Boost For Parental Leave Pay

Article by Lea Williams Byfields Director

As the new financial year begins, parents across Australia are set to benefit from expanded government support, with key changes to the Parental Leave Pay scheme coming into effect from 1 July 2025. 

Families welcoming a child born or adopted on or after this date will now be eligible for 24 weeks of paid parental leave, up from the previous 22 weeks. In a landmark change, the scheme will also now include superannuation payments, a first for Australia’s paid parental leave policy. 

The payment is set at $948.10 per week, based on minimum wage rates, which means the total value of the 24-week entitlement, including the new 12% superannuation contribution totals approximately $25,485. It’s important to note that these payments count as taxable income, and super contributions will be taxed within the recipient’s nominated super fund. 

To qualify for the payment, applicants must meet both a work test and an income test: 

• Work test: Applicants must have worked at least 330 hours across 10 of the 13 months prior to the child’s birth or adoption. There are provisions for exceptions in special circumstances, which must be individually assessed. 

• Income test: The applicant must have an adjusted taxable income below $180,007, or a combined family income under $373,094. 

Eligible work includes: 

• Paid wages 

• Self-employed work (including through a partnership or trust) 

Income via a trust can be more complex to verify; we recommend that individuals drawing income from trusts contact their accountant to discuss in more detail. Importantly, volunteering and studying do not count as eligible work under this scheme. 

Parental Leave Pay must be taken within two years of the child’s birth or adoption, and recipients must be on leave or not working while receiving it. Payments can be made directly to the parent or through their employer. 

Applications can be submitted up to three months before the child’s birth, but payments will commence only after birth and verification of the claim. Parents may also choose when payments begin and can transfer the entitlement to another parent if they take over as the primary caregiver. 

This year’s introduction of superannuation contributions to the scheme is being widely welcomed as a step toward closing the retirement savings gap often experienced by parents who take time away from the workforce to care for young children. 

The Parental Leave Pay scheme has steadily expanded since its launch in 2011, when it provided just 18 weeks of support. The next and final scheduled increase will bring the total leave entitlement to 26 weeks by July 2026. 

For further details or to check your eligibility, visit Services Australia or consult your accountant. As with all government entitlements, accurate income reporting is crucial, and you will need to have lodged your 2025 tax return for your application to be assessed in the current financial year.