All Posts in Category: Paid Parental Leave

Baby born after 1 Jan 2020? Here are the PPL changes.

A couple of positive changes coming to the Paid Parental Leave Scheme that will affect you if your child is born after 1 January 2020.

Change to the gap allowed between two working days

When calculating if you meet the Work Test during the 13 months before your due date, you are currently allowed a gap between two work days of up to 56 days.

This means that if you don’t perform any paid work for up to 8 weeks during this time you will still be eligible for Paid Parental Leave. (Paid leave is considered to be a ‘work’ day and doesn’t count towards this gap.)

From 1 January 2020, this will become 12 weeks.

This is very useful for those who are on contract work or even if you are out of work for an extended time during your pregnancy.

Dangerous Jobs Provision

If your pregnancy forces you to stop work due to safety concerns, it’s possible that you wont work enough hours to meet the Work Test and therefore will miss out on receiving Paid Parental Leave. This may no longer be the case if you meet the following conditions:

  • you’re pregnant or the birth mother of a newborn child
  • your child’s date of birth is on or after 1 January 2020
  • you stopped work because a workplace hazard was a risk to your pregnancy
  • you won’t meet the work requirements in the 13 month work test period ending the day before your child’s birth,

then you may now meet the number of hours as the 13 months used to calculate this will now end on the day that you had to finish work instead of the date of birth.

You will still need to meet all of the eligibility requirements of the Work Test, but the dates involved in your calculation will be moved.

 

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 2019-20, paid parental leave was $740.60 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 $648 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 employer 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 $629.50

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 or it may already be included in your myGov tax return. 

Where should you start? Here with your free checklist:

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

Changes to Paid Parental Leave

Changes to Paid Parental Leave from 1 July 2020

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.
  • Learn about  Dad & Partner Pay .
  • Stop wanting to pull your hair out trying to get it done!
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!
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!