Your Guide to Parental Leave Pay in Australia

Expecting your first baby is a joyous and exciting time. However, it is also common for expectant parents to be a little anxious about their financial situation. A new child brings with it increased costs including medical costs and all the items you need for your new baby.

During your pregnancy, it's important to get an understanding of your entitlement for Parental Leave Pay. This article covers information on Parental Leave Pay for a child born or adopted after 1 July 2023. Here is information about Parental Leave Pay for a child born or adopted before 1 July 2023. Eligible parents will receive at least 20 weeks of Parental Leave Pay while you care for your new child. Here's some helpful information relating to Parental Leave Pay.

Am I eligible?

To be eligible for Parental Leave Pay you must:

• Be the primary carer of a newborn or newly adopted child
• Have met the income test (adjusted taxable income of approx. $175k individual or $364k for a couple. Here's the detail: Meeting the income test)
• Not be working during your Paid Parental Leave period except for allowable reasons
• Have met the work test
• Have registered or applied to register your child's birth with your state or territory birth register, if they're a newborn
• Be living in Australia and have either an Australian citizenship, a permanent visa, a Special Category visa or a certain temporary visa. Read more about Meeting residence rules.

Read more on the Services Australia website.

How much is Parental Leave Pay?

Parental Leave Pay is based on the weekly rate of the national minimum wage. If your child's birth or adoption date is between 01/07/2024 and 30/06/2025 you are entitled to 22 weeks, which is 110 payable days. It is currently $183.16 per day before tax. So the maximum you can get is $20,147.60 before tax (these rates are current as at September 2024).

The number of Parental Leave days is increasing each year. Here's an overview

Is there tax on Parental Leave Pay?

Yes, Parental Leave Pay is taxable income. If you claim Parental Leave Pay through your employer, they will withhold tax at normal PAYG Withholding rates. If Centrelink is paying you directly, they will withhold 15% PAYG Withholding tax, unless you ask for a different rate. Either way, your actual tax on Parental Leave Pay will be calculated with your individual tax return and there may be extra tax to pay or tax refunded with the lodgement of your tax return.

What is the Work Test?

To meet the work test, you need to have worked for both: 

• 10 of the 13 months before the birth or adoption of your child
• A minimum of 330 hours, around 1 day a week, in that 10 month period and had no more than a 12 week gap between 2 consecutive working days.

Things to note

• Some exceptions to the work test apply for pregnancy related illness, complications and premature birth.
• If you have a dangerous job or workplace hazards you may be entitled to have the work test period moved to the 13 months prior to when you stopped work.

What counts as 'Work' for the Work Test?

A working day is either a day when you have worked for at least 1 hour, or paid leave such as sick leave, annual leave and paid maternity leave. Read more about Activities that count as work.

You may still meet the work test even if you're not paid a salary. This includes if you're working in a family business or self employed, if you're undertaking the work for financial reward or gain, even if the business does not make a profit. Read more about Self employed parents

Examples to help you apply the work test

When to claim

To get Parental Leave Pay, at least one parent needs to claim within 52 weeks of the child's birth or adoption. Other parents have 2 years to claim.

You can claim up to 3 months before your child's due date. It is best to claim before your child's birth or adoption. Your payments won't start until after the birth or adoption. You can submit the claim before the birth or adoption, but the claim won't be finalised until you submit proof of birth or adoption.

Read more about Claiming timeframes.

How to claim

Here is the guide on how to claim Parental Leave Pay

Before your Parental Leave Pay can start, you need to make the claim and provide all supporting documents including proof of birth or adoption. 

How will I receive the payment?

Usually your Parental Leave Pay will be paid via your employer through their normal pay cycle.

In some circumstances, you may receive Parental Leave Pay direct from Centrelink (for example, if you're self-employed or no longer employed). In this case, Centrelink will pay the after-tax amount into your account every 2 weeks.

Read more about Getting your payment

This article is a general guide only, and is up to date as of September 2024. For the most updated information, check the Services Australia website. Parental Leave Pay