All Posts in Category: Paid Parental Leave

Changes to Paid Parental Leave

Changes to Paid Parental Leave 2018

The minister for women, Kelly O’Dwyer has released the government’s ‘Women’s Economic Security Statement’ which includes changes to Paid Parental Leave.  There are a large number of other initiatives that are designed to improve women’s financial security by focusing on workforce participation, earning potential and economic independence.

The start date for these initiatives will be 1 July 2020.

There is a significant focus in the Statement on helping victims of domestic violence achieve economic independence through early access to superannuation and increased funding for no interest loans.

The changes to Paid Parental Leave Scheme are designed to improve the flexibility of the current system, especially for those who are self employed and small business owners.

I regularly discuss with small business owners the problem of keeping their business going while meeting the requirements of the PPL Scheme of not working for 18 weeks. Few small business have that option available to them.

The proposed changes include:

Splitting your Paid Parental Leave into separate blocks.

Currently you must take the entire 18 weeks of payments in one continuous block. If you need to return to work before your 18 weeks are finished then you lose any remaining PPL. Currently about 2,300 people return to work each year before they have received the full 18 weeks of their payment entitlement and they miss out.

The new initiative will mandate the first 12 weeks to be taken within the first year of the child’s life, but the second block of six weeks can be taken within the first two years.

Changes to the Work Test

The current Work Test requires that you work for 330 hours in 10 months out of the 13 months before your due date. This must be done without a gap of more than 8 weeks between two work days.

The new initiative will allow for greater flexibility in the Work Test with gaps of up to 12 months allowed. There will also be the ability to move your Work Test dates forward should you have to stop work earlier in your pregnancy than expected.

 

The no interest loan scheme is already available and further information can be found here: https://goodshepherdmicrofinance.org.au/services/no-interest-loan-scheme-nils/

I will keep updating this page each time more information is announced on the changes to Paid Parental Leave.

I have created a free checklist that you can download to help you gather the information you will require when you sit down and prepare your application. Enter your details below and the PPL Checklist will be emailed to you.

As always, feel free to ask any questions.

Lisa

 

Download Making Sense of Paid Parental Leave  for $17. 

  • Get your application completed  all online.
  • Review the different tests and apply them to your situation.
  • Understand how it affects your tax.
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How much is Paid Parental Leave?

How Much is Paid Parental Leave? – Myth v Fact

So how much is Paid Parental Leave? Just like one big game of broken telephone, the information that gets passed around about Paid Parental Leave (PPL) changes depending on who you speak to. Since there is so much to know it is understandable. I’ve made a list of some of the more common things that I have heard or read, especially in Facebook groups, about your right to receive PPL and will try to set the record straight.

1. You have to have worked for one employer during your entire pregnancy.
You need to meet the Work Test to receive PPL. The test does not measure how many jobs you have had, but how many hours of work you have performed. You need to have worked for 330 hours in a 10 month period over the 13 months before you due date. You can achieve this in one job or many jobs. This includes contract work and also working two or more jobs at once. Keep a record of the number of hours of work you perform during this time to ensure you meet the Work Test.

2. You have to be working for a year before you go on parental leave.
I believe that this false comment comes up because of a different rule, from a different law, that has nothing to do with PPL. That is, if you have worked for 12 months continuously for an employer, they are required to give you 52 weeks of unpaid maternity leave. This is completely different to the requirements under the Paid Parental Leave Act 2010 which contains the laws about the payment of PPL. Note that one law discusses the rules about you being able to take the parental leave and the other the rules about the payment of money for PPL. It is possible to qualify for one and not the other. If you meet the Work Test, even if it is for more than one employer you will still be paid PPL, but your employer may not be required by law to give you leave. Given that you can’t work while receiving PPL this may be problematic for some.

3. You don’t get PPL if you are Self Employed
You certainly are entitled to receive it; it just takes a little extra planning. You will need to specify in your application to be paid directly by Centrelink rather than an employer. Also you will need to work out the best way for you to show Centrelink that you have worked the 330 hours in the Work Test. This varies for everyone but you could keep a diary or perhaps show the invoices that you have issued during the period before your due date.

