2012 Australian Baby Bonus News Site.

Here is a great blog that contains heaps of useful information:

Note this blog is located on www.news.com.au

To visit the blog: http://blogs.news.com.au/moneystuff/...ave?area=money


Justine Davies

Monday, September 27, 2010 at 09:03pm

Hi Justine, I have a money question for you: We are planning on having a baby next year, and I just want to know what the difference is between the paid maternity leave, and the baby bonus (and if one works out better in the long run). I also heard if you take paid maternity leave then you cannot claim FTB (family tax benefit) for the year you take off. If you take the baby bonus you can claim FTB. Is this true? (I won’t be working and my husband earns approx $60,000.00 per year) Thanks, Prima.

Hi Prima,
Okay, as a bit of general information for readers – earlier this year the Labor government passed Australia’s first-ever Paid Parental Leave scheme, which is designed to encourage parents to take at least 18 weeks off work after the birth of their child by paying them up to 18 weeks paid parental leave, paid at the National Minimum Wage (which is currently $570 a week before tax). So a total benefit before tax of $10,260. This money is considered to be taxable income.
This compares to our current Baby Bonus scheme (which will still continue) which pays eligible parents a total of $5,294 over 26 weeks. This money is not considered to be taxable income.
As well, some parents will receive Family Tax Benefit A (FTB A), which is a means-tested fortnightly benefit of up to $160 per fortnight , per child. And single or lower-income parents may also receive Family Tax Benefit B (FTB B) which is up to $136 per fortnight. Then there are various supplements and so forth.
Working parents will be able to choose whether to opt for the Baby Bonus or the Paid Maternity Leave, depending on which one works out to be financially better for them. You can certainly claim Family Tax Benefit (FTB) either way (although if you choose Paid Parental Leave you won’t get paid FTB B for the 18 weeks that you are receiving the other payment), you just need to calculate how much FTB you will get under each scenario.

And Prima – as to which one will work out better for you, it’s going to depend largely on when you have your baby - at the beginning of the financial year, halfway through, or towards the end. Because that’s going to affect how much you earn in that financial year and hence what amount (if any) of FTB A and B you may be eligible for.
Let’s say, for arguments sake, that you go on maternity leave on 1st July and earn no other money for the financial year. If you chose the baby Bonus you would receive $5,294 baby bonus, plus $1,335 of FTB A, plus $3,555 of FTB B (and some supplements). That’s a total of $10,184.
If you chose the Paid Maternity Leave, you would receive $10,260 paid leave, plus $1,335 FTB A, plus about $2,000 of FTB B. So a total of $13,595. With the low income tax offset, this should effectively be tax-free.
In this situation, the Paid Maternity Leave would be better. And in fact the Government estimates that more than 85% of families will be better off receiving Paid Parental Leave. These families will, on average, receive around $2,000 more than if they chose the Baby Bonus. This is after tax has been paid and all interactions with other family assistance have been taken into account.

Prima, if you start your leave part way through a financial year then it will depend on how much you earn and whether you are close to any income thresholds for various benefits. The Family Assistance Office is going to launch an online calculator on 1st October to enable families to plug in their specific figures and check it out for themselves, so I’d recommend that, when the time comes, you check it out.


A few tips to be aware of:
•When you estimate your income, don’t forget any holiday leave, long service leave or paid maternity leave that you are eligible for through your work.
•You can’t go back to work and continue to receive paid parental leave. If you return to work, the payments will stop.
•Another option is for you and your partner to “share” the paid parental leave, or for your partner to take it instead of you.
•Be aware that you have to meet a work test in order to claim the Paid Maternity Leave.


And Prima if you have twins then your question will be irrelevant – you’ll be able to claim one lot of Paid Maternity Leave and one lot of Baby Bonus!
Good luck with it all Prima. I hope your baby-making plans all go well!
Cheers,
Justine
www.news.com.au blog located on this link http://blogs.news.com.au/moneystuff/...ave?area=money