As well as being an exciting and life-changing time, having a baby is a very expensive time too.
Many parents-to-be worry about how they are going to cope with the loss of earnings associated with the mother being out of work for a while, and there are many other costs such as the purchase of cots, prams and baby clothes.
There is, however, a great deal of help available to parents for the costs associated with the baby, the time off work and even to help pay for childcare as and when the mother gets back into the workplace.
Baby Bonus and Paid Parental Leave
The subject of entitlement to parental leave pay is complex and depends on a variety of factors. It is complicated further by the fact that many employers offer their staff parental leave pay which is in excess of the government minimum, and there is also some variation from state to state.
The two main schemes to support new parents are Baby Bonus and Paid Parental Leave. Families cannot claim both. Some families may be eligible for only one payment and for them the decision will be straightforward. Others will have to do some financial calculations to see which one is best for them, and the Centrelink website provides tools to help with this.
The paid parental leave scheme covers parents who:
- Are the main carers for a newborn, or who adopt a child.
- Are Australian residents.
- Earn less than $150,000 individually each tax year.
- Have worked for 10 months out of the 13 before the baby is born.
Paid parental leave gives the parent:
- 18 weeks paid parental leave in addition to anything provided by an employer.
- Flexibility to choose when to use the paid parental leave along with any annual leave or other employer leave schemes.
- Payments are at the national minimum wage level, which from 1 July 2012 is $606.40 per week. Parents who do not generally work full time will be paid pro rata, so it is important to work out how much paid parental leave will be to see if Baby Bonus is the better option financially.
Baby Bonus
Parents who are unable to claim paid parental leave because they have not worked enough qualifying months, or because their Australian residency is still being processed can apply for a separate payment called Baby Bonus. Some other families may opt for Baby Bonus because it is financially advantageous. To qualify for Baby Bonus, parents must:
- Be eligible for Family Tax Benefit within 6 months of the birth
- Be the child’s main carer
- Meet the Family Tax Benefits residency requirements within 6 months of the birth
- Not be claiming Paid Parental Leave
- Make the claim for Baby Bonus within a year of the birth
- Earn, as a family, $75,000 or less in the 6 months after the baby is born.
Baby bonus is paid for 26 weeks, as 13 fortnightly payments. Rates change at the beginning of each year, and as of 1 January 2012 the rate is $5,437 per child.
Child care assistance
Parents are often shocked by the high cost of childcare, and in response to this, the Australian government has assistance programmes to help with the costs.
Child Care Benefit can be paid to parents who use registered child care such as nurseries, and the amount will vary depending on circumstance. Payment is on a sliding scale and will also depend on the number of children in the family.
The maximum rate of Child Care Benefit is paid to families earning less than $39,785 per year and the cut off points are $138,065 for families with one child, $143,095 for two children and $161,581 for three children. Parents are entitled to 24 hours of child care per week at a rate of $3.78 per hour, unless both parents are working or training in which case up to 50 hours per week can be paid.
Child Care Rebate
This benefit is paid in addition to Child Care Benefit and is designed to cover out of pocket expenses for parents who are using child care. Both parents have to be working or in training to qualify, and there are also exceptions for parents who are disabled or have caring responsibilities.
The amount you are entitled to is calculated by taking your child care fees then deducting any Child Care Benefit and other fee assistance you may be receiving, then halving it. The maximum which can be claimed is $7,500 per year.
Advice and Help
Navigating your way through all of the different benefits and assistance schemes which are available can be complicated. The best place to go for assistance and advice on your individual circumstances is Centrelink, either online, by phone or in person.
An advisor will be able to help with the calculations and give a concrete idea of what you will receive. Citizens Advice Bureaus are also a valuable source of information and advice, as are State governments. Start the process of thinking about which benefits you may be able to claim as soon as possible, as it may take some time to process a claim.