4. You apply after you have given birth
Not necessarily. You can submit your application up to 90 days before your due date. Personally I think that this is the best time to do this as once you have given birth, the last thing you want to be doing is paperwork! You will receive a proof of birth document from your hospital that can be uploaded to Centrelink online or on their App which is then matched to your application to begin your payment of PPL.

5. Everyone can get it.
That would be nice wouldn’t it? As I mentioned, you need to meet the Work Test in order to receive PPL. You also need to be a permanent resident, earn less than $150,000 in the financial year that ended before your application and not be working at all whilst receiving your PPL.

6. You have to go into Centrelink to Apply.
If you can avoid doing this then do it! Your application can be done online through the governments’ website my.gov.au. If you have never dealt with Centrelink before you will need to go in to allow for them to view your original documents for proof of identity. Otherwise, apply online as much as you can, I can’t stress this highly enough!!

7. Paid Parental Leave includes Superannuation
The law does not require your employer to continue to pay into your Super fund while you are receiving PPL. However, I have noticed a very small number of companies starting to do this. Given the large variation is Superannuation balances between men and women the older they get then I wonder if this could be something that future governments consider changing.

I’m sure there are many more myths surrounding Paid Parental Leave so I hope this covers the main ones. How much is Paid Parental Leave? From 1 July 2018, Paid Parental Leave is $719.35 a week for 18 weeks.

If you would like help with filling out your application, enter your details below for my free checklist. It tells you every piece of data that you need to enter into your application.

Download Making Sense of Paid Parental Leave  for $17. 

  • Get your application completed  all online.
  • Review the different tests and apply them to your situation.
  • Understand how it affects your tax.
  • Learn about  Dad & Partner Pay details.
  • Stops wanting to pull your hair out!
Is paid parental leave taxable?

Is Paid Parental Leave Taxable?

Is Paid Parental Leave Taxable? YES, paid parental leave is taxable income. How much is taken out really depends on the circumstances of your leave arrangement and who is making your payments. In 2018-19, paid parental leave is $719.35 a week and paid through your normal payroll by your employer or directly through Centrelink.

Paid by your employer

If this is your only income during the 18 weeks from your employer then you should get $634 a week after tax. However everyone’s situation is different and you may be receiving other leave payments at the same time such as annual leave or paid maternity leave. Your employer will take the amount of tax that is relevant to your situation so it may be different to someone else you know getting paid parental leave at the same time as you.

Also as it is paid through your employers normal payroll cycle, if you are only paid once a month then you will only receive your paid parental leave payment at this time. You should receive a pay slip with your payment from your employer similar to what you would have received if paid your normal salary.

I was fortunate to also receive paid maternity leave from my employer for 13 weeks.  Therefore during my normal pay cycle each fortnight I was receiving my Paid Parental Leave plus my maternity leave pay from my employer. This meant that more tax was taken out of my fortnightly pay than if I was just receiving my PPL. For my second child I chose to have my 13 weeks of maternity leave pay spread out over 26 weeks at half pay. Therefore the amount taken out of my pay in tax would have been different again.

Paid by Centrelink

If you receive your Paid Parental Leave directly from Centrelink then your rate of tax is different again. This might occur if you are self employed or have not worked for your employer for longer than a year or even if you don’t intend to return to that employer. In this case the rate of tax that Centrelink will take out of your payment is 15%. This reduces your payment down to $611.45.

Income Tax Return

What all of this also means is that your Paid Parental Leave taxable income needs to go onto your Income Tax Return. Your employer will still need to give you your annual PAYG Payment Summary which will include your Paid Parental Leave. This is included in your Gross Payment amount and the Total Tax Withheld amount. It doesn’t need to be separately disclosed.

