Baby Bonus V Maternity Leave

[briggsy's girl]

Miss E - I was told by my employer and FAO that it is all taxed the same despite what you have previously earned. 15% is what it is, I am a high income earner and am being payed through employer and it is the same as it is through the FAO, that wouldn't be fair if it depended on how much you earned for the entire year, claiming it before July shouldn't make a difference, I got a big back pay of 9 weeks worth of it approx $5000 before tax and it was still only taxed at the low/weekly level. Briggsy's girl will know for sure but I worked full time up until I went on leave and in a high bracket and it hasn't made a difference in the amount of tax taken, my best friend had her baby a few weeks after mine and she is taxed the same as me despite earning less than half of what I did.

your employer is not taxing you correctly if he's not taking into account your annual figure. the whole point of ppl being paid by the employer is to make sure your annual income is taken into account! be aware that there is a chance you may end up with a tax bill at tax time due to the taxation rate your employer is using

there are no hard and fast rules as to which option is better - you really have to work that out yourself - playing with dates for it to be paid, different estimates etc. i worked out for our family bby is better because DH doesn't work - but if he worked, PPL would have potentially been better. no FAO staff will advise you to choose one or the other - simply because they will get a small snippet of the bigger picture. you need to work out what is going to be best using the estimator

i suggest trying several different scenarios and work out what is going to best work for you. if your income is really variable it may be safer to choose one option and stick with it - regardless of what the tax implications are or what you may look at later and say "we should have..." - you can only make the decisions based on the info you have at hand now

[Astrid]

your employer is not taxing you correctly if he's not taking into account your annual figure. the whole point of ppl being paid by the employer is to make sure your annual income is taken into account! be aware that there is a chance you may end up with a tax bill at tax time due to the taxation rate your employer is using

Well actually the employee is taxing correctly as per the ATO guidelines. It is up to the Employee to ask for additional tax to be taken out if they are concerned they may owe tax at the end of the year (this applies to anyone dependent on their situation), there is an ATO form for this (Withholding Variation)

Nothing has come through from the ATO advising of any special tax treatment for PPL (I work for a software developer and we are sent advisories on how we need to change the system to cope with ATO changes). By the sounds of it the PPL should be taxed like a bonus. Chances are though once the whole tax year is taken into account, it probably evens out anyway.

I am going to have to revisit my PPL processing instructions to advise the payroll officer to discuss the taxation of PPL.

[Kirley64]

I had a friend who took BB because she worked 'too much' to earn any significant amount out of PPL. Her and her husband were only in the annual bracket of $70K combined but because she did so many hours per week up until bub was born (may baby), it meant that she was going to get less for the PPL than she would if she took BB. Worked out really stupid for her. So i'd ring up and talk to someone. I think if you work roughly 5-10hours a week normally that PPL works out great and more money for you. If you earn any more or any less you end up not 'qualifying' for the whole amount.

[~TT40~]

I had a friend who took BB because she worked 'too much' to earn any significant amount out of PPL. Her and her husband were only in the annual bracket of $70K combined but because she did so many hours per week up until bub was born (may baby), it meant that she was going to get less for the PPL than she would if she took BB. Worked out really stupid for her. So i'd ring up and talk to someone. I think if you work roughly 5-10hours a week normally that PPL works out great and more money for you. If you earn any more or any less you end up not 'qualifying' for the whole amount.

but the PPL isn't means teasted. its just 4 1/2 ish months on minimal wage isn't it? so your income shouldn't affect it? (unless by the end of the financial year you go up an extra tax bracket)

[Miss E]

but the PPL isn't means teasted. its just 4 1/2 ish months on minimal wage isn't it? so your income shouldn't affect it? (unless by the end of the financial year you go up an extra tax bracket)

Nope, not means tested and your income doesn't affect the pre-tax full amount, that is the same for everyone. Your income determines how much tax you pay on the full amount. If you have to pay a higher tax rate you could be better off with the BB. That is why the time of year that you take it can affect what works best for you - if you are taking it towards the end of the financial year, chances are your total income will be at a higher level because you have already worked (and earned an income for most of the year). If you are taking it earlier in the financial year and don't intend to return to work until much later in that year or the following year, your earnings for the full year will be lower and as a result the amount of tax you pay of the PPL will be lower.

[surprised]

Thanks so much everyone... glad to see I'm not the only one who is confused! BB is looking much simpler right now!

[briggsy's girl]

sorry to upset - but there are some income tests applied to PPL - can't recall exactly off the top of my head, but your previous financial year income needs to be included on application because there is a limit to who it is is paid for.

[~TT40~]

sorry to upset - but there are some income tests applied to PPL - can't recall exactly off the top of my head, but your previous financial year income needs to be included on application because there is a limit to who it is is paid for.

I think I remember reading that, but it was so ridiculously high for us that DH and I would never earn that much in our lives that I ignored it =P