• How does the baby bonus work?

    If you have claimed the baby bonus before and you are claiming for the same child this year, go to Should you transfer your eligibility this year? as you will already know your base year.

    Base year

    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

    The amount of your baby bonus and when you can start to receive it is determined by your base year.

    Danger

    Stop

    Once you have chosen a base year, you cannot change or revoke it.

    End of danger

    There are two possible base years. Your base year will be the income year before legal responsibility for your child started, unless you choose the income year that legal responsibility started. Whatever year you choose will be your base year for all future claims for this child.

    If you adopted a child, you have four possible base years. Information to help you choose your base year is available on our website or phone the Personal Tax Infoline on 13 28 61.

    If you choose the income year that legal responsibility started as your base year, you must complete the Base year election.

    Your baby bonus is calculated by comparing your taxable income in your base year to your taxable income in your claim year. If your taxable income is lower in your claim year, you will get some baby bonus. If your taxable income is $25,000 or less in the year you claim the baby bonus, 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.

    Record your base year

    You need to keep a record of your base year to help you claim in future years, as you cannot change it.

    Australian resident

    If you were not an Australian resident in the income year before legal responsibility for your child started, your base year must be the income year legal responsibility started. If this applies to you, go to Should you transfer your eligibility this year?

    How to choose your base year

    If your gross tax for both possible base years is less than or equal to $2,500:

    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 in Important terms.

    If your gross tax for at least one possible base year is more than $2,500:

    You should choose the year that you started to have legal responsibility for the child as your base year only if your taxable income (and the gross 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 full-year payments up to and including the year the child turns five. For an adoptive child the payment in the last year may not be a full-year payment.

    Example

    Sharon and Allan had a baby, Lily, on 23 August 2003. Sharon's taxable income for 2002-03 was $52,000 (gross tax of $12,220), and her taxable income for 2003-04, the year that Lily was born, was $26,000 (gross tax of $3,972). Therefore, Sharon uses 2002-03 as her base year as she could get more money over five years.

    Sharon's base year taxable income is $52,000.

    Sharon's taxable income for 2003 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.

    2004 taxable income of $26,000

    -----------------

    Sharon's base year taxable income is $52,000

    2005 taxable income of $28,000

    -----------------

    2006 taxable income of $30,000

    -----------------

    2007 taxable income of $55,000

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

    2008 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

    Cut out and keep this election with your tax records for six years from the date of the 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 legal responsibility for 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: 07 Jan 2009QC 27791