PPL Superannuation Contributions

The proposal to add superannuation contributions to the Commonwealth-funded Paid Parental Leave Scheme (PPL Scheme) has now been enacted. Superannuation contributions (called PPL Superannuation Contributions) will be payable in respect of 2025/26 and subsequent financial years at the rate of 12% (which will be the SG rate for 2025/26 and following financial years) of the total amount of eligible Parental Leave Paid during the financial year. After the close of the financial year, the ATO will pay the PPL Superannuation Contribution to the individual’s nominated super fund.

Only Parental Leave Pay (PLP) paid in respect of children born on or after 1 July 2025 will be eligible for PPL Superannuation Contributions.

The calculated PPL Superannuation Contribution will be increased by a nominal interest component for lost earnings (as the contribution will be paid after the end of the financial year and not at the same time as the PLP was paid).

Recipients of eligible PLP will not be required to lodge a separate claim to access the PPL Superannuation Contribution. From information provided by Services Australia, the ATO will automatically calculate and disburse the applicable superannuation payment.

The rate at which PPL Superannuation Contributions will be calculated is automatically linked to the Superannuation Guarantee Rate, so any subsequent increases in the SG Rate (none have been foreshadowed) would automatically flow through to them.

Taxation and Super treatment of PPL Superannuation Contributions

PPL Superannuation Contributions will have the same tax treatment as employer contributions; that is they will be subject to 15% tax when received by the superannuation fund and will form part of the taxable component of any benefit paid to the recipient. The PPL Superannuation Contribution will be preserved until age 60 at the earliest. Also, the PPL Superannuation Contribution will be counted against the concessional contribution cap of the recipient. However, unlike normal employer SG contributions, PPL Superannuation Contributions, as they are not employer contributions, will be eligible contributions for the purposes of the First Home Super Saver to the extent of 85% of the contribution.

PPL Superannuation Contributions will be paid in a broadly similar way that the Government Co-Contributions for Low Income Earners is paid – that is the contribution will be paid to the nominated superannuation account (whether in an SMSF or other regulated fund) or nominated retirement saving account (RSA) which has been nominated to receive the contribution. In the absence of a nominated fund or RSA the ATO will pay the contribution to the Superannuation Holdings Accounts Special Account for the recipient.

Amendment of the SUPERCentral/Townsends Lawyers Governing Rules

The Governing Rules will be amended to expressly permit trustees of self managed superannuation fund which have adopted the Governing Rules to accept PPL Superannuation Contributions.

Details

The enacting legislation is Paid Parental Leave Amendment (Adding Superannuation for a More Secure Retirement) Act 2024 – being Act No 90 of 2024.

 

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