-and-household-income-australia/latest-release

A New Tax System (Family Assistance) Act 1999 (Cth). https://www.legislation.gov.au/C2004A00490/latest/text

Australian Government. (2026, February 2). 1.1.M.10 Maintenance (FTB). https://guides.dss.gov.au/family-assistance-guide/1/1/m/10

Australian Government. (2026, February 2). 1.2.1 Family tax benefit (FTB) – description. https://guides.dss.gov.au/family-assistance-guide/1/2/1

Cook, K., Byrt, A., Burgin, R., Edwards, T., Coen, A., & Dimopoulos, G. (2023). Financial abuse: The weaponisation of child support in Australia. Swinburne University of Technology and the National Council of Single Mothers and their Children. https://apo.org.au/sites/default/files/resource-files/2023-03/apo-nid321973.pdf

Cook, K., Byrt, A., Edwards, R., & Coen, A. (2024). Opening the Black Box of Child Support: Shining a Light on How Financial Abuse Is Perpetrated. Swinburne University of Technology. https://apo.org.au/sites/default/files/resource-files/2024-10/apo-nid328732_0.pdf

Department of Social Protection. (2024, June 4). Minister Humphreys announces implementation of landmark legislation to reform child maintenance system. Government of Ireland. https://www.gov.ie/en/department-of-social-protection/press-releases/minister-humphreys-announces-implementation-of-landmark-legislation-to-reform-child-maintenance-system/

Duffy, C., & Bradley, A. (2024, March 15). The child support payment system is outdated and not fit for modern parenting, according to critics. ABC News. https://www.abc.net.au/news/2024-03-15/child-support-agency-overhaul-parenting-payments/103589324

Economic Justice Australia. (2025, June 18). Concerns regarding the intersection of child support and Family Tax Benefit. https://www.ejaustralia.org.au/wp-content/uploads/Concerns-regarding-the-intersection-of-Child-Support-and-Family-Tax-Benefit-Updated-2-July-25.pdf

Economic Inclusion Advisory Committee. (2024). 2024 Report to Government. https://www.dss.gov.au/system/files/resources/13404-eiac-report-dv-08-app-orig_0.pdf

Interim Economic Inclusion Advisory Committee. (2023). Interim Economic Inclusion Advisory Committee 2023–24 report to the Australian Government. https://ministers.treasury.gov.au/sites/ministers.treasury.gov.au/files/2023-04/eiac-report.pdf

Kane, A. (2023, October 25). Government urged to put financial literacy on the curriculum. The Adviser. https://www.theadviser.com.au/borrower/44998-government-urged-to-put-financial-literacy-on-the-curriculum

Ministerial Taskforce on Child Support. (2005). In the Best Interests of Children - Reforming the Child Support Scheme. https://www.dss.gov.au/system/files/resources/best_interests_children_full_report.pdf

National Council of Single Mothers and their Children. (2011). National Tax Forum. https://treasury.gov.au/sites/default/files/2019-03/National-Council-of-Single-Mothers-their-Children.pdf

Remeikis, A. (2024, October 4). Single parents in Australia are owed $3.7bn in child support. Anne says no leader has been ‘brave enough’ to fix it. The Guardian. https://www.theguardian.com/society/2024/oct/08/single-parents-in-australia-are-owed-37bn-in-child-support-anne-says-no-leader-has-been-brave-enough-to-fix-it

Services Australia. (2025, July 1). Income test for FTB Part A. https://www.servicesaustralia.gov.au/income-test-for-family-tax-benefit-part?context=22151

Services Australia. (2026, January 13). How child support affects FTB Part A payment rates. https://www.servicesaustralia.gov.au/how-child-support-affects-ftb-part-payment-rates?context=21911

Shepherd, T. (2024, May 6). Child support used as ‘tool of violence’ for economic abuse of women in Australia, report finds. The Guardian. https://www.theguardian.com/australia-news/article/2024/may/06/child-support-used-as-tool-of-violence-for-economic-abuse-of-women-in-australia-report-finds

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Ward, M. (2023, December 3). ‘Middle incomes miss out’: Why fewer families are eligible for tax benefit. The Sydney Morning Herald. https://www.smh.com.au/national/middle-incomes-miss-out-why-fewer-families-are-eligible-for-tax-benefit-20231128-p5enfp.html

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Working with Women Alliance. (2025). 2026-2027 Pre-Budget Submission. https://wwwa.org.au/wp-content/uploads/2025/10/NWA-2026-2027-Pre-Budget-Submission.pdf