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Paid Parental Leave Scheme Update For Federal Budget Announcements

If you have employees who are expecting to expand on their family (whether they are adopting or looking to become pregnant), the Federal Budget 2022-23 announced a change to paid parental leave that could impact you and your employees.

Single parents and fathers are now eligible for longer paid parental leave after the government proposed an ‘enhanced’ 20-week scheme from announcements made during the Federal Budget 2022.

Under existing arrangements, up to 18 weeks of paid parental leave can be taken by whoever is designated a baby’s primary carer – usually the mother – at the minimum wage, while a secondary carer is eligible to take two weeks. If the secondary carer does not use the two weeks, it is lost.

As a result of the recent announcements made in the Federal Budget 2022-23, the secondary carer’s leave will be merged with the 18 weeks of Paid Parental Leave to increase the government-funded scheme to 20 weeks of leave.

Single parents will see two additional weeks of paid parental leave added to what they normally would be entitled to, whereas two-parent households will be able to split the Paid Parental Leave as they would like. However, this leave must be taken within two years of the child’s birth or adoption.

The ‘use it or lose it’ incentive will not be implemented into the new scheme, but an emphasis may still be placed on the primary caregiver to take the bulk of the leave.

The enhanced scheme will also broaden the eligibility for paid parental leave to include a household income threshold of $350,000 per year.

This fully flexible leave aims to help working parents make caring decisions that suit their specific circumstances and encourage fathers to take up parental leave.

Presently, women who earn up to $151,350 can access paid leave, but women earning more than the threshold are not entitled to this scheme, even if their partner has lesser or no income.

The rate of paid parental leave has not increased either – it is simply that eligible parents will be able to access more of it. This may be a disincentive however to the higher income earner, as taking the paid time off may be less than what they would otherwise earn working.

Notably, though, the proposed scheme still does not include superannuation payments in parental paid leave. Paying super on paid parental leave would allow parents to continue building their retirement savings while taking time out of the paid workforce to care for children.

If all goes to plan, these changes to the paid parental leave scheme will take place no later than 1 March 2023.

Paid parental leave is a topic that can be tricky for employers. Having a discussion with a professional can be a way to alleviate concerns about what your employees are entitled to or the risks of failing to match standard employee obligations around the matter.

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Super Guarantee Change – Deadlines, Payments & Everything Your Business Needs To Know Before The EOFY

Posted on May 23, 2022 by admin

It is easy to get caught out with superannuation, particularly when you are the owner of a business. With so many things to occupy your mind, superannuation may slip from the forefront.

But as a business owner, you must pay the superannuation guarantee for your staff, and you must pay it on time. A failure to pay it on time will mean that you are no longer able to receive a tax deduction for the payment for that financial year. 

On top of that, you can face hefty penalties (which you won’t get a tax deduction for either!). Now imagine being five days late on a $10,000 super payment, losing the tax deduction on that payment and then copping a $20,000 penalty as well. 

The first thing is to make sure that your super is paid well before the time it is due. This should be a priority payment (a payment that you make before anything else).

As the end of the financial year approaches, it is time to be thinking about the June Super Guarantee payment. You may have until July 28 to make the payment but leaving it until then will not net you a tax deduction until the next financial year. From a tax perspective, this may not be what you want to do (unless you know that in the next year, you will need more tax deductions).

Superannuation also has a few strange rules when it comes to claiming a tax deduction.  For employee superannuation, it is critical that it is paid on time.  More than that, the money has to actually be in the bank account of the super fund for you to claim a tax deduction.  

Unlike other expenses where you can show the money coming out of your bank account, this money needs to be present in your super fund for you to make the claim. If your super guarantee payment hits the bank account of the super fund on June 30th then you can claim a tax deduction for that year.  If, however, it hits the bank account on July 1st then the tax deduction is claimed in the financial year after.

Problems arise when you are paying your super through a clearing house, which takes a number of days to clear your payment and get it to the super fund. For example, you may pay the clearing house on the 25th of June, but your super fund does not receive it into their bank account until the 1st of July. 

The ATO’s Small Business Superannuation Clearing House usually has some concessions in these instances.

If you want to get a tax deduction for your June Super Guarantee payment, you need to work out with your clearing house the latest day that they can guarantee that the super fund will then receive the payment this financial year.  Some of these clearinghouses are quoting that you should be paying as early as the 14th of June.

Finally, with regards to Super Guarantee, remember that the rate increases to 10.5% from 1st July.  This rate applies to wages paid on or after July 1st so make sure your payroll system either automatically updates the rate or that you have updated it to reflect the increase.

Employers who fail to meet their Super Guarantee obligations may also be liable for a range of penalties or charges on top of the super guarantee charge. 

Paying super is an important part of being an employer. To ensure your business remains compliant, remember to: 

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