If you have received your payment from Centrelink, they will send you a PAYG Payment Summary directly which will include the Paid Parental Leave details for you to include in your tax return.

I have created a free checklist that you can download to help you gather the information you will require when you sit down and prepare your application. Enter your details below and the PPL Checklist will be emailed to you.

As always, feel free to ask any questions.

Lisa

Download Making Sense of Paid Parental Leave  for $17. 

  • Get your application completed  all online.
  • Review the different tests and apply them to your situation.
  • Understand how it affects your tax.
  • Learn about  Dad & Partner Pay details.
  • Stops wanting to pull your hair out!
Paid Parental Leave when you are self employed

Paid Parental Leave when you are Self Employed

I’m in A LOT of Facebook groups targeted to mums and also mums in business. Lately I’ve noticed an increase in questions relating to receiving your 18 weeks of Paid Parental Leave when you are self employed. Yes, you are definitely entitled to receive Paid Parental Leave if you are self employed.

The tests that you have to pass are exactly the same as if you were an employee but most of the information you read online seems to focus on employees. So here are answers to the most common questions.

1.How do you prove that you have met the Work Test?

The Work Test states that you must complete paid work for 330 hours over 10 months within the 13 month period before your due date/date of birth. This does not mean that your business has to make a profit or any money at all. You just need to have been working towards making a financial gain during this time. Volunteer work does not meet the Work Test.

So how do you show how much you have worked in the unlikely event that Centrelink ask you to prove your hours of work?

• Keep a detailed diary of hours worked. Write it down or use a spreadsheet and actually record each day of work and how many hours you spent working.
• If you bill by the hour, use your invoices to show the services provided
• If your clients book in a time to see you, show your schedule of bookings.
• Use your Tax Return or Financial Statements if your can you relate the amount or sales your business has to the number of hours that it takes to make a sale

2. What can you do in your business while receiving Paid Parental Leave?

You cannot perform paid work while you are receiving Paid Parental Leave. When you are self employed, the definition of paid work is where your purpose is to carry out work to make a profit. The only paid work that is allowed, and you can still get paid during this time, is to perform tasks where you are only overseeing the business, performing administrative tasks or other ad hoc activities to keep your business going.

These can include paying an account, checking the delivery of an order, arranging a repair or dealing with a dispute. Notice these examples are administrative as they don’t create a sale or income, which is how you should think about an activity that you want to perform in your business during this time. There is nothing to stop you employing someone else or even getting your mum to perform the tasks that will earn an income for your business.

3. What about ‘keeping in touch days?’

These don’t apply if you are on Paid Parental Leave when you are self employed. The legislation specifically refers to a keeping in touch day’ for people other than self employed. Also, these 10 days are not designed for employees to be performing their usual paid jobs but to keep up to date with training and meetings to help prepare them for a return to work.

4. Where to start?

I have created a free checklist that you can download to help you gather the information you will require when you sit down and prepare your application. Enter your details below and the PPL Checklist will be emailed to you.

As always, feel free to ask any questions.

Lisa

Download Making Sense of Paid Parental Leave  for $17. 

  • Get your application completed  all online.
  • Review the different tests and apply them to your situation.
  • Understand how it affects your tax.
  • Learn about  Dad & Partner Pay details.
  • Stops wanting to pull your hair out!

Update – Changes to Paid Parental Leave

Update: The proposed legislation mentioned in this post did not pass and these laws did not come into place. 

It’s been a bit quiet on the Paid Parental Leave front.  No doubt negotiations have continued behind the scenes between the Senators with the casting votes in the Upper House and the Minister for Social Services who has proposed the changes. As with a lot of these negotiations, in order to get the Bill through the Senate a number of compromises are expected.

In interesting news today, it has been suggested that one of those compromises may be to extend the total Paid Parental Leave period from 18 weeks to 20 weeks. For most parents that would mean two more weeks of $672.60. It would not change the new proposal to reduce the number of weeks of government Paid Parental Leave if you also receive employer provided leave. It would just mean that, if for example, you receive 8 weeks of paid leave from your employer, you would now receive 12 weeks from the government instead of 10.

