Paid Parental Leave boost for new parents, and understanding is key

Recent changes to the paid parental leave scheme open it to higher-income households, prompting a big message for mums and dads.

Families risk missing out on more than $17,000 – and extra tax benefits – by failing to understand the generous new changes affecting the government’s Paid Parental Leave Scheme.

A revamp of the scheme in July increased the payment from 18 to 20 weeks of the national minimum wage, widened its availability to higher income earners, dropped the previous two weeks of dad and partner pay and introduced more flexibility for families.

However, payment experts say some people are missing out on the daily before-tax payments of $176.55 per day that now last for 100 days.

It is estimated that more than 20,000 people a month are claiming money through the scheme, and it is set to expand further from next year.

Entitlemate founder Brendan Ryan said paid parental leave was “a case of if you don’t ask, you don’t get it”.

“If you think you might be earning too much, have a closer look,” he said.

“If you don’t think you are eligible because of work, have a closer look.”

“There is no reason why people can’t make the most of this system that is there to support them. Get to know the rules and you will be in good shape.”

Under the old scheme, if a birth mother earned more than $156,000 there would be no payment, Mr Ryan said.

Most people claiming government paid parental leave are women. Picture: iStock

But the changes from July 1 meant if the mother earned more than $169,000, the income test went to a family limit of $350,000, he said.

“This means families with higher earning birth mums are not disadvantaged,” Mr Ryan said.

Nine out of 10 people claiming through the government scheme are female, and Minister for Social Services Amanda Rishworth said the July changes had made it easier for parents to share care by removing the notion of primary and secondary carers in creating a single payment that both could access.

“We have expanded access to more families by introducing a $350,000 family income limit, which parents can be assessed under if they exceed the individual income limit,” she said.

Parents could take government-paid leave in blocks as small as a single day with periods of work in between, Ms Rishworth said.

More changes were coming in 2024, she said.

“We will progressively add six more weeks of leave until the scheme reaches six months in 2026.”

Mr Ryan said dropping two weeks of dad and partner pay and absorbing it into a family’s 100 available days was better for single parents as it gave those households greater income.

He said the scheme was “gender blind”, so the payment could be channelled to the lower earning partner to minimise tax, and it could be paid at the same time as paid leave from an employer.

“My advice is to get the money in asap and chuck it against the mortgage.”

Mr Ryan said people might not realise the broad range of activities that counted as work and could make people eligible for the payment, including study, self-employment even without making a profit, jury service, seasonal or contract work, annual leave, sick leave and employer’s maternity leave.

He said the work test to get the payment was complex but very broad – equating to 41 days in the 13 months before birth.

Originally published as Paid Parental Leave boost for new parents, and understanding is key