Mr Taxman
Change the way you feel about taxes.
Get informed and discover what the taxman doesn't want you to know.
Sharing it with Australia, Mr Taxman is a regular Woman’s Day columist and TV finance commentator
  • click to visit Mr Taxman on Twitter
  • click to visit Mr Taxman on FaceBook
  • rss

Paid parental leave

Nov 23, 2010

My daughter-in-law is expecting a child in June.  They earn $83,000 combined.  Can she receive the new Paid Parental Leave Pay as well as the Baby Bonus?

Esther, Meadowbank, NSW

From 1 January 2011, eligible working parents of children born or adopted after that date may get the government-funded Paid Parental Leave Pay to help them care for a new baby.  The pay is for up to 18 weeks at the minimum wage (currently $570).

To be eligible your daughter-in-law must work at least 330 hours in total across 10 of the 13 months before the new baby arrives.  She can earn an annual salary of up to $150,000.

This is different to the Baby Bonus which is payable provided the family's combined income is under $75,000 in the six months immediately after the birth.

Unfortunately, whilst it appears that your daughter-in-law will meet the eligibility criteria for both payments, you cannot be paid both the Parental Leave Pay and the Baby Bonus for the same child.  The only instance where she could claim both is where there is a multiple birth (such as twins or triplets), and she claims Parental Leave Pay for one and the Baby Bonus for the others. 

On the surface of it, most eligible families appear to be better off choosing the Paid Parental Leave as the 18 weeks' pay totalling $10,260 is almost double the Baby Bonus ($5,294).  But this payment is subject to tax and may also affect other government benefits such as child support, health care cards, public housing and dependent spouse rebates. 

By contrast, the Baby Bonus is not taxable and not considered income for Family Assistance or Social Security purposes.

To ensure that your family chooses the payment which is the best financially for them, I suggest that you look at the "Paid Parental Leave Estimator" on the Centrelink website.  This Estimator offers a comparison between the two payments and shows which payment is likely to benefit the family the most.

A claim for the Paid Parental Leave can be made up to three months in advance.  Don't worry if you pick the wrong benefit initially.  Provided that you haven't received any Parental Leave payments, you can change your claim to the Baby Bonus.

Tags: ChildrenFamily

Author: Mr Taxman

Comments

"I noticed in your article about Paid parental leave that you said the daughter inlaw could earn up to $150,000 p.a. I was just wondering if the limit was a taxable income of $150,000 combined for a couple or just $150,000 for just the parent claiming the PPL? Thanks"

By: Kath on Mar 20, 2012 12:33AM

"Kath - it is based on the individual adjusted taxable income. Please see www.australia.gov.au/paidparentalleave for more information on eligibility requirements."

By: Mr Taxman on Mar 27, 2012 10:50AM

"Hi, I am doing my partners tax online and am curious to know what to put in. She earned 3500 and payed 750 dollars in tax from her employer but also recieved 10600 dollars in paid parental leave of which she paid 1550 in tax. Do I have to add this to her tax return as income and if so will i recieve any of the tax paid for parental leave back as it is still classed as income. Thanks:)"

By: chris on Jul 19, 2012 4:12AM

"Yes you need to show this paid parental leave as salary income in item 1 & be taxed on it accordingly."

By: Mr Taxman on Jul 26, 2012 11:34AM

Post a New Comment

Media Availability

Are you interested in booking Mr Taxman for a speaking engagement or requesting his viewpoints for an article?

comments-rhsLatest Comments

  • "Hello, I got married overseas in December 2016, My wife is still overseas. She doesnt work and i have provided her sustenance from here. Can I claim deduction on partner ? Thanks"

    By: SK at Jun 24, 2017 8:48AM

    Post: Marriage

  • "Hi there, I am non resident and just bought a property in Perth. Property price was $800k, Australian bank had lent me $200k against the property, and rest $600k I have loaned from my bank in UK..."

    By: Nick at Jun 16, 2017 12:00AM

    Post: Buying property as non-resident

  • "Hi there, I have an enquiry regarding CGT please. My son purchased a house nearly six years ago (6 years this December 2017) When he purchased he lived in it for 8 months but then he decided he..."

    By: maree at Jun 15, 2017 11:45PM

    Post: Little known ways to reduce capital gains tax on your investment property

  • "I have a similar situation. I live overseas but visit Australia and am an Australian resident for tax purposes. I am marrying an American who also lives overseas. I have a property in Australia so it..."

    By: Bron at Jun 14, 2017 7:32AM

    Post: Marriage

  • "I have recently got a job as a contract sales consultant and spend a lot of time on the road, but they don't offer a car allowance, I pay for all exspenses on a flat hourly rate."

    By: Sandy at Jun 13, 2017 10:26AM

    Post: Claiming car expenses