One of the Senators with a casting vote, Derryn Hinch, is still pushing for a later start date of 1 October 2017 which would mean that anyone who is currently pregnant will not be affected by any changes in the legislation. It would also mean that from now on, anyone who becomes pregnant will not be surprised by the changes and can adequately budget for their proposed leave period. That has been the one thing that has really frustrated me ever since the original ‘double dipping’ changes were delayed as they tried to pass through parliament. If you are going to make changes to the amount of income parents can receive (up OR down), give families and their employers enough time to take these changes into account when planning for their financial future.

Feel free to forward and share this information to anyone who may benefit from the details.

Thanks,

Lisa

That will cost you $12,000 thanks.

Update: The proposed legislation mentioned in this post did not pass and these laws did not come into place. 

Well that took us all a bit by surprise didn’t it? The Fairer Paid Parental Leave Bill is back and it might have more luck getting through the parliament than the last time the Government tried to push it through in 2015.

Since then we have had an election and movement of numbers in both houses of parliament. Personally I don’t think that the Government would try to reintroduce the Bill if it didn’t think it could get it through this time. I’ve read the Bill (I know who does that???) and this is my summary of the important things that you should know if it goes through in its current state. It may still change.

The Bill refers to your employer provided paid leave as ‘primary carer pay’ and I will do the same in this explanation. Paid Parental Leave (PPL) is the 18 weeks of minimum wage provided by the government.

When??????

Well that depends. Although the talk in the media last week was that it will come into effect on 1 January 2017, the reality is that the scheme will start at the beginning of the following quarter after the Bill is signed off by the Governor General. So, if that happens before 31 December 2016, the scheme will start 1 January 2017. If it doesn’t get done until, say, next September, then it will take another year to start from now, etc. etc. This is completely useless for those who are trying to plan their finances for the next year.

From the date of introduction of the Bill, there are 12 sitting days of parliament before the end of 2016. Then they don’t come back until February. Can the government get the support of both Houses of Parliament to pass the Bill in 12 sitting days and get it signed by the Governor General? Perhaps?

How will it work?

Your 18 weeks of PPL will be reduced by the number of weeks of primary carer pay you receive from your employer. If your employer pays you 8 weeks of primary carer pay, you will receive 10 weeks of PPL at the minimum wage.

If your weekly amount of primary carer pay is less than the minimum wage, you will receive a top up to reach the minimum wage. The top up will be paid in one lump sum.

You will no longer be able to receive your PPL and primary carer pay at the same time.

Four Weeks (28 day) Backdating Rule

Currently, if you want the start date of your PPL to be the same as the date of birth of your child, you need to have completed your application by submitting a claim and proof of birth within 28 days of the date of birth. Therefore it is backdated by up to 28 days to the date of birth.

If you complete your application after your child is 28 days old, the start date of your PPL cannot be backdated to before your application. This is fine if you don’t intend to work for the next 18 weeks after you start to receive PPL as once you return to work your PPL has to stop.

However, some parents complete their application much later than 28 days and then find themselves having their payments stopped when they either return to work while receiving PPL or they reach the maximum date for which you can receive PPL.

They actually take the time away from work to care for their child but don’t get paid their full PPL entitlement because their application wasn’t completed early enough. Going forward you will be able to backdate your application by 28 days, regardless of when you complete it within the year after birth.

Break during qualifying period

To be eligible for PPL you need to meet the work test which is to work 330 hours in a 10 month period of the 13 months before birth. Within that period you can have a break between days of work of up to 8 weeks. That period will now be extended to 12 weeks which will help those who don’t have consistent employment to still meet the work test.

Hazardous work

Some pregnant women have to give up work early in their pregnancy as their job is considered to be unsafe and no other suitable job can be found for them. Their work test date of 330 hours in a 10 month period of the 13 months before birth is therefore generally not met and they don’t receive PPL.

