Baby bonus

Am I eligible? |  'Primary care giver' |  A little background

The baby bonus is a payment of $5,000 (from September 1, 2012) for each child, not taxed, and paid by higher first instalment of 16.92% of the total (to help with upfront costs) and 12 fortnightly instalments of the balance paid after that. To be eligible you need to pass an income test. The scheme is administered out of the Family Assistance Office. It is available for each baby in multiple births, and has been extended to cover adopted children who are less than 16 years old. A woman who has a stillborn baby also gets the payment.

NOTE: The government announced that it will pause indexation of the bonus for three years from July 1, 2012. Also, from July 1, 2013, the Baby Bonus for subsequent children born after the first child will be reduced to $3,000.

Am I eligible?
The income test hurdle is based on the equivalent of $150,000 a year, but coined as the parent or primary carer's 'adjusted taxable income' that is $75,000 or less in the six months following the birth', or six months from the day a child enters your care in the case of adoption.

Adjusted taxable income equals gross assessable income less allowable deductions, the value of certain non-taxable 'income' less any child support you may pay (see here for details on how this is all worked out).

The time you have to make a baby bonus claim has been extended from 26 weeks to 52 (because some people may have had too little time to get a realistic estimate of family income, as circumstances, and income levels, can change over a year).

You cannot receive paid parental leave (see below) and a baby bonus payment for the same child. If you are eligible for both parental leave and the baby bonus, you can access Centrelink's Paid Parental Leave Comparison Estimator to help you make an informed decision about which payment to claim.

Primary care giver
While the bonus is intended to remain a payment for the mother, there are circumstances where the mother will not be the primary care giver. Payment can be arranged to go to the care giver or divided up between care givers, and these decisions are managed by the Family Assistance Office.

The paid parental leave scheme (see details here) cuts off parents from claiming the baby bonus (except for multiple births) or the family tax benefit part B for the 18 weeks of the paid parental leave.  Also, paid parental leave scheme benefits will be taxable.

A little background
From the first day of 2009, the birth of a child also saw the birth of a new era in the life of Australia's baby bonus. The baby bonus, or maternity payment, replaced the old Tax Office-run scheme from January 1, 2009.

One of the more prominent changes to the baby bonus is that where before it was worked out as part of the annual tax return process (it was called an 'offset', which either reduced tax owed or added to a refund) it is now an actual cash payment spread over about six months.

Families who qualified under the old scheme continue to be eligible; however most will find that 2008-09 was their last 'claim year' (the bonus was spread over five years) that was able to be claimed on a tax return, as children born in the final year before the old scheme was scrapped will have turned five. Late claims will be accepted until June 30, 2014, but you cannot claim through your tax return or lodge your claim by phone.

The rules on adopted children are another shift worth noting, as previously the bonus was limited to adopted children two years old or younger. Increasing the age limit to 16 years recognises that many adopted children are older than just two, and that adoptive parents may need to spend time out of the workforce to care and welcome their new family member.

The bonus continues to recognise the extra costs that bringing a new life into the world entails, and provides at least some financial help for new parents.

Last reviewed 23/10/2012

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