Paid Parental Leave income test and previous financial year income estimate 108-05030070

For children born or adopted:

• On or after 1 July 2023
• A family income test applies in addition to the individual income test. If the customer does not meet the individual income test, then the family income test is applied. This applies to both single and partnered customers
• Before 1 July 2023
• The PPL income test is based on the estimate of the customer’s income only, and
• It does not include their partner’s income estimate

For claims with children with an expected or actual date of birth or entry into care:

• on or after 1 July 2023, go to Step 3
• before 1 July 2023, go to Step 2

A PPL claimant’s adjusted taxable income (ATI) must be below the relevant financial year income limit to be eligible for payment. Their partner’s income is not included in determining if the claimant meets income eligibility. Evidence of a claimant’s ATI is needed when their estimate is between the individual evidence threshold and the individual income limit for the relevant financial year.

The PPL Income limits are subject to indexation each financial year.

Is the claimant’s estimated ATI between the relevant individual evidence threshold and the individual financial year income limit?

• Yes, see Step 1 in Table 2
• No, see Step 2 in Table 2

At the date of claim lodgement, is the customer single?

• Yes, go to Step 4
• No, go to Step 5

A claimant who is single at the time of claim with a child or children born or adopted on or after 1 July 2023 will be assessed under the individual income test.

If their income is over the individual income limit, the family income test applies to the customer’s adjusted taxable income (ATI) only. A claimant may need to give evidence if their income is more than 90% of the relevant income test. See relevant financial year income limit for the income evidence thresholds.

Note: if a single claimant is granted PPL under the family income test and later found to be partnered at time of claim, they must provide the partner income.

See Resources for examples of when the individual or family income test applies and evidence needed.

Is the claimant’s individual ATI on or over the family income evidence threshold for the relevant financial year?

• Yes, if the claimant’s individual ATI is:
• between the family income evidence threshold and the family income limit, evidence is required and is assessed under the family income test. See Step 1 in Table 2
• over the family income limit, no evidence is required and is assessed under the family income test. The PPL claim will auto reject reason INC (income) when the claim is finalised. See Table 3
• No, if the claimant’s individual ATI is:
• below the individual income limit, no evidence is required and is assessed under the individual income test. See Step 2 in Table 2
• over the individual income limit, no evidence is required and is assessed under the family income test. See Step 2 in Table 2

A partnered claimant will be assessed under the individual income test.

If a partnered claimant does not meet the individual income test, then the family income test applies. The PPL claimant's individual ATI provided in the PPL online claim will determine if they need to give:

• partner income details, and/or
• income evidence

A claimant may need to give evidence if they and/or their partner's ATI is 90% or more of the relevant income limit. See relevant financial year income limit for the income evidence thresholds.

See Resources for examples of when the individual or family income test applies and evidence required.

If the claimant’s individual ATI is:

• below the individual income evidence threshold:
• partner income is not required as claimant meets the individual income test
• income evidence is not required
• See Step 2 in Table 2
• over the individual income limit and over the family income limit:
• partner income is not required as claimant does not meet the individual or family income test
• evidence is not required. The PPL claim will auto reject reason INC (income) when the claim is finalised
• See Table 3
• over the individual income limit but under the family income limit:
• partner income is mandatory in the online claim as the claimant is to be assessed under the family income test
• go to Step 6
• between the individual income evidence threshold and the individual income limit:
• go to Step 7

See Resources for examples of when the individual or family income test applies and evidence required.

If the claimant’s individual ATI is above the individual income limit and the combined family income is:

• below the family income evidence threshold - no evidence is required as the claimant meets the family income test. See Step 2 in Table 2
• between the family income evidence threshold and the family income limit – Income evidence from the claimant and partner is required to determine if they meet the family income test. See Step 1 in Table 2

Partner income collection in the online claim is optional.

• If partner’s income is provided, go to Step 8
• If partner's income is not provided, claimant must provide evidence that they meet the individual income test. If the evidence confirms the customer’s income is:
• on or below the individual income limit, then the customer has met the individual income test. See Step 1 in Table 2
• over the individual income limit, request partner’s income to assess under the family income test. See Step 1 in Table 2

See relevant financial year income limit for the income evidence thresholds.

Request for income evidence will be required where a claimant may not meet at least one of the income tests.

If the claimant’s individual ATI is between the individual income evidence threshold and the individual income limit and the combined family income is:

• below the family income evidence threshold – no evidence is required. The claimant is considered to have met under the individual income test. See Step 1 in Table 2
• between family income evidence threshold and the family income limit - Income evidence is required for claimant and partner to determine which income test they meet. The claimant is to be assessed firstly under the individual income test and where they do not meet, then assessed under the family income test. See Step 2 in Table 2.
• over the family income limit - evidence is required for the claimant only. The claimant is to be assessed under the individual income test. See Step 1 in Table 2

See Resources for examples of when the individual or family income test applies and evidence required.

For online claims, claimants are advised on the Next steps page to provide evidence if it is needed.

Note: evidence is not required where a customer and/or partner have advised income over the relevant financial year income limit as they will not be eligible for PPL.

Check if actual income details are available

Do the following if the claimant has:

• income between the income evidence threshold and the individual or family relevant financial year income limit  
• received either Family Tax Benefit (FTB) and/or Child Care Subsidy

Go to the FAO Income for Previous Year (FIPY) screen to check if their actual adjusted taxable income (AATI) details have been transferred from the Australian Taxation Office (ATO).

Check the financial year field to ensure the correct financial year details are displayed. Each financial year is displayed on a separate page.

