Traditionally winter has been a time that saw many farming families welcome new additions. Timing a new arrival for the winter (if well planned) meant that both mum and dad could be back on the farm in time for the busy spring period.
Whatever the timing of a new arrivals birth, monetary assistance is available to self-employed parents (including farmers), as well as to salary and wage earners, in the form of Paid Parental Leave. New parents, including adoptive parents, are entitled to receive Paid Parental Leave, as long as they meet the legal criteria. Taking advantage of this would mean money for a relief milker, calf rearer, nanny or however you see fit to use it. At such a vulnerable and stressful time, having that extra money in your back pocket could help to ease some emotional and financial stress.
Paid Parental Leave Eligibility
To be eligible for Paid Parental Leave, self-employed parents need to have been working in self-employment for an average of 10 hours a week This employment needs to have occurred over any 26 of the 52 weeks before the baby’s due date, date of adoption or date when you or your spouse become the primary carer of a child under 6 years old. Every farmer has a business structure unique to them, and their self-employed earnings could come in the way of a trust distribution, a salary from their farming company, partnership income or other avenue.
A successful application will mean that either parent will be entitled to take time off work and receive Paid Parental Leave from the government. For babies due after 1 July 2020, the paid entitlement has increased from 22 weeks to 26 weeks. A self-employed parent is entitled to receive Paid Parental Leave of up to $585.80 per week (before tax) and a minimum of $177 per week (before tax).
Paid Parental Leave Payments
Paid Parental Leave is flexible and leave payments can be transferred to your spouse or partner provided they meet the parental leave requirements. The amount of entitlement will be calculated based on their employment and earnings. This could be of a financial advantage to parents if one party is earning a higher income.
We all know that self-employment doesn’t always stop because you have a baby and Inland Revenue