Australia and the US are the only two OECD countries not to have a Government-backed scheme.

Changes to the paid parental leave scheme

Expecting your baby sometime in the New Year? Then here’s your at-a-glance guide to the new paid parental leave scheme.

On the 17th June, Parliament made history by passing Australia’s first-ever paid parental leave scheme – hooray! It’s designed to encourage parents to take at least 18 weeks off work after the birth of their child and it is an action that finally brings Australia into line with every other western country in the world (bar the United States). The when, what, who and how of the new scheme is as follows:

When?
The paid parental leave scheme will begin on the 1st January 2011 and will apply to eligible parents of children born or adopted on or after this date. If you give birth prior to the New Year then you will fall under the current Baby Bonus arrangements.

After 1st January, the current Baby Bonus will continue for those who either aren’t eligible or choose not to receive the paid parental leave.  

What?
Eligible parents will receive up to 18 weeks paid parental leave, paid at the National Minimum Wage (which is currently $570 a week before tax). You can elect to take it at any time in the first year after birth and you can take it before, during or after any other employer benefits you might have, such as paid maternity leave, annual leave or long service leave.

If you are expecting twins – or more! – then you will receive the parental leave for the first child and the baby bonus for second and subsequent children. So twins, for example, could attract the 18 weeks of paid leave plus one $5,000 Baby Bonus payment. You’ll need it!

Who?
To receive the paid parental leave you must be “eligible”. To be eligible you need to be an Australian resident and be the primary carer of your baby. You must also have personally earned less than $150,000 in the previous financial year (your partner’s income won’t be taken into account).
Finally, you must meet a “work test”. To meet this test, you must have:

  1. been in paid work for at least 10 of the 13 months prior to the birth/ adoption of your child, and
  2. worked at least 330 hours in that 10 month period (just over one day per week), and had no more than an eight week unpaid break between working days. A working day is a day on which you worked for at least one hour.

After 1st January, the current Baby Bonus will continue for those who either aren’t eligible or choose not to receive the paid parental leave.  

“Working parents” include full-time, part-time, seasonal and casual workers, contractors, the self employed, and people who have had multiple employers.


How?
Initially for most parents, the payment will be received from the Family Assistance Office (FAO) in fortnightly instalments. From 1st July next year employers will take over the payment responsibility for their long-term employees and you will receive your parental leave pay in the same way as they pay your wages or salary (for example, if they normally pay you weekly, you will receive your Parental Leave pay weekly; if you are paid fortnightly you will receive your Parental Leave fortnightly).
If you are not a long-term employee (casual, seasonal, recently commenced) then the Family Assistance Office will continue to make your payments. Irrespective of who makes the payment, you lodge your claim through the FAO, in the same way as other family benefits are claimed.

For more information on the scheme, read our “Frequently Asked Questions” below, and for any queries contact the Family Assistance Office, either online www.familyassist.gov.au  or by phoning 13 61 50. And in the meantime, have a great pregnancy!
 

 
FAQ’s

Will I be better off?
Probably. The Government estimates that more than 85 per cent of families will be better off receiving Paid Parental Leave. These families will, on average, receive around $2,000 more than if they chose the Baby Bonus. This is after tax has been paid and all interactions with other family assistance have been taken into account.
 
How can I work out whether to claim Paid Parental Leave or Baby Bonus?
The Family Assistance Office is going to provide an online estimator on their website (www.familyassist.gov.au) from September this year. Alternatively you can telephone the FAO on 13 61 50 to discuss your situation with them.

When can I claim?
You can lodge a Paid Parental Leave claim either online or in a paper form with the Family Assistance Office up to three months before the expected date of birth or adoption of your child.
Payments won’t start until after the birth and after you have applied to register your child’s birth, but completing and lodging the claim form in advance will help to ensure the payments start as early as possible.

Is it taxed?
Yes, paid parental leave is taxable income. The FAO will deduct 15% PAYG tax before crediting your bank account each fortnight; if the payment is being made by your employer they will also deduct PAYG tax before paying you.  

Will it affect my other family benefits?
Yes, because it’s taxable income it can affect your Family Tax Benefit A & B and your child support assessment. You will be able to use the FAO’s online assessment calculator from September this year to work out how your situation might be affected, or alternatively, make an appointment to visit the FAO by calling 13 61 50.   

What if I want to go back to work?
You can’t go back to work and continue to receive paid parental leave. If you return to work, the payments will stop. So if this is something which is likely, then have a chat with the FAO about whether you should apply for the baby bonus instead.

Alternatively, you and your partner can “share” the paid parental leave. For example, you might decide to take 10 weeks off, and your partner might take 8 weeks off after that. You can arrange through the FAO to change the nominated primary carer and thus share the paid leave.      

Is it a cost to my employer?
No, the paid parental leave is being fully funded by the Australian Government.

Help –my baby’s overdue and I might not meet the work test because of it!
That’s okay – they’ll take that into account. You won’t miss our just because of that!

Read more resources for working parents.