Baby Bonus or the Paid Parental Leave scheme – which is better for you?
If you’re a working parent expecting to have a baby or adopt a child, you may be eligible to receive either Parental Leave Pay or the Baby Bonus.
Parental Leave Pay and the Baby Bonus cannot be paid for the same child. Most eligible families will be better off receiving Paid Parental Leave rather than the Baby Bonus. If you meet the eligibility criteria for both payments, you can choose which payment is the best financial decision for your family.
So, how do you figure out which option is best for your circumstances?
You can use the Paid Parental Leave Comparison Estimator at www.humanservices.gov.au to help you do this, but here are some starting points to think about in making your choice:
Do you work?
There is a Paid Parental Leave work test. To be eligible for Parental Leave Pay you must have worked for at least 10 of the 13 months prior to the birth or adoption of your child, and worked for at least 330 hours in that 10 month period (just over one day a week) with no more than an eight week gap between two consecutive working days. A working day is defined as a day you have worked for at least one hour.
There are some exceptions to the work test if you cannot meet it due to pregnancy complications and/or premature birth.
Parental Leave Pay is available to full-time, part-time, casual or seasonal workers, contractors and self-employed workers, people who work in a family business (such as a farm), people who have multiple employers, and people who have recently changed jobs.
There is no work test for the Baby Bonus. This means that your eligibility is not affected by whether or not you worked prior to the birth or adoption.
What other factors than work affect your eligibility?
To be eligible for Paid Parental Leave or the Baby Bonus, you must be an Australian resident.
To be eligible to receive Paid Parental Leave you need to:
- be the primary carer of a newborn child born after 1 January 2011 or a child adopted after 1 January 2011
- have received an individual adjusted taxable income of $150,000 or less in the previous financial year, and
- be on leave or not working from the time you become the child’s primary carer until the end of your Paid Parental Leave period.
To be eligible for the Baby Bonus you need to:
- be the primary carer or the partner of the primary carer of a newborn or recently adopted child
- have a family adjusted taxable income of $75,000 or less for the six month period following the birth of your baby, or the date that the child enters your care, and
- have care of the child for at least 35 per cent of the time.
How does your income affect your eligibility?
Paid Parental Leave is dependent on your individual income whereas the Baby Bonus is dependent on your family income.
To be eligible for Parental Leave Pay, the primary carer of the child (usually the birth mother) must have an individual adjusted taxable income of $150,000 or less in the financial year prior to the birth/adoption or claim, whichever is the earlier.
Baby Bonus is dependent on your family income. To be eligible for the Baby Bonus, you and your partner (if you have one) must have a family adjusted taxable income of $75,000 or less for the six month period following the birth of your baby or the date that the child enters your care.
When can you claim?
You can lodge a claim for the Paid Parental Leave scheme or the Baby Bonus up to three months before the expected date of birth or adoption of your child. Claiming before your child arrives will help prevent any delay in providing you with your Parental Leave Pay.
Parental Leave Pay must be fully paid within 52 weeks of the birth or adoption. To receive the full 18 weeks of Paid Parental Leave, you will need to lodge your claim no later than 34 weeks after the birth or adoption of your child.
To receive the Baby Bonus you need to claim no later than 52 weeks after the child’s birth, or in the case of adoption, no later than 52 weeks after the child is entrusted into your care as part of the adoption process.
You can lodge a claim for Parental Leave Pay or the Baby Bonus by using Online Services at www.humanservices.gov.au or by contacting the Department of Human Services on 13 6150.
How much do you receive, and when?
Parental Leave Pay is paid at the rate of the National Minimum Wage for a maximum period of 18 weeks, currently $589.40 per week before tax – a total of $10,609.20 before tax. The income that you receive as Paid Parental Leave is taxable. The rate of tax depends on your individual circumstances.
In the case of multiple births (for example twins, triplets), you may receive Parental Leave Pay for one child and the Baby Bonus for the other child, or children, in the multiple birth, if eligible.
Parental Leave Pay can start from the day your child is born or adopted or a later date, but must be fully paid within 52 weeks from the date of birth or adoption.
Until the 31st August, 2012 the Baby Bonus payment will be $5,437, paid in 13 fortnightly instalments. The Baby Bonus is not taxable or considered income for DHS or Social Security purposes.
From September 1, 2012 the Baby Bonus will be $5000 and will be paid in 13 fortnightly instalments. The first payment will be larger than the subsequent payments.
You may receive Baby Bonus for each eligible child. For example, if you have twins you may receive a Baby Bonus payment for each child.
The Baby Bonus payment will start from the date you finalise your claim for the payment.
Can you work whilst receiving the payment?
To receive Parental Leave Pay you cannot work from the time you become the primary carer of your child until the end of your Paid Parental Leave period. If you decide to return to work before the end of your Paid Parental Leave period you will need to notify the Department of Human Services. The unused part of your Parental Leave Pay may be transferred to your partner if they meet the eligibility criteria and they claim your unused Parental Leave Pay.
You can work whilst receiving the Baby Bonus.
For more information and to discuss your individual circumstance, visit www.humanservices.gov.au, use the Paid Parental Leave Comparison Estimator at www.humanservices.gov.au or contact the Department of Human Services on 13 6150.