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Help with baby bonus versus paid parental leave calculations

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  • Help with baby bonus versus paid parental leave calculations

    I am at my wit's end trying to work out which one I should claim.

    BB is $5000, but tax free.

    PPL is approx $10,500, but taxable.

    According to the Centrelink comparison tool, I would be $150 better off taking BB.

    But I have done my own calculations that say I am better off taking PPL.

    My calculations are based on comparing my gross income only (if I took the BB) versus my gross income plus PPL, so there is a $10,500 difference between the figures.

    Income + PPL ($10,500 gross)
    less $3000 tax
    less $500 loss of child care benefits
    less $800 loss of family tax benefit part a

    Total benefit (10,500 less 4,300) = $6,200 in the hand extra

    Income +BB ($5,000 gross)
    less nothing = $5,000 in the hand extra

    So I would be $1,200 better off taking the PPL.

    The only thing is that I am using the 2011 ATO comprehensive tax calculator, whereas the relevant tax year will be 2013, and am using the 2012 family tax benefit estimator, whereas the relevant year will be 2013, but I don't think that would account for the difference.

    Has anybody else gone through this process and had similar problems? Have I missed something in my calculations?
    Last edited by MsMummy; 27-06-2012, 18:35.

  • #2
    it doesn't account for all difference, but the BB is $5,400 ish

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    • #3
      You don't lose ftb a on ppl, only ftb b if you are eligible.

      The ppl will count towards your taxable income, but you are still eligible for ftb a if you meet the income requirements.

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      • #4
        Originally posted by Bubbles10 View Post
        it doesn't account for all difference, but the BB is $5,400 ish
        From 1 September 2012, the baby bonus is being reduced to $5,000. I think they are freezing it at that for about 3 years to save money.

        Originally posted by BigRedV View Post
        You don't lose ftb a on ppl, only ftb b if you are eligible.

        The ppl will count towards your taxable income, but you are still eligible for ftb a if you meet the income requirements.
        We don't get part b either way as we both work, but from my understanding ftb a is calculated on your total taxable income from the year, so PPL would be included (so if you received fortnightly payments, you would include the PPL in your annual estimate, I guess, but we make an annual claim anyway). If that makes sense.

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        • #5
          We only get ours annually as well.

          I guess I have all this to think about as well. I don't really know how ppl works. I guess I should find out.

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          • #6
            Originally posted by BigRedV View Post
            We only get ours annually as well.

            I guess I have all this to think about as well. I don't really know how ppl works. I guess I should find out.
            It's 18 weeks at the minimum wage, which is about $590 per week. From what I understand Centrelink pay it to your employer, and they withhold the relevant tax and pay the net to you like a wage.

            However, I'm not sure how it would work with you as you would get employer paid leave as well being in the public service. I'm not sure if you can take the two types of leave together or take one after the other.

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            • #7
              Def take ppl. You won't get family payment part b for the 18 weeks but you do not loose child care benefits. After tax you get $520 a week. So that's just over $9000 less any part b you would have got. Way better than $5000. You would only really take that if you are entitled to a large amount of part b I guess.

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              • #8
                Originally posted by MsMummy View Post
                It's 18 weeks at the minimum wage, which is about $590 per week. From what I understand Centrelink pay it to your employer, and they withhold the relevant tax and pay the net to you like a wage.

                However, I'm not sure how it would work with you as you would get employer paid leave as well being in the public service. I'm not sure if you can take the two types of leave together or take one after the other.
                I have been trying to work this out. I am in a bit of a pickle as my car is leased through salary sacrifice with just under 2 years to go. I would prefer to take one after the other, but I am not sure if the ppl will cover the lease.

                I need to figure it all out. I've got 2 weeks holiday after this week, so I've got 3 days a week childless to make phone calls.

                My friend just returned to work and she took the 28 weeks from our employer and then 18 weeks after that, which is ideally what I would like to do. If that doesn't work out, I might have to use up some long service leave so I don't have to pay for 3 children in daycare. My daughter goes to school in 2014 so it would be good to try and have all of next year on leave.

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                • #9
                  Originally posted by jordansmumma View Post
                  Def take ppl. You won't get family payment part b for the 18 weeks but you do not loose child care benefits. After tax you get $520 a week. So that's just over $9000 less any part b you would have got. Way better than $5000. You would only really take that if you are entitled to a large amount of part b I guess.
                  I won't get $9000 though as the difference in tax between my estimated income from work for 2012/2013 if I take baby bonus and my estimated income from work for the 2012/2013 plus PPL is about $3,000. You would only pay very little tax if you didn't have other income in that financial year.

                  Basically taking PPL increases your taxable income for the year by $10,500 verus taking the baby bonus and not working for the 18 weeks, so that has a flow on effect for child care benefit and family tax benefit, as they are all based on annual income.

                  But I do think I'm better taking PPL, despite the advice from the calculator.

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                  • #10
                    Originally posted by BigRedV View Post
                    I have been trying to work this out. I am in a bit of a pickle as my car is leased through salary sacrifice with just under 2 years to go. I would prefer to take one after the other, but I am not sure if the ppl will cover the lease.

                    I need to figure it all out. I've got 2 weeks holiday after this week, so I've got 3 days a week childless to make phone calls.

                    My friend just returned to work and she took the 28 weeks from our employer and then 18 weeks after that, which is ideally what I would like to do. If that doesn't work out, I might have to use up some long service leave so I don't have to pay for 3 children in daycare. My daughter goes to school in 2014 so it would be good to try and have all of next year on leave.
                    I have no idea about salary sacrificing. good luck dealing with centrelink - from what I hear it's a nightmare getting hold of them on the phone.

                    I'm just so sh*tted off with this PPL rubbish. The government promotes it as "paid parental leave" but only if you earn the minimum wage. By introducing it, it has taken the pressure off for a genuine paid parental leave system. Even disregarding any family tax or child care implications, the after tax amount for me per week is at least $300 a week less than my after-tax part time wage. We are using our tax return to cover the gap, and I am only taking 5 months off now.

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                    • #11
                      Subscribing so I can read later.

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                      • #12
                        Remember less at tax time as the PPL is income not a bonus

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                        • #13
                          sorry i havent read other replies. But given carbon tax is coming in next financial year it may affect the tax rates on any income including PPL...

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                          • #14
                            Originally posted by MsMummy View Post
                            I have no idea about salary sacrificing. good luck dealing with centrelink - from what I hear it's a nightmare getting hold of them on the phone.

                            I'm just so sh*tted off with this PPL rubbish. The government promotes it as "paid parental leave" but only if you earn the minimum wage. By introducing it, it has taken the pressure off for a genuine paid parental leave system. Even disregarding any family tax or child care implications, the after tax amount for me per week is at least $300 a week less than my after-tax part time wage. We are using our tax return to cover the gap, and I am only taking 5 months off now.
                            It sounds so frustrating. I'm not looking forward to working it all out.

                            How long did you think you were going to take off?

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                            • #15
                              I texted my friend last night to ask her how much her payments were and she said for ppl, she was getting $1178 a fortnight. Don't know how she was getting that much, but anyway.

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