Australia’s Paid Parental Leave Scheme
6. The financial benefits for new parents
A parent eligible for PPL will receive taxable payments at the Federal Minimum Wage, currently $543.78 a week, for a continuous period of up to 18 weeks (a total of $9788).
It is estimated that 148,000 new parents will be eligible for PPL payments each year. Parents receiving PPL will, on average, receive around $2000 more than under current family assistance arrangements. This net benefit takes into account the payment of tax, forgone Baby Bonus and interactions with Family Tax Benefits.
Families receiving payments under the scheme will not receive the Baby Bonus. For multiple births, the Baby Bonus may be paid for the second or additional children.
Family Tax Benefit Part B will not be payable to the family during the period when PPL payments are being received. The dependent spouse, child housekeeper and housekeeper tax offsets also will not be available during this period.
PPL payments will be taxable income and will affect entitlement to family assistance payments. Income from PPL will not be treated as income for Parenting Payment (partnered and single), or other income support payments, such as the Disability Support Pension and Newstart Allowance.
Superannuation payments will not be made for Government Paid Parental Leave but this decision will be subject to a review beginning two years after the scheme has commenced.
Setting up PPL payments prior to the birth of a child
Anne is expecting her second baby on 1 February 2011. She is currently employed part-time and is eligible for the Government PPL scheme. She is also eligible for six weeks employer-funded paid maternity leave and she plans to take this prior to the birth.
Anne must talk to her employer about her leave intentions, including her intention to take unpaid parental leave.
Anne will be able to apply for her Government PPL up to three months prior to the expected birth of her child, i.e. from 1 December 2010. The application form will seek details such as:
- her expected confinement date;
- her employment status and details on her current employer;
- her work history (to establish eligibility); and
- the proposed start and end dates for her PPL payments.
Anne will need to produce sufficient evidence to establish her eligibility for PPL. This may consist of copies of tax assessment notices, payment summaries issued to her by employers, payslips or other similar forms of evidence. Details on the required evidence will be finalised during implementation.
The Family Assistance Office will communicate with both Anne and her employer. It will confirm with her employer that it has:
- appropriate details to properly identify the employer;
- the bank account details necessary to pay the employer;
- accurate information on the employer’s usual pay cycle to ensure that payments are made in advance.
The Family Assistance Office will also ensure that the employee and employer have the same understanding of when PPL payments are to be made.
Once Anne’s baby is born, she will need to verify the birth with the Family Assistance Office.
Anne will begin receiving her PPL payments at the time she has specified, consistent with her employer’s usual pay cycle.
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