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Parental leave pay

Jun 17, 2011

There are two ways to administer new regulations ... the short way ... and the long way.  To me this seems like the long way to go around things.

From 1 July 2011, employers will be responsible for providing Parental Leave Pay to their eligible long-term employees. Centrelink will contact employers if they're required to provide Parental Leave Pay to an employee. They will also provide those funds to the employer before they need to pay their employee.

Employers will:

  • need to withhold the usual pay as you go (PAYG) tax
  • not have to make super contributions on Parental Leave Pay (so make sure that you quarantine it from other amounts that attract a super guarantee liability)
  • do not have to pay payroll tax on Parental Leave Pay
  • not incur increased workers compensation premiums due to the Parental Leave Pay.

I simply don't know why they are doing it in this manner.  It is guaranteed that it will cause alot of confusion amongst employers and multitude of mistakes as well.  I wonder how many employers will pay super on the amounts or include the amounts in their Workers Comp declarations. 

Whilst it is great that any costs incurred in administering the scheme are tax deductible, there should not have to be any extra expense in the first place.  Get the employee to fill out his/her forms at Centrelink and get paid direct by them.  Centrelink can take out the tax and give it to the tax department next door and issue a PAYG Payment Summary at year end. 

Don't go through the whole merry-go-round process of going to Centrelink then Centrelink contacting the employer who then has to wait for funds to clear so that they can pay the long-term employee and then have to worry about PAYG, super and workers comp obligations.

It just seems like a waste of time for small business owners who struggle as it is to run the administration side of their business as it is.

For more information about the Paid Parental Leave scheme, you can read the Employer Toolkit on the Centrelink
website or phone 13 11 58.

Tags: Company taxEmployeesEmployersFamilySmall Business

Author: Mr Taxman

Comments

"I agree. This payement should and would be better off covered wholly by Centrelink instead of having to have it handled by the employer."

By: Patrick on Jun 19, 2011 9:09AM

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