FTB for Blended Families: Navigating Benefits When Combining Households

Blended families are increasingly common in Australia, with many couples bringing children from previous relationships into their new partnership. While forming a blended family is a wonderful new chapter, it creates unique complexities when it comes to Family Tax Benefit calculations. Understanding how Centrelink assesses your combined household helps you maximise your entitlements and avoid unexpected payment adjustments.

How Blended Families Are Assessed for FTB

When you form a new relationship and move in together, Services Australia treats your household as a single family unit for FTB purposes, regardless of whether you're married, in a de facto relationship, or registered. This means both partners' incomes are combined when calculating your family's FTB entitlements, even if some children are biologically related to only one partner.

The partner who has primary care of each child is typically the one who receives FTB for that child, though you can nominate which partner receives the payment. In practical terms, one parent often claims FTB for all children in the household to simplify administration, but this is your choice as a family.

Each child in your care counts towards your family's FTB payment, whether they are biological children, step-children, or children you care for through other arrangements. The key factor is that you have at least 35 percent care of the child, meaning you care for them at least 35 percent of the time in a typical fortnight.

Step-Children and FTB Eligibility

Step-children can absolutely be included in your FTB claim, provided you meet the care percentage requirements. If your partner's children from a previous relationship live with you more than 35 percent of the time, they can be included in your household's FTB calculation. This applies regardless of the legal relationship between you and the step-children.

The important consideration is that only one household can claim FTB for each child. If the step-child's other biological parent also has significant care time, the FTB payment may need to be split between households based on actual care percentages. Services Australia uses a shared care arrangement formula to calculate how much each household receives.

You don't need to legally adopt step-children to include them in your FTB claim. What matters is the actual care arrangement rather than legal guardianship status. However, clear documentation of care arrangements helps if there are ever questions about your claim.

Managing Shared Care Across Households

Blended families often involve children moving between multiple households. A child might spend weekdays with your family and weekends with their other biological parent, for example. Services Australia calculates the care percentage based on these arrangements and splits FTB payments accordingly.

The care percentage thresholds are important to understand. If you have 35 to 65 percent care, you receive a proportional share of FTB. With less than 35 percent care, you cannot claim FTB for that child. With more than 65 percent care, you receive the full FTB payment and the other household receives nothing for that child.

Care arrangements can be complex in blended families where multiple children have different schedules with their respective other parents. Each child's care percentage is calculated individually, so you might receive full FTB for one child while splitting payments for another child with their other parent's household.

Combined Income Considerations

One of the biggest changes when forming a blended family is the income test calculation. Before you moved in together, each partner's FTB was calculated based on their individual income (plus any child support received). After forming a household, your combined income determines your FTB entitlements.

This can sometimes reduce your total FTB payments compared to what both partners received separately, particularly if one partner had a low income and received maximum FTB rates. The combined income may push your family over the income-free threshold, causing payment reductions.

However, having more children in the household can offset income test impacts. The income test applies to your total FTB entitlement, and larger families have higher maximum rates. In some cases, combining households with multiple children results in higher total payments despite the combined income.

FTB Part B for Blended Families

FTB Part B is designed for single-parent families and families with one main income earner. When you form a blended family, your FTB Part B eligibility changes based on your new circumstances. Couples are subject to the secondary earner income test, which limits Part B based on the lower-earning partner's income.

If both partners work and earn above the Part B threshold, you may lose Part B eligibility entirely after combining households. However, if one partner stays home or works limited hours, you may still qualify for significant Part B payments. The youngest child's age in the household determines which Part B rate applies.

Planning around these thresholds can help maximise your family payments. Some blended families find that adjusting work hours or timing income differently helps maintain Part B eligibility while still meeting the family's needs.

Reporting Your New Family Situation

When you form a blended family, you must notify Services Australia within 14 days of your change in circumstances. This includes advising them of your new relationship, your partner's income, and any changes to care arrangements for children. Failing to report changes can result in overpayments that you'll need to repay.

You can update your circumstances through your myGov account linked to Centrelink, by calling the Centrelink families line, or by visiting a service centre. Online updates are usually fastest and create a clear record of when you reported the change.

Both partners may need to update their individual Centrelink records, especially if both were previously receiving FTB. Coordinate your updates to ensure the transition is smooth and all children are correctly attributed to your new family unit.

Key Takeaways

• Blended families are assessed as a single unit with combined income
• Step-children can be included in FTB claims with 35% or more care
• Shared care arrangements split FTB between households proportionally
• Combined income may affect your FTB rates compared to when single
• FTB Part B eligibility changes when you become a couple
• Report relationship changes within 14 days to avoid overpayments

Navigating FTB as a blended family requires understanding how multiple children, shared care arrangements, and combined incomes interact. While the rules can seem complex, they're designed to ensure fair treatment regardless of family structure. Taking time to understand your entitlements and keeping Centrelink informed of changes helps your family receive the correct payments and avoid complications down the track.