The Family Tax Benefit (FTB) is a government payment designed to assist Australian families with the cost of raising children. It is divided into two parts—FTB Part A and FTB Part B—each targeting different family circumstances.

While it provides crucial financial support, many families wonder whether these payments are considered taxable income. This article breaks down everything you need to know about the Family Tax Benefit, its eligibility criteria, and its tax implications.

What is the Family Tax Benefit?

The Family Tax Benefit is a two-part payment offered by Services Australia to help families manage the financial demands of raising children. Here’s a quick breakdown of its components:

  • FTB Part A: This payment is made per child and depends on your family’s income and circumstances.
  • FTB Part B: This payment provides additional support for single parents, grandparent carers, or families with one primary income earner.

Both parts aim to ease the financial burden on families and ensure children receive adequate care and resources.

Eligibility for Family Tax Benefit

To qualify for the Family Tax Benefit, you must meet specific requirements related to your family situation, income, and residency.

General Eligibility Criteria

  • You must have a dependent child or a full-time secondary student aged 16–19 years who isn’t receiving other government benefits like Youth Allowance.
  • You must care for the child at least 35% of the time.
  • You must meet an income test and satisfy residency rules.

FTB Part A Eligibility

  • For children aged 0–15 years, or
  • For children aged 16–19 years, they must meet study requirements (e.g., full-time secondary education).
  • Immunisation requirements must also be met.

FTB Part B Eligibility

  • Available to:
  • Single parents or grandparent carers of children under 18 years.
  • Couples with one primary income earner caring for a child under 13 years.
  • You cannot receive FTB Part B if you are already receiving Parental Leave Pay.

How is Family Tax Benefit Paid?

The payments are calculated based on your family’s circumstances, including your adjusted taxable income. Payments can be made fortnightly or as a lump sum after lodging your tax return at the end of the financial year. The amount varies depending on factors such as:

  • The number of children in your care.
  • The age of your children.
  • Your family’s total income.

For example:

  • Families with younger children (aged 0–12) may receive higher payments compared to those with older children (aged 13–19).

Is Family Tax Benefit Taxable Income?

One of the most common questions about FTB is whether it counts as taxable income. The answer is straightforward: Family Tax Benefit payments are not included in taxable income.

This means you don’t need to pay tax on FTB payments or declare them as part of your gross income when filing your tax return. However, there are some important considerations:

  1. You must provide an accurate estimate of your family’s gross income when applying for FTB.
  2. If you underestimate your income or fail to update changes in your financial situation, you may receive an overpayment. In such cases, Centrelink will require you to repay the excess amount as a debt. While no interest is charged on this debt, repayment arrangements can be made if needed.

Why Accurate Income Reporting Matters

Although FTB payments are not taxable, they are calculated based on your adjusted taxable income. This includes:

  • Wages and salaries.
  • Business or investment income.
  • Other taxable government payments (e.g., JobKeeper).

If you fail to report changes in your financial situation, it could affect your eligibility or lead to overpayments that need to be repaid.

How to Apply for Family Tax Benefit

Applying for FTB is straightforward:

  1. Set up a myGov account linked to Centrelink.
  2. Lodge a claim online by providing details about your family’s income, residency status, and dependent children.
  3. Submit supporting documents such as tax file numbers (TFNs), proof of identity, and details about shared care arrangements if applicable.

Once submitted, Centrelink typically processes claims within 28 days.