Paying Super On Government Paid Parental Leave From 1 July 2025 Confirmed

The Budget confirmed the proposal to pay superannuation on Government-funded paid parental leave (PPL) for births and adoptions on or after 1 July 2025. From that time, the super guarantee (SG) rate will be 12% (up from 11.5% for 2024–2025). Therefore, eligible parents will receive an additional payment (12% of their PPL payments) as a contribution by the Government to their superannuation fund.

As previously announced by the Treasurer on 7 March 2024, this measure seeks to build on the Government’s work to “modernise” PPL and expand the payment to a full six months by 2026.

The Paid Parental Leave Amendment (More Support for Working Families) Act 2024, which received assent on 20 March 2024, expanded the Paid Parental Leave Act 2010 to give families an additional six weeks of PPL. Effective from 1 July 2024, families will have access to an extra two weeks of leave (for 22 weeks total). This will increase to 24 weeks from July 2025 and 26 weeks from July 2026. At the time, the Treasurer said this builds on changes which commenced in July 2023 to give more families access to the payment, including through a “more generous” $350,000 family income test.

The Government will provide $1.1 billion over four years from 2024–2025 (and $0.6 billion per year ongoing) to pay the 12% superannuation on the government-funded PPL scheme from 1 July 2025. The Government will also spend $10 million over two years from 2024–2025 to provide additional support for small business employers in administering PPL. Another $1.4 million will be provided over two years from 2023–2024 to update communication products and documents for potential PPL recipients.

Example

Courtney earns around $70,000 per year and takes 22 weeks of PPL after her child is born in July 2026, while her partner takes four weeks of PPL. Based on projected future payment rates, the Government says Courtney’s family will receive around an additional $5,790 of parental leave pay due to the expansion of the PPL scheme to a total of 26 weeks by 1 July 2026. Both partners are also entitled to superannuation on their PPL payment. They do not have to do anything additional to receive their super payment. Courtney will receive around $2,500 as a contribution to her superannuation account. According to the Government, this means Courtney will retire with a superannuation balance around $4,250 (or 1.15%) higher.

 

Important: Clients should not act solely on the basis of the material contained here. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas.

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