2011 Australian Baby Bonus News Site.

Paid Parental Leave - $150,000 taxable income cap


Although announced just 2 days before the 2009-10 Federal Budget, the Budget papers gave some further details of the new Paid Parental Leave scheme. The Government said it will commit $731m over 5 years to Australia's first comprehensive, statutory, Paid Parental Leave scheme.
The Government scheme will be available to parents for births and adoptions that occur on or after 1 January 2011. Parents will be able to lodge claims from 1 October 2010.
The scheme will provide 18 weeks postnatal leave paid at the federal minimum wage (currently $543.78 per week). Around 148,000 mothers and primary carers will be eligible for the scheme each year.
To be eligible for the scheme, a parent in paid work:

• must have worked continuously with one or more employers for at least 10 of the 13 months before the expected date of birth or adoption;
• must have worked at least 330 hours in those 10 months (equivalent to around one full day of work each week); and
• must have an adjusted taxable income of $150,000 or less in the financial year prior to the date of birth or adoption of the child.

As part of the scheme, employers will act as "paymasters" for most employees. The Government said it will provide employers with funds in advance of the payments they make to employees. The Government said the Productivity Commission estimated that only around 4% of small businesses would make payments under the scheme in any given year.
Parents who are eligible for Paid Parental Leave will be able to continue to access employer-funded leave around the time of the birth or adoption of a child. This includes employer-provided maternity leave and recreation leave. Government-funded Paid Parental Leave can be taken in conjunction with, or in addition to, employer-provided paid leave.
Payments taxable

Payments made under the scheme will be taxable. Parents who receive paid parental leave will not receive the Baby Bonus (except in the case of twins or multiple births), or Family Tax Benefit Part B during the 18 week Paid Parental Leave period.
Mothers and primary carers not in full-time paid work will continue to receive the current forms of family assistance (including the Baby Bonus), if they meet the relevant eligibility requirements.
The Government said that, in line with a recommendation of the Productivity Commission's final report, superannuation payments will not initially be introduced for the Government's Paid Parental Leave. The Government said its introduction will be considered as part of a comprehensive review of scheme, within 3 years after the scheme's implementation. Due to the global economic downturn consideration of the recommended paternity leave has also been deferred to the review, the Government said.