Paid Parental Leave and Dad and Partner Pay are available to all parents, not only self-employed, within the first 12 months of a child’s life. Its goal allows you to take time off work to care for your child. Paid Parental Leave is 18 weeks of pay at the Australian minimum wage and Dad and Partner Pay is for two weeks. From 1 July 2018, the minimum wage is $719.20 a week.
What is the Work Test?
In order to receive either of these payments, there are a number of tests that you need to pass. Most are easy to determine even if you are self-employed such as if you are an Australian resident or whether you earn less than $150,000 in the last financial year. But the more complex test is the ‘Work Test.’
The Work Test states that you must complete paid work for 330 hours over 10 months within the 13 month period before your due date/date of birth. This does not mean that your business has to make a profit or any money at all. You just need to have been working towards making a financial gain during this time. Volunteer work does not meet the Work Test.
So how do you show how much you have worked in the unlikely event that Centrelink ask you to prove your hours of work?
• Keep a detailed diary of hours worked. Write it down or use a spreadsheet and actually record each day of work and how many hours you spent working.
• If you bill by the hour, use your invoices to show the services provided
• If your client’s book in a time to see you, show your schedule of bookings.
• Use your Tax Return or Financial Statements if you can you relate the number of sales your business has to the number of hours that it takes to make a sale
What happens when you receive your payment?
You cannot perform paid work while you are receiving Paid Parental Leave. When you are self-employed, the definition of paid work is where your purpose is to carry out work to make a profit. The only paid work that is allowed, and you can still get paid during this time, is to perform tasks where you are only overseeing the business, performing administrative tasks or other ad hoc activities to keep your business going.
These can include paying an account, checking the delivery of an order, arranging a repair or dealing with a dispute. Notice these examples are administrative as they don’t create a sale or income, which is how you should think about an activity that you want to perform in your business during this time. There is nothing to stop you from employing someone else or even getting your mum to perform the tasks that will earn an income for your business.
Keeping in Touch Day
These don’t apply if you are on Paid Parental Leave when you are self-employed. The legislation specifically refers to a keeping in touch day’ for people other than self-employed.’ Also, these 10 days are not designed for employees to be performing their usual paid jobs but to keep up to date with training and meetings to help prepare them for a return to work.