Paid Parental Leave – Know the Facts!

Following summary has been derived from the Family Assistance Office for your reference. Further detailed information can be obtained from their dedicated website > http://www.familyassist.gov.au/payments/family-assistance-payments/paid-parental-leave-scheme/

THE FACTS

Are you eligible?
• are the primary carer of a newborn child or recently adopted child
• are an Australian resident (Australian citizen, holder of permanent visa, a New Zealand citizen who arrived to Australia on a New Zealand passport and some temporary visa applicants)
• have met the Paid Parental Leave scheme work test (see below) before the birth or adoption occurs,
• have received an individual adjusted taxable income of $150,000 or less in the previous financial year, and
• are on leave or not working from the time you become the child’s primary carer.

The Paid Parental Leave scheme work test
To meet the Paid Parental Leave scheme work test you must have:
• worked for at least 10 of the 13 months prior to the birth or adoption of your child, and
• worked for at least 330 hours in that 10 month period (just over one day a week), with no more than an eight week gap between two consecutive working days.

A working day is a day you have worked for at least one hour. There are some exceptions to the work test if you cannot meet it due to pregnancy complications and/or premature birth.

You do not need to be working full-time to be eligible for Parental Leave Pay. You may meet the work test even if you:
• are a part-time, casual or seasonal worker
• are a contractor or self-employed
• work in a family business such as a farm • have multiple employers, or • have recently changed jobs.

Can you work while receiving Parental Leave Pay?

If you return to work, your Parental Leave Pay will stop.

What about your other employer entitlements?

The scheme does not change any of your existing leave entitlements. If your employer currently provides paid maternity or parental leave through an industrial agreement, they cannot withdraw the entitlement for the life of that agreement.

What should you do before your child arrives?

If you think you are eligible for Parental Leave Pay there are a number of things you should do before your child arrives.
1. Plan your caring role and work leave arrangements.
o Consider what paid and unpaid leave you might take from work, when you would like your Parental Leave Pay to start, and when you might want to return to work.
2. Use the Paid Parental Leave Comparison Estimator
o Parental Leave Pay and the Baby Bonus cannot be paid for the same child. If you meet the eligibility criteria for both payments, you can choose which payment is the best financial decision for your family.
o Most eligible families will be better off receiving Parental Leave Pay rather than Baby Bonus. You should check the Paid Parental Leave Comparison Estimator to work out which payment is best for your family.
3. Talk to your employer.
o Organise your leave from work. You should try to do this at least 10 weeks before you intend to take leave.
o If you have worked for 12 months or more for the same employer you are entitled to up to 12 months unpaid parental leave.

How will you be paid?

Parental Leave Pay will be provided to you by either your employer in your usual pay cycle or by the Family Assistance Office in fortnightly payments., From 1 January 2011, you and your employer can agree that your employer will provide your Parental Leave Pay. Your employer will be funded by the Australian Government to do this if you are eligible. If either you or your employer do not agree, you will receive your Parental Leave Pay from the Family Assistance Office.

From 1 July 2011, your employer must provide your Parental Leave Pay if you have worked with them for at least 12 months prior to the expected date of birth or adoption of your child and you will be receiving at least eight weeks of Parental Leave Pay. If this does not apply to your situation, you and your employer can still agree that your employer will provide your Parental Leave Pay after 1 July 2011, provided you are eligible.

How much will you be paid?

Eligible working parents will receive Parental Leave Pay at $570 a week for a maximum period of 18 weeks.

This pay is taxable.

If your employer is providing your Parental Leave Pay:
• You will be able to access other paid leave such as maternity leave, however this may mean you will be taxed at a higher rate.
• They can deduct child support from your Parental Leave Pay if they are required to do so.
• You may arrange for other deductions to be made from your Parental Leave Pay.
• You may salary sacrifice some or all of your Parental Leave Pay. For example, you may make voluntary contributions to superannuation. You must agree these arrangements with your employer as you do with wages.
• Your employer will not be required to make superannuation contributions on your Parental Leave Pay.
If we provide your Parental Leave Pay:
• We will withhold PAYG at the rate of 15 per cent unless you request another rate.
• You will not be able to salary sacrifice Parental Leave Pay that is provided directly by us.
• You can voluntarily request a Family Assistance and/or Centrelink debt to be deducted.

What else do you need to know about this entitlement? (which is often not conveyed during media coverage)

Parental Leave Pay and the Baby Bonus cannot be paid for the same child. If you meet the eligibility criteria for both payments, you can choose which payment is the best financial decision for your family.

If you have a multiple birth (for example, twins or triplets), you can receive Parental Leave Pay for the first child and, if you are eligible, the Baby Bonus for a second or additional child in a multiple birth.

Parental Leave Pay will count as taxable income for Family Tax Benefit and child support purposes.

You and your partner cannot receive Family Tax Benefit Part B, the dependant spouse, child housekeeper and housekeeper tax offsets during the Paid Parental Leave period. These may be paid after the end of the Paid Parental Leave peiod.

Are you an employer with a staff member who has given birth or about to, post 1 January 2011?

The Paid Parental Leave scheme starts on 1 January 2011. Your role in providing Parental Leave Pay will be voluntary until 30 June 2011. This means you have time to make any necessary adjustments to your payroll system. This also means you will not have to make changes to your payroll system part-way through a financial year.

From 1 July 2011, you will be responsible for providing Parental Leave Pay to your eligible employees who have or adopt a child from 1 July 2011, and have worked in your business for 12 months or more and are expecting to receive more than eight weeks Parental Leave Pay.However, you will have the choice to pay your employee if they have worked for your business for less than 12 months, or are accessing less than eight weeks Parental Leave Pay. If you choose not to provide your employee their Parental Leave Pay in these situations, we will pay your employee.

Your employee will need to contact the Family Assistance Office and lodge a claim for Parental Leave Pay.

On a practical level:

Paid Parental Leave funds will be transferred into the business bank account you nominate, before your employee’s usual pay cycle cut off date. You will receive these funds fortnightly over 18weeks, or you can receive them in three six-weekly instalments.

You will be required to withhold tax from the Parental Leave Pay under the usual PAYG withholding arrangements. You must also include any Parental Leave Pay in the total amounts on the employee’s annual or part-year payment summary.

Other Links of Interest:

For a checklist of things you need to do and/or keep track of as an employer, please see > http://www.familyassist.gov.au/payments/family-assistance-payments/paid-parental-leave-scheme/employers–what-will-i-need-to-do.php

Examples of how the Paid Parental Leave applies > http://www.familyassist.gov.au/payments/family-assistance-payments/paid-parental-leave-scheme/working-parents—more-information.php

Questions & Answers for working parents > http://www.familyassist.gov.au/payments/family-assistance-payments/paid-parental-leave-scheme/parents—frequently-asked-questions/

Once again, for more detailed information about this entitlement, please see the Family Assistance Office website > http://www.familyassist.gov.au/payments/family-assistance-payments/paid-parental-leave-scheme/ or contact them directly for further rights and responsibilities.