Going forward, your work test will become 330 hours in a 10 month period of the 13 months before the date you had to cease work.

Dad and Partner Pay

When PPL is transferred to the father or partner, they still cannot receive more the 18 weeks in total for Dad and Partner Pay, Primary Carer Pay (the fathers/partners entitlement) and PPL.

Payment will now come from Centrelink – not your employer

Now everyone will be paid from Centrelink unless you and your employer agree for you to be paid by your employer. Small businesses must be so happy for this to happen! I can’t find any mention of how much tax will be taken out by Centrelink or whether it will just continue to be 15%.

 

So what do I think? The government thinks that by implementing these changes it will save close to $1billion over 4 years. Sure, but businesses offer primary carer leave/paid maternity leave to attract female staff and promote themselves an employer of choice. Now that there is no benefit in that, won’t they just find other ways to attract female staff and the government will still be making payments over 18 weeks to new parents? (Perhaps a cleaner or ready cooked meals for 18 weeks!!)

The positives are that more parents will become eligible for PPL from the changes to hazardous work arrangements and break between work days. Administration will move away from employers which will help small businesses save time.

What does annoy me is that by giving us no real fixed date in the future no one can really plan ahead. Parents can’t plan how much time they can afford to take off work. This then affects their employers’ ability to plan for their return to work and any employee in a position of maternity cover also doesn’t know how long they will be in their job.

I hope this information is useful for you. If you know of someone who may benefit then please share it with them and tell them to sign up to my email list. I’ll keep updating as things progress so they can keep up to date as well.

If you enjoyed the information I have provided and need more help, then the My Family Budget eBook is what you need to help you apply for Parental Leave Pay and Childcare Benefit. I explain everything so that everyone can understand how it works and then step you through the application process. It’s such a complicated process, but I can help with that.

Lisa

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Your Family Budget eBook – Making Sense of Government Parenting and Childcare Payments.

My guide to everything you will ever need to apply for and understand Parental Leave Pay, Dad and Partner Pay, Childcare Benefit & Childcare Rebate.  All in one place, with easy explanations.

Double Dipping – so where are we now?

Update: The proposed legislation mentioned in this post did not pass and these laws did not come into place. 

Before I get started, I just want to say one thing. I hate the term double dipping! I feel like I don’t have a choice but to use it. It’s the only thing that people understand when I mention a reduction in Paid Parental Leave for new mothers – oh, you mean double dipping?

I was very lucky to receive 18 weeks of Paid Parental Leave from the government as well as 13 weeks pay from my employer. It meant that I had some form of income for over half the year that I took leave from work. I’m not complaining. Should I have felt lucky or should I have expected more from society in general? How about I just stick to the facts?

In May 2015 it was announced that government paid parental leave (currently $672.80 per week for 18 weeks = $12,110.40 before tax) would not be available to mothers ONLY IF if they were also receiving paid maternity leave from their employers.

After a bit of tweaking, the final proposal was that if the number of weeks of pay from from your employer is more than the 18 weeks of government paid parental leave, then you would receive nothing from the government. If you received less than the government amount then you would be topped up. No one would receive less than the 18 weeks pay. In my case, I would have received the 13 week pay from my employer, then 5 weeks of paid parental leave to reach the total of 18 weeks.

The reason for this change was to save the government $1 billion over four years which would then be redirected into changes to the funding of Childcare. It was meant to start on 1 July 2016, but as that date approached, the legislation had still not passed the Senate. Many families were unable to plan ahead as they didn’t know what income they would be entitled to once their babies were born.

By April 2016, the government had decided that the Senate would not be able to pass the legislation required for the changes, the election was called not long after and it was kind of forgotten about. But not really forgotten completely.
This brings us to last week. Social Services Minister Christian Porter made a speech that reaffirmed his intention to introduce new legislation that will stop mothers from accessing parental leave pay if it is already provided by their employer. We will just have to wait and see what happens next. I’ll keep you informed.