Paid parental leave - what is it, and how can you use it?

What's on offer? |  Who is eligible? |  How do I get it?

The paid parental leave scheme provides 18 weeks of government-funded leave to eligible working parents, paid in instalments at the national minimum wage (which is currently $589.40 a week before tax). Payments are taxed as wages in the hands of the parent, but no superannuation is paid on this amount.

It applies from January 1, 2011, but parents and parents-to-be should also look at the existing baby bonus scheme. Also, from January 1, 2013, a paid paternal leave scheme (click here to read more about it) is planned to come into operation, giving eligible working fathers and partners two weeks leave at the national minimum wage.

• 18 weeks of minimum wage to natural and adoptive parents who have been working and who have a baby or adopt on or after January 1, 2011
• can be received concurrently or separately to other employer-provided leave (and is additional to other paid maternity leave offered under some employment contracts)
• must be taken in one continuous 18-week period, although this can be split between one and the other parent (where, say, the mother can take 10 weeks and then the father takes eight)
• it is not a 'leave' entitlement, but will complement other leave entitlements, such as those contained in workplace awards or unpaid parental leave
• will be treated as other taxable income, but have no super guarantee portion.

• earning less than $150,000 the previous financial year (a partner's income is not counted)
• passing a 'work test' (more below), and being 'an Australian resident for tax purposes'.

Most workers are entitled to the paid parental leave scheme – employees, contractors or the self-employed – if they are the primary care giver to a baby or adopted child under 16. A salary cap of $150,000 has been imposed for eligibility, and anyone who claims will have to be a 'resident' for taxation purposes. There will also be a 'work test' to pass.

• worked for at least 10 of the 13 months before the birth or adoption, and
• worked for at least 330 hours in that 10 month period (around one day a week), with no more than an eight-week gap between any two consercutive working days.

Working 'continuously' can mean part-time, casual or seasonal; contractor or self-employed; work in a family business such as a farm; with multiple employers, or if you change jobs over that time as well. As long as you didn't have more than an eight-week break between working days, you will be regarded as having worked continuously (and a 'working day' is one where you worked for at least an hour).

• claims can be lodged up to three months before the expected birth, or up to 52 weeks after – but after that, no claims can be made
• a parent cannot work while receiving the parental leave, and it stops once the parent returns to work, even if this is before the 18 weeks

The scheme is administered by the Family Assistance Office, but if you are working it will be your employer who makes the payments (not that they have to come up with the money – they just handle the payment). Otherwise, all dealings will be with the Family Assistance Office.

• it needs to withhold PAYG (Pay as You Go tax withholdings) at the usual rate, and
• it can deduct child support from your Parental Leave Pay if it is required to do so, and
• it is not required to make superannuation contributions in respect of your Parental Leave Pay, but may do so if it wishes to, and
• you will be able to access other paid leave such as maternity leave/paternity leave at the same time as Parental Leave Pay, but you may be taxed at a higher rate, and
• you may arrange for other deductions to be made from your Parental Leave Pay, and
• you may salary sacrifice some or all of your Parental Leave Pay, through voluntary contributions to superannuation

These arrangements, except for PAYG and child support deductions, will depend on what you and your employer agree on, in the same way in which you make agreements about wages.

The Family Assistance Office, which is integrated into the Department of Human Services, can conversely provide the payment. The self-employed, people who work for various employers, or parents who are no longer working at the time of the birth will need to make arrangements through the Family Assistance Office anyway (which will still withdraw the PAYG portion of tax). And while you're there, ask about claiming for the family tax benefit and maternity immunisation allowance.

There is information available at the Family Assistance website that will explain the scheme in more detail.

Last reviewed 31/07/2012

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