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Changes to the Baby Bonus and Family Tax Benefit

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Universal Maternity Payment

From 1 July 2004, a new universal maternity payment will replace the existing Maternity Allowance and the Baby Bonus. This will be paid as a lump sum of $3,000 on the birth of each child occurring after 1 July 2004, increasing to $4,000 from 1 July 2006, and increasing again to $5,000 on 1 July 2008. However, the current Baby Bonus will still be available for births occurring prior to 1 July 04.

Family Tax Benefit (FTB) Changes

Immediate Payments

  • An increase in the rate of FTB(A) of $600 per child to be paid as a lump sum, which will be paid to your family as part of the annual FTB reconciliation that occurs after the lodgment of your 2003-04 tax return. But, there may be a catch. If you have received an overpayment of the FTB in a previous year, this additional amount will be available to offset any overpayment.
  • Before 30 June 2004, if your family is receiving or eligible to receive the FTB(A) in the 2003-04 financial year, you will also receive an additional once off lump sum payment of $600 per child.

From 1 July 2004

  • There will be a reduction in the income test taper rate for the maximum rate of FTB(A). This means that you can earn more income before the benefit cuts out. For each additional dollar of your income in excess of the $31,755 threshold, only 20 cents rather than 30 cents of FTB allowance is withdrawn until the base rate of payment is reached.
  • If you are the secondary earner in a family, you will be able to earn up to $4,000 a year (instead of the current $1,875) before the FTB (B)benefit is reduced. The income test taper is also to be reduced from 30% to 20%.

From 1 July 2005

  • The income earned by a mother after returning to work will not affect FTB(B) received earlier in the same year.

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