What are the financial implications after considering Government benefits and childcare?
Raising children can be financial challenging. The decision to go back to work and how much to work is becoming ever more complicated. Looking at the decision from a financial perspective, going back to work creates issues in terms of how much Family Tax Benefit you receive, associated child care costs and the income tax implications. From a family perspective, there is also the consideration of how time at work will affect the family.
We can help you with your decision – Deciding how much to work
We can assist you by unravelling the complexities of the Australian family entitlement system. We have the resources and knowledge to look at your individual situation. Well consider income tax, family assistance benefits and child care costs to determine if working is financially better than the alternative, that is not returning to work yet. Our analysis will, if necessary, compare the financial outcomes for a few scenarios. It may be necessary to compare the outcomes of your spouse/partner working part-time and you working full time, or possibly both working part-time or some other potential combination of work hours.
If you are both working full time you may be surprised to know that working less may actually result in you taking home more money, or taking home only marginally less. Working less may mean you receive more Family Assistance and of course reduce the amount you will have to pay in child care costs. We can go through the process to figure out what would be best outcome for your family.
When preparing your next income tax return, have a chat with us regarding your current situation and let us help you explore the options going forward.
Baby Bonus vs Paid Parental Leave
When you have a child you are now given a choice between the baby bonus payment or the Governments paid parent leave. The choice is not simple. Whilst it appears you will receive more from the paid parent leave scheme, you lose the baby bonus payment, Family Tax Benefit Part B. It is also worth noting that paid parent leave is subject to income tax.
We can assist you by explaining what all this means and what alternative you should consider. Before completing the relevant form after the birth of a child, speak to us and we can help you make the most beneficial choice for your circumstances.