The basics of parental leave

Paid Parental Leave (PPL) has come a long way baby! Back in 2002, when it was first introduced in New Zealand, parents and primary care givers received 12 weeks. However, PPL was increased from 18 weeks to 22 weeks, with a further increase to 26 weeks from 1 July, 2020.

We’ve put together some of the basics to help you navigate your plans for PPL. Because everyone’s situation is different, this is just a basic outline to get you started. You can find more detailed info at the following links:  Employment New Zealand and Inland Revenue Department

Related articles

KiwiSaver hacks for maternity leave

Can we afford a mortgage and a SAHP?

Motherhood and my career: an empowering perspective 

Paid parental leave (PPL) is a government-funded entitlement paid fortnightly by the IRD to eligible parents and other primary carers, such as adoptive parents, Home for Life parents, whāngai, grandparents with full-time care, and other permanent guardians.

These payments go towards the loss of income when they take parental leave or stop working to care for their newborn baby, or a child under the age of six who is now in their care.

You can qualify for paid parental leave if:

✔️ You have worked for at least an average of 10 hours per week for at least any 26 of the 52 weeks up to your due date or date the child comes into your care. This can be for one employer or a combination of employers even if there were periods where you did not work.

✔️ You have been self-employed for at least an average of 10 hours per week for at least any 26 of the 52 weeks up to your due date or date the child comes into your care.

✔️ If you resign or cease self-employment instead of taking leave, or while you’re on PPL, your entitlement won't be affected.

Click here to find out more about your own eligibility.

Your PPL payments will be paid directly into your bank account each fortnight. The payments will be treated as income, just like your normal salary and wages or self-employed income. PPL payments have tax and student loan deductions taken out (at the rate that applies to you).

If you're an employee...

PPL payments equal your normal pay up to a current maximum of $564.38 a week before tax. You'll receive the average of your highest 26 of the last 52 weeks of earnings up to the date the child arrives in your care.

If you're self-employed...

PPL payments equal your average weekly earnings up to a current maximum of $564.38 a week before tax. The minimum payment is $165.00 each week before tax. If you earn less than this, or make a loss, this is what you'll receive. It's equivalent to 10 hours each week at the current minimum wage rate.

How long you can receive payments for:

Working or resigning while you're receiving paid parental leave

You can work limited Keeping in Touch (KIT) hours by agreement with your employer during your PPL without losing your entitlement.

Just note, you can't work any of these KIT hours in the first four weeks after giving birth, but if you're receiving payments for a premature baby you may work additional KIT hours. For more information, see the Ministry of Business, Innovation and Employment's website or call them on 0800 20 90 20.If you qualify for PPL payments, you'll continue to be entitled to your payments even if you resign from your employment instead of taking leave.If you qualified for an in-work tax credit (IWTC) while you were working, you'll also receive IWTC while you are being paid PPL.

Maximum weekly amounts for PPL for previous year:From 1 July 2017 until 30 June 2018, the maximum amount for employees is $539.08 (before tax). For self-employed with a loss, or income less than the minimum wage, the maximum amount is $157.50 (before tax).

Best Start tax credits

A Best Start tax credit (BSTC) is a payment to help families with the costs in a child’s first three years. It's a new component of the Working for Families Tax Credits (WfFTC). It's available for all qualifying families with children due or born on or after 1 July 2018. You can receive a BSTC for a child due or born on or after 1 July 2018. You can't receive a BSTC for the same period PPL is being paid. In your child's first year, the amount of BSTC is up to $60 a week ($3,120 a year). For your child's second and third years, the amount reduces by 21 cents for every dollar your family income goes over $79,000. The table below is based on a family with one child qualifying for BSTC.Your BSTC entitlement will end when your child turns three.

Click here for more information on the Best Start Tax Credit

NOTE: If you delay applying for PPL your payment is backdated. If you are already receiving BSTC you could be overpaid BSTC by receiving both payments for the same period. To avoid an overpayment you can either apply for PPL first or delay your BSTC payments by contacting the IRD on 0800 227 773.

Information sourced from employment.govt.nz and ird.govt.nz and updated 8 January 2019.