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What is the Parenting Payment, and how can it help me?

What is the Parenting Payment and how can it help me?

If you’re concerned about the cost of raising children on your family income, there is Government support available that could assist you. The income support payment from the Government while you’re a young child’s primary carer is called the Parenting Payment. This payment is organised through Services Australia. Your and your partner's income and assets determine the amount of support you could receive.

Parenting Payment eligibility

The Parenting Payment is only offered to those who are the principal carer of a child. If you're single, the child must be younger than eight and, if you have a partner, the child must be younger than six years of age.

A principal carer is defined as having the majority of responsibility for the day-to-day care, welfare and development of a child. If the child’s care is shared between yourself and your partner, you may need to nominate which of you is to be designated as the principal carer.

You cannot apply for the Parenting Payment before the birth of your child. You need to submit your claim within four weeks of your child's birth or the date the child has come into your primary care.

If you’re looking to receive the parenting Payment, you and your partner need to meet the income and assets tests to be eligible.

Parenting Payment income test

To receive the full benefit of the Parenting Payment, your gross income must be within a defined limit. The limit depends on the number of children you have and whether you are single or reside with a partner.

Income limits per number of children for single parent payment

Number of children Gross income limit per fortnight to get the full payment
 1$194.60
 2$219.20
 3$243.80
 More than 3$243.80 plus $24.60 for each extra child.

Source:Services Australia

For every dollar you earn over the gross income limit, you’ll get a 40 cent reduction in your Parenting Payment.

Income limits if you have a partner

When you share the care of the child with a partner, you can qualify for a part payment if you meet all of the following conditions:

  •  Your income is less than $1,123.17 a fortnight.
  •  Your partner earns less than $2,079.50 a fortnight.
  •  Your combined income is below $2,247.17 a fortnight.

If your partner’s income is over $1,124 gross a fortnight, it will affect how much of the Parenting Payment you are eligible to receive. 

Assets test

To qualify for the Parenting Payment, there are limits on the value of your assets. The limits differ for singles and couples, as shown in the following table.

Your situation Homeowner Non-homeowner
Single$270,500$487,000
A couple, combined$405,000$621,500
A couple, one partner eligible, combined$405,000$621,500

Source: Services Australia

Is the Parenting Payment considered as taxable income?

Yes, the Parenting Payment is a taxable Centrelink payment. You can request that tax contribution is deducted from each of your payments, or that you receive the full amount and pay your tax yourself.

Mutual Obligations Requirements

You may be required to fulfill Mutual Obligations Requirements, meaning a set of conditions related to part-time working or training, in order to continue to receive the Parenting Payment. If you cannot meet these Mutual Obligations Requirements for any reason, you will need to apply for an exemption.

What is the Family Tax Benefit?

The Family Tax Benefit (FTB) is a two-part payment that may also help you meet the costs of raising children. To receive this, you must have responsibility for a dependent child or a full-time secondary student between 16 and 19 years of age who is not receiving a pension or benefit such as Youth Allowance. You must be responsible for the care of the child at least 35 per cent of the time. 

If your family has an adjusted taxable income of $56,137 or less, you may be eligible for the maximum FTB Part A benefits. Your benefit reduces as your income rises above that level. 

For FTP Part B, the maximum rate per family per fortnight is $162.54 when the youngest child is between 0 and 5 years of age and $113.54 when the youngest child is between 6 and 18 years.

Questions you may have

What are the requirements of an ING Bank locked savings account?

An ING bank locked savings account - also called a term deposit - offers you interest in exchange for holding your money for a period of time.

The terms offered include as little as 90 days or as long as two years. Generally, the longer you lock your money away, the higher the rate of interest. 

The minimum deposit amount for an ING locked savings account is $10,000. 

To be eligible to apply, you must: 

  • Be an Australian resident for tax purposes
  • Be aged 13 years or older
  • Hold the account for personal use (ING offers business term deposits as a separate product). 

 

Do I have to claim interest on my savings account?

When you lodge your income tax returns, you must include in the documentation all your sources of income, including bank interest. Your bank will report any interest you earn on the funds in your savings account to the Australian Tax Office (ATO). When the ATO then compares this information with your tax returns,  you also need to have mentioned the interest earned. If there is any discrepancy, you’ll receive a letter from the ATO. 

Avoid this situation by ensuring you receive your bank statement with interest noted. Then declare the interest in your tax returns and pay the tax that’s applicable based on the income tax rate.

You only need to claim your share of the interest earned for joint accounts. If you manage an account for your child and receive or spend money via this account, you will also need to report any interest earned from said account.

Do banks run credit checks on savings accounts?

When you apply to open a new savings account, some providers may conduct a credit check, meaning that they will ask a credit bureau for your credit history. This isn’t always the case on savings accounts though and depends on the provider, as you aren’t borrowing money. 

As you are opening a savings account and not borrowing funds, this credit check is considered a soft inquiry and should not affect your credit score. If the bank has run the credit check, you can often still open a savings account even if you have a poor score, provided you meet other requirements. 

Should I open multiple savings accounts with UBank?

UBank offers customers an opportunity to make the most of their savings by opening multiple savings accounts. Having multiple savings accounts with UBank may be ideal for savers tracking different goals in separate accounts. 

It’s important to note that to earn bonus interest, you will still need to meet the conditions of the UBank savings account every month. If you don’t make these deposits, you will receive the standard interest rate, which is typically lower. 

Keep in mind that you won’t earn bonus interest on your UBank savings account in the month an account is opened and if you open multiple savings accounts with UBank, you'll start earning any bonus interest the following month. 

It's also not yet known how long the special interest rate will hang around for, so please check with your bank for more information. 

Should I open a Commonwealth locked savings account?

If you have trouble saving money, a Commbank locked savings account could be a potential solution. A locked savings account won’t let you make withdrawals and as such, it can help you grow your savings balance if you keep topping it up. 

The Commonwealth locked savings account advertises high-interest rates and minimal maintenance fees, along with a host of other incentives that will encourage you not to touch the money. 

The account offers a higher interest rate for each month that you make limited or no withdrawals, as well as regular deposits. 

To qualify for a Commonwealth locked savings account with the advertised features, you will need to fulfil specific criteria such as:

  • Depositing a fixed minimum amount into the account every month.
  • Making a fixed number of deposits each month.
  • Making a minimum or no withdrawals each month.
  • Maintaining a minimum account balance.
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This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.

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