Superannuation on Paid Parental Leave From 1 July 2025
At Bramelle Partners, we keep Australian businesses and individuals informed about legislative changes that affect their finances. The Federal Government’s announcement to pay superannuation on Government-funded Paid Parental Leave (PPL) from 1 July 2025 marks a significant step toward improving women’s long-term financial security and narrowing the superannuation gap.
According to the Government, this reform, alongside the expansion of Paid Parental Leave, is central to strengthening women’s economic security and supporting the broader economy.
Current Paid Parental Leave Settings
Subject to meeting eligibility requirements, families can currently access up to 20 weeks, or 100 payable days, of Government PPL for children born or adopted from 1 July 2023.
The current payment rate is $176.55 per day before tax, or $882.75 per five-day week, based on the national minimum wage. Of the 20 weeks available, two weeks are reserved for each parent.
Eligibility Conditions
To qualify for Government PPL, individuals must meet specific eligibility criteria, including:
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Caring for a child born or adopted from 1 July 2023
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Satisfying the income test, where individual adjusted taxable income must be $168,865 or less for the relevant financial year
If the individual income test cannot be met, families may instead qualify under the family income test.
Paying Superannuation on Paid Parental Leave
From 1 July 2025, eligible parents receiving Government PPL will also receive superannuation contributions paid by the Government.
These contributions will be made at the prevailing superannuation guarantee rate, which is scheduled to be 12% from 1 July 2025. This reform is designed to address gaps in superannuation balances that often arise during periods of unpaid or reduced work due to caring responsibilities.
Expansion of Paid Parental Leave Entitlements
Recent legislation also provides for a staged expansion of the Paid Parental Leave scheme.
Increased Leave Periods
From 1 July 2024, families will have access to 22 weeks of PPL. This will increase to 24 weeks from 1 July 2025 and to 26 weeks from 1 July 2026.
This represents a total increase of six additional weeks of Paid Parental Leave for new parents.
Reserved Leave for Each Parent
By 2026, a total of four weeks of PPL will be reserved for each parent on a use-it-or-lose-it basis. This change is intended to encourage a more equal sharing of caring responsibilities between parents.
Greater Flexibility for Families
From 1 July 2025, the amount of Paid Parental Leave that parents can take at the same time will increase from the current two weeks to four weeks. This added flexibility allows families to spend more time together during the early stages of caring for a new child.
How Employers and Families Can Prepare
Businesses and families can take practical steps now to prepare for these upcoming changes.
Steps to Consider
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Review parental leave policies to ensure alignment with the new rules from 1 July 2025
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Check super fund details to confirm where Government contributions will be paid
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Plan ahead for future tax years, particularly where employer-funded parental leave is offered in addition to Government PPL
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Speak with an accountant to understand how these changes interact with payroll, superannuation and compliance obligations
Supporting Long-Term Financial Security
The Government hopes that paying superannuation on Paid Parental Leave, combined with reforms to childcare and parenting payments, will contribute to a more secure and dignified retirement for more Australian women.
Get Advice on Tax and Superannuation Changes
With multiple changes rolling out over the next few years, professional advice can help you understand how Paid Parental Leave and superannuation reforms affect your personal or business circumstances. Bramelle Partners can assist with navigating these changes and planning ahead with confidence.
Speak to one of our accountants if you have any questions about the changes in tax for 2023.
