• How does the baby bonus work?

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    If you have claimed the baby bonus before and you are claiming for the same child this year, go to Will you get more baby bonus if you transfer your eligibility?

    Base year

    The amount of your baby bonus and when you can start to receive it is determined by your base year. There are two possible base years. Your base year will be the year before legal responsibility for your child started, unless you choose the year that legal responsibility started. This will be your base year for all future claims for this child. If you choose the year that legal responsibility started you must complete the Base year election.

    Your baby bonus is calculated by comparing your taxable income in the year you claim to your taxable income in your base year. If your taxable income has reduced then you will get some baby bonus. However, if your taxable income is $25,000 or less in the year you claim, your minimum bonus for a full year will be $500. Your baby bonus will be reduced if you have not had legal responsibility for and care of your child for a whole year.

    Important:

    Once a base year has been chosen, it cannot be changed or revoked. You need to keep a record of your base year to help you claim in future years.

    Australian resident

    If you were not an Australian resident in the year before legal responsibility for your child started, your base year must be the year legal responsibility started. If this applied to you, go to Will you get more baby bonus if you transfer your eligibility?

    Your taxable income for both possible base years is less than or equal to $20,400.

    You should keep the year before you started to have legal responsibility for the child as your base year. If you don't, you will have to wait another year before you can claim.

    If your taxable income is $25,000 or less in the year you claim the baby bonus, you will be entitled to an annual amount of $500. This applies even if you are not required to lodge a tax return or pay tax. The annual amount will be reduced if you have not had legal responsibility for and care of your child for the whole year.

    If your taxable income is more than $25,000 in a claim year, you will not get a baby bonus that year.

    An explanation of taxable income is given in Important terms.

    Your taxable income for at least one possible base year is more than $20,400.

    You should only choose the year that you started to have legal responsibility for the child as your base year if your taxable income (and the tax calculated) was higher in that year than the year before.

    If you keep the year before you started to have legal responsibility for the child as your base year, and you make a claim each year, you will be entitled to a part-year payment in the year the child was born and the year the child turns five, and full-year payments for the four years in between.

    If you choose the year that you started to have legal responsibility for the child as your base year and you make a claim each year, you will be entitled to five full-year payments but you cannot claim the baby bonus in the first year. You will have to wait a year until you make your first claim. For example, if your child was born on 11 April 2003 and you choose 2003 to be your base year, you cannot make your first claim until 1 July 2004.

    Example

    Sharon and Allan had a baby, Lily, on 23 August 2002. Sharon's taxable income for 2002 was $32,000, and her taxable income for 2003, the year Lily was born, was $26,000.

    Sharon uses the calculation and works out that if she uses 2002 as her base year, the maximum baby bonus that she can get each year will be $1,196. If she chooses 2003 as her base year, the maximum baby bonus that she can get each year will be $836. Therefore, Sharon uses 2002 as her base year.

    Sharon's taxable income for 2002 will be compared to her taxable income in each claim year (until Lily turns five). If her income reduces, or is $25,000 or less in the claim year, Sharon will get a baby bonus amount.

    2003 taxable income of $26,000

    _______________

    Sharon's base year taxable income is $32,000

    2004 taxable income of $28,000

    _______________

    2005 taxable income of $30,000

    _______________

    2006 taxable income of $35,000

    ***************

    2007 taxable income of $27,000

    _______________

    _______________

    Sharon will get a baby bonus amount because her income has reduced compared to her base year income.

    ***************

    Sharon will not get a baby bonus amount because there is no reduction in her income.

     

    Base year election

    If this is the first time you are claiming the baby bonus or transferring your eligibility and you are choosing the year that legal responsibility for your child started as your base year you MUST complete this election.

    I .................................................................................................,
                         Eligible person's name

    elect ................... as my base year for the baby bonus.
         Income year

    My eligible child is ........................................................................
                                        Child's name

    And the date I gained responsibility of this child is ........... / .......... / ..........

    This is your child's date of birth or the date legal responsibility
    started if a court order appointed legal responsibility.

    I understand that this election cannot be changed or revoked.

    ............................................................   .......... / ........... / ...........
              Signature of eligible person                        Date

    Last modified: 17 Dec 2009QC 16835