Note:

• If the customer needs to provide evidence, and
• indicates in their online claim they have other income components, for example:
• foreign income, or
• deductible child maintenance expenditure etc.
• then a tax notice of assessment (NOA) issued by the ATO and/or ATO verified AATI on the FIPY screen is not sufficient as evidence

They will need to provide additional evidence, such as their full Income Tax Return (ITR). Go to Step 2.

Where verified income has been provided and the customer indicated no other income components in their online claim, do not ask for further evidence. Go to Step 8.

If there is a significant discrepancy between the provided income estimate and the verified income, consider if contact with the claimant is needed to establish eligibility. Contact with the customer should only be made if the verified income on record could change the payment outcome or the requirement for evidence

If no income details are available for the customer on the FAO Income for Previous Year (FIPY) screen, go to Step 2.

To be accepted, estimates must be determined as reasonable.

When there is a significant discrepancy between the income estimate provided in the claim and the verified income on the record, consider contacting the claimant. Contact must be made if

• using the verified income instead of the estimate provided could change their eligibility or
• evidence is required to substantiate their and where required, their partner’s income estimate

Customers claiming PPL must provide a reasonable estimate of their adjusted taxable income (ATI):

• for a pre-birth/adoption claim, an estimate is needed for the financial year before the date of claim
• for a post-birth/adoption claim, an estimate is needed for the financial year before the date the child was born or entered their care

Pre and post birth PPL claims spanning financial years

If a claimant has lodged a pre-birth claim in a previous financial year (for example, 2021-22) and later lodged proof of birth in the following financial year (2022-23), additional income details are not needed. The claim must be finalised using the income details provided with the pre-birth claim.

The claimant must provide an estimate in the PPL claim.

If they have lodged a claim that has not yet been processed, they may verbally provide a revised reasonable estimate. See Customer notifies a change of circumstances for Parental Leave Pay (PPL).

If the claimant has lodged their tax return for the relevant financial year, their tax return and Notice of Assessment (NOA) will help them provide an accurate income estimate.

The estimate must include an amount (or zero) for all ATI components:

• Taxable income. If the claimant received taxable Centrelink payments, these must be included as reported on their payment summary. Check details on the Tax Payment Summary (TXGS) screen
• Reportable fringe benefits including exempt reportable fringe benefits, as on the payment summary from the employer. From 1 January 2017, exempt reportable fringe benefits and all other reportable fringe benefits will be assessed differently. Claimants must provide any exempt reportable fringe benefits as a separate amount to any non-exempt reportable fringe benefits they receive. This includes reportable superannuation contributions
• Foreign income and tax exempt foreign income
• Total net investment losses which includes net rental property loss
• Tax free pensions and benefits per their payment summary. Check details on TXGS screen
• Less child maintenance expenditure

Note: when a customer provides an estimate, a superannuation withdrawal under the First Home Super Saver (FHSS) Scheme is not counted towards their taxable income.

• Yes, go to Step 5
• No, the claimant must be contacted to obtain the details
• If contact with the customer was unsuccessful, issue a written request the information (and evidence if it will be needed) as per Information requests for FTB and PPL claims, and Add Newborn and PPL change of circumstances activities
• If not provided as requested, finalise claim as not effective (NEF-INF). Procedure ends here

• No, go to Step 7
• Yes, is evidence of income required?
• Yes, go to Step 6
• No, go to Step 8

Issue a written request for evidence as per Information requests for FTB and PPL claims, and Add Newborn and PPL change of circumstances activities.

Claimants can post, fax or upload evidence to support their estimate. Originals do not have to be provided. The Resources page lists examples.

Is evidence provided by the resubmit date?

• Yes, scan documents and return any originals to the claimant. Go to Step 8
• No, finalise the claim as not effective, reason NPI (proof of income not provided). Process claim to upload/record estimate and to indicate requested evidence has not been provided. Procedure ends here

For Families and Child Care Processing Services staff only.

Discuss with the claimant why the estimate is not considered reasonable and request a revised estimate.

If the claimant does not wish to provide an acceptable revised estimate or cannot be contacted:

• DOC the estimate and indicate it is not considered reasonable. Unreasonable estimates will not be applied to the PPL assessment
• Issue a written request for evidence advising evidence must be supplied within requested timeframe or claim will be rejected

If a reasonable estimate is not provided as requested, process the PPL claim.

Record the estimate provided as not reasonable. In Process Direct:

• update the PPL Income Details (P1INC) screen
• Change ‘Income Reasonable’ answer to No

The estimate will not be applied and PPL will reject, reason ENA (Estimate not accepted). Procedure ends here.

For Families and Child Care Processing Services staff only.

Once the claim is ready to process, record income details and indicate the estimate is reasonable.

If the claim has been finalised and has a status of assessed (ASS) or pending (PND), see Customer notifies a change of circumstances for Parental Leave Pay (PPL) Table 2, Step 7.

Go to Table 3.

For Families and Child Care Processing Services staff only.

• Yes, the claimant may be eligible for PPL if other eligibility criteria are met, or
• No, PPL will auto reject reason INC (income) when the claim is finalised

For help, see Assessing Parental Leave Pay (PPL) claims

For Families and Child Care Processing Services staff only.

Any PPL received by the claimant must be included in their estimated taxable income for the relevant period.

Check the claimant's current financial year estimate is reasonable for Family Tax Benefit (FTB).

If the claimant's PPL pre-birth claim was rejected due to income and the child is born or enters care in the new financial year, they may wish to reclaim PPL and test their eligibility against income for the financial year before the child's birth or entry into care

If a claimant wants to revise their estimate for the same financial year, they should apply for a formal review of the decision to reject their PPL claim.

See:

• Claiming family assistance and PPL for a newborn child
• Initial contact about a decision and the review of decision process