Getting that Bonus
February 6th 2009 04:08
Major changes to the baby bonus scheme means parents of babies born after January 1st 2009 may not be eligible for the bonus. If your (joint) taxable income (ATI) is over $75000 for the six months AFTER the birth, you will not be eligible. However, if you are in a higher income bracket, there are ways to help improve your eligibility.
Let’s look at the facts. As of January 1st 2009, new parents (including those that adopt) will only receive a baby bonus if they earn $75,000 or less in the 6 months following birth, or after the child comes into your care. The $5000 payment will be paid in fortnightly instalments over 13 weeks, after eligibility has been satisfied.
The following are included in estimating income:
Taxable income – That is your salary less allowable deductions (charitable donations, income protection insurance etc. Check the ato website for more details PLUS
Employer provided fringe benefits over the value of $2000 (which must be declared) PLUS
Rental property gains/losses PLUS
Tax Free pensions or benefits PLUS
Targeted foreign Income MINUS
Child support payments paid to a third party.
Therefore, you may think if you have an annual taxable income less than $150k you should be ok, right. Well hopefully but you need to be aware of other sources of income. For example, someone with an annual income of $100k ($50000 in 6 months), who sells an investment property in the 6 months following the birth at a profit may be caught out.
The thing with the baby bonus is it is all or nothing. So if you earn $75,000, in the six months after the birth then you get it, if you earn $75,001 you miss out there is no gradual decline.
If you are borderline, there are ways you of reducing your taxable income, such as:
Salary Sacrifice – Put a lump sum into your super package, which will be win win, you boost your super, and get the bonus.
Pre pay some expenses such as income protection, which can be paid up to a year in advance.
Take a holiday – If you are going on maternity leave consider taking a holiday or leaving a bit earlier so that your holiday pay is not paid in a lump sum adding to your taxable income.
Sit down with an accountant and discuss your options. Good luck, if you cannot swing it, I am sure your little darling will be a big bonus in itself.
For more information check out the Family Assistance Website
Let’s look at the facts. As of January 1st 2009, new parents (including those that adopt) will only receive a baby bonus if they earn $75,000 or less in the 6 months following birth, or after the child comes into your care. The $5000 payment will be paid in fortnightly instalments over 13 weeks, after eligibility has been satisfied.
The following are included in estimating income:
Taxable income – That is your salary less allowable deductions (charitable donations, income protection insurance etc. Check the ato website for more details PLUS
Employer provided fringe benefits over the value of $2000 (which must be declared) PLUS
Rental property gains/losses PLUS
Tax Free pensions or benefits PLUS
Targeted foreign Income MINUS
Child support payments paid to a third party.
Therefore, you may think if you have an annual taxable income less than $150k you should be ok, right. Well hopefully but you need to be aware of other sources of income. For example, someone with an annual income of $100k ($50000 in 6 months), who sells an investment property in the 6 months following the birth at a profit may be caught out.
The thing with the baby bonus is it is all or nothing. So if you earn $75,000, in the six months after the birth then you get it, if you earn $75,001 you miss out there is no gradual decline.
If you are borderline, there are ways you of reducing your taxable income, such as:
Salary Sacrifice – Put a lump sum into your super package, which will be win win, you boost your super, and get the bonus.
Pre pay some expenses such as income protection, which can be paid up to a year in advance.
Take a holiday – If you are going on maternity leave consider taking a holiday or leaving a bit earlier so that your holiday pay is not paid in a lump sum adding to your taxable income.
Sit down with an accountant and discuss your options. Good luck, if you cannot swing it, I am sure your little darling will be a big bonus in itself.
For more information check out the Family Assistance Website
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Mum's Word
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Mrs M