Making Money on Parental Leave In Canada

 

Can I make money while on Parental and Maternity leave? This is a frequent question my Canadian Budget Binder fans want to know. So, I went to Mom Expert Sarah Deveau Author of Money Smart Mom to share the inside scoop for our fellow Canadians wanting to learn about making some extra money while they are off work caring for their new bundle(s) of joy.

Here’s what Sarah has to say….

If you’ve just had a baby and are living on the reduced income of employment insurance maternity or parental leave payments, you might be wondering how to bring in extra income.

If you earn income while on the maternity leave portion of the benefit (the first 15 weeks), your earnings will be deducted dollar for dollar from your benefits.

If you work while you’re receiving the parental leave benefit, after the first 15 weeks, in the past you’ve been allowed to earn $75 per week or 40% of your weekly benefits, whichever is higher. Any income earned above that amount will be deducted dollar for dollar from your benefits.

However, due to the new Working While on Claim (WWC) pilot project, once you have served the waiting period, if your earnings are equal to or less than 90% of your weekly earnings that were used to calculate your benefit rate, your benefits will be reduced at a rate of 50% of your earnings each week. Any earnings that exceed this 90% mark, will be deducted dollar for dollar from your benefits. The 50% claw-back begins at the first dollar earned.

Due to negative feedback, the government is letting anyone on parental leave after January 6, 2013 choose which way they want their income taxed – the old way, or the new way.

For some examples of how these calculations work, see the Service Canada website. If in doubt, write to Service Canada and get their advice and calculations for your individual income level in writing.

Here are a few suggestions for ways you can earn additional income while on parental leave to help with your maternity/parental leave budget:

  • Drive a school bus
  • Offer evening and weekend babysitting for friends and family
  • Deliver newspapers
  • Operate a drop in day home
  • Sign up to participate in focus groups
  • Create a freelancing or in-home business in your area of expertise (tutoring, writing, music lessons, etc.)
  • Join a virtual office company in your area
  • Work as a casual employee, on occasional weekends or evenings when you have access to free childcare (spouse or relatives)
  • Sign up as a secret shopper (be sure to join a reputable company)
  • Work temporary jobs, such as seasonal retail help

If you earn money while on parental leave, you will be required to fill out regular reports. Be sure to contact Service Canada if you have any questions about earning or reporting income while on parental leave.

What other ways did you earn extra income while on Parental leave?

Guest Post By: Sarah Deveau is a mom of three, and the author of Money Smart Mom: Financially Fit Parenting. Visit her website at MONEY SMART MOM or pick up her book from Chapters Indigo.

Here is a Book Review that I did for Sarah once I finished reading her book… Money Smart Mom Financially Fit Parenting:  Book Review Mr.CBB.

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Maternity and Parental Leave Part 2: Budgeting

Maternity and Parental Leave Part 2: Budgeting

Ideally, you’ve gone on maternity leave only after working for at least the minimum 600 hours (about 15 weeks full-time) in the last 52 weeks or since your last Employment Insurance claim. This will ensure you receive the current maximum payment at $447 per week.
For many families, this means mom (and maybe dad later on) will be bringing in half of their previous income for a year unless they have a paid maternity leave or top up with their employer. In many cases, maternity leave benefits can be far less than half.
Here are some ideas on how to budget for this change in your family’s finances.
  • Plan ahead. If you’re pregnant, or just planning to get pregnant, now’s the time to go on a money diet and begin budgeting for a baby. Trim your budget and do your best to live off your projected maternity leave income. Save that unused income to provide you with a cushion during your mat leave, to cover some of the larger baby items, or to pay down debt. Don’t assume it will be easier to save more money when you’re not working, because you won’t be tempted by eating out or clothing or events. You’ll be just as tempted, if not more, by baby deal websites and the goods on display at your mall playdates.
  • Make friends in the same boat. Join baby groups where the moms want to meet at each other’s houses, not the local play place. Arrange walking dates that don’t go past an expensive coffeehouse. Find friends that you can share meal planning ideas or coupons with, swap baby clothing with, and generally support you in sticking to your budget.
  • Take a breather. If you’re finding it hard to make ends meet on the basics and you’re being honest with yourself that you’ve cut out the extras, start looking at your fixed costs. You may need to change your mortgage from biweekly to monthly, eliminate your cell phone, cut back on the cable bill, sell unused items for cash, applying for a consolidation loan to ease interest headaches or putting a hold on RRSP payments. Some of these moves are truly for extreme cases only, and if you’re considering them, be sure you’re doing it for the right reasons – not because you’re in a cycle of spending on frivolities and then slashing important things like debt repayment.
  • Bring in extra income. As noted in Part 1, if you work while you’re receiving parental benefits, you’re allowed to earn $75 per week or 40% of your weekly benefits, whichever is higher.  If you’re earning the maximum of $447 per week, you can add an extra $178 in income each week without being penalized. Any income earned above that amount will be deducted dollar for dollar from your benefits for maternity while off the job.
There are plenty of things you can do to earn extra income while on leave that don’t require you to pay for childcare. You can look into babysitting, house cleaning, freelance work, consulting, working in a retail store that allows you to bring your kids to work with you, or another part-time job that fits around your spouse’s schedule or any free babysitters you might have (family, friends).
About The Author
Sarah Deveau is the author of Money Smart Mom: Financially Fit Parenting. Reach her at www.moneysmartmom.ca
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Maternity and Parental Leave Part 1 – The Basics

Even if you have the easiest baby in the world, maternity or parental leave won’t be the blissful paradise you imagined if you’re constantly stressed about your reduction in income. In this two-part series I’ll outline how the benefits work, and how you can make them work for your budget.
Maternity and Parental Leave Benefits in Canada
Unless you work for a company that offers an income top up programs or paid maternity leave most parents on leave will only receive basic maternity benefits, which fall under Canada’s Employment Insurance program.
While many people refer to the year a mother takes off after the birth or adoption of a child a maternity leave, it’s actually a combination of two leaves. The first leave is called maternity leave, and is only available to birth mothers and surrogate mothers for up to 15 weeks.
After the 15 weeks, the leave is now called parental leave. This cheque can be collected by either the biological or adoptive parents for up to a maximum of 35 weeks.These benefits can be claimed by one parent or shared between the two partners, but cannot exceed a combined maximum of 35 weeks.  
Parental leave benefits must be claimed within the 52 weeks following the child’s birth, or for adoptive parents, within the 52 weeks from the date the child is placed with you. 
Leave payments are capped at 55% of your average insured earnings up to a yearly maximum insurable amount of $42,300 $45,900 as of January 1,2012.
This places the current maximum payment at $447 $485 per week. You could receive a higher benefit rate if you are in a low-income family earning with a net of $25,921 or less per year – be sure to check into this. Your payment is a taxable income, meaning federal and provincial or territorial taxes will be deducted.
How to make extra money while on Maternity leave?
Working while on leave can be a good way to earn extra money. It doesn’t make financial sense to work while on the maternity portion of the benefit, as your earnings will be deducted dollar for dollar from your benefits, unless you make significantly more than the benefits (after the cost of child care is deducted, if needed).
If you work while you’re receiving a parental leave benefit, you’re allowed to earn $75 per week or 40%. This was changed as of August 2012 to $50 per week or 25% of your weekly benefits whichever is higher. Any income earned above that amount will be deducted dollar for dollar from your benefits. 
Update: Oct 18,2012- There is  now a New Pilot Project In Place in which they are currently making changes to. Review this pilot project for any changes to the above as it may affect you.
New Pilot Project:  Once the waiting period is over earnings are deducted at a rate of 50% of each dollar earned up to 90% of the weekly insured earnings used to establish the benefit rate.
After you reach the 90% threshold money is deducted dollar for dollar. As of January 2013 you will have the option to stay with the current pilot project or revert to the old pilot project if you are an eligible claimant during the period August 5,2012- August 1,2015.
Check out Part 2 In this Series: Maternity and Parental Leave Part 2: Budgeting
Post Contribution By: Sarah Deveau is the author of Money Smart Mom: Financially Fit Parenting. Reach her at  Money Smart Mom.

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