Tax plan 'could make big difference'

Rachel Rix-Trott and Owen Bradley with 9-week-old son Callum. Photo / Sarah Ivey

The parents of a newborn baby say income-splitting could make the difference to let one of them stay home with the children for their first few years.

Software designer Owen Bradley and public health worker Rachel Rix-Trott, both 33, had their first baby nine weeks ago, roughly halving their household income to Mr Bradley's $60,000 salary.

They are still renting their home in Te Atatu Peninsula because their priority is to give time first to their baby, Callum, and hopefully to more children, before buying a house.

Ms Rix-Trott is on paid parental leave which is being topped up to her full former salary for 14 weeks by her employer, the Counties-Manukau District Health Board. But her income will stop after the 14 weeks and the couple have not yet decided whether she will go back to work when her unpaid leave finishes next June.

"Our intention at that stage is actually to expand our family, so if I do go back I'll probably only go back part time," she said.

If she goes back half time, earning $30,000 a year, income-splitting would give them a tax credit of $1500 a year, or $125 a month.

That would rise to $2480 a year, or $200 a month, if she opts to stay home and the couple rely solely on Mr Bradley's income.

"Potentially it would make the difference," she said.

She said the couple would prefer to have one parent at home until the children are much older.

However, Mr Bradley said the country clearly could not afford the $450 million annual cost of income-splitting right now.

"So I'd like to see something like that happen, but maybe not immediately," he said.

Both parents said it might be more helpful to extend paid parental leave. The Families Commission estimated in 2007 that it would cost the same $450 million a year to extend paid parental leave to a year plus a month for fathers.