The paid parental leave scheme is a government payment to support the leave taken by working parents of newborn and newly adopted children. Consideration is also available in circumstances of still-birth and infant death.
The government payment has no effect on your leave entitlements; it is simply a payment in support of parental leave. Minimum entitlements to time off, paid or unpaid, are specified in the National Employment Standards, and there may be additional provisions in your employment contract, which can also encompass superannuation and salary sacrifice arrangements.
Key features of the current scheme are:
- You must be on leave (paid or unpaid) and not working from the time of becoming the child’s primary carer
- Residence: you must be permanently in Australia as a citizen, PR or holder of special category (New Zealanders) visa, and limited categories of temporary visa
- Income – your adjusted taxable income is below $150,000 in the previous financial year
- Work test – you must have worked for at least 330 hours in 10 of the 13 months before the birth or adoption of your child with no more than an eight-week gap between any two consecutive working days. Full time, part time and casual work is all counted, and there are exceptions for exceptional circumstances. A day you have worked for at least one hour is treated as one working day.
The scheme is for the benefit of the “primary carer” of a newborn or newly adopted child, most often the mother. Generally, the arrangement is for the employer to receive the money from the government and then pay you as they would normally through the payroll.Change to Adjusted Taxable Income Formula
The government has adjusted the formula for the inclusion of the value of fringe benefits in Adjusted Taxable Income.
The meaning of ‘adjusted fringe benefits total’ is modified so that the gross value rather than adjusted net value (previously 51%) of reportable fringe benefits is used, except for PBIs, hospitals and charities.
‘adjusted fringe benefits total’ is a component of Adjusted Taxable Income
This affects eligibility for:
family tax benefits, stillborn baby payment,child care benefit, Youth Allowance, Abstudy and Isolated Children’s Allowance
parental leave pay and dad and partner pay
low income superannuation contribution payment
net medical expenses offset
dependant (invalid and carer) (DICTO) tax offset
Notional dependent’s offset for the Zone & overseas personnel tax offsets
For details of the amending legislation see Budget Savings (Omnibus) Act 2016 (Schedule 15). The measures received royal assent on 16 September 2016 and according to its terms therefore take effect from 1 January 2017 for family assistance payments and for income tax tests from 1 July 2017.
The maximum PPL benefit is paid at the rate of the National Minimum Wage. The actual period for which it is paid is based on your leave entitlement, for a maximum of 18 weeks.
Generally, the scheme is for the benefit to be paid to you by your employer, having already been paid by the government. In circumstances where you are not being paid by an employer, the Department of Human Services can pay you directly.
PPL payments are subject to normal PAYG rules and income tax, but not payroll tax, workers compensation insurance or superannuation guarantee contributions.
Baby Bonus and PPL can’t both be claimed; you have to choose. You can choose the benefit with the higher value.
The PPL scheme is administered by the Department of Human Services. Eligibility information and application details are here: Paid Parental Leave.
Dad and Partner Pay
From 1 January 2013 the Dad and Partner Pay allowance of up to 2 weeks is becomes available. It can be claimed on its own or in addition to the PPL.
The primary carer’s eligibility for Parental Paid Leave is most often claimed by the birth mother, however same sex couples can also benefit by nominating one parent as a primary carer with the second parent getting two weeks of paid leave.
The residence, work test and income conditions are similar (as above), and the payments are taxable income.
You can claim Dad and Partner Pay up to three months before, or within a year after, your child’s birth or adoption.
Payment is at the same rate as PPL – the rate of the National Minimum Wage – and is aimed at Dads on unpaid leave for up to 2 weeks. (there’s more here)
The public consultation phase of a government review of the Paid Parental Leave scheme closed on 31 May 2013. Details of the review, submissions and discussion papers can be read here.
- Parental Leave Pay (DHS)
- Parental Leave: Sorting Out Fact From Fiction – A Practical Guide to Parental Leave Obligations – www.wolterskluwercentral.com.au
This page was last modified 2017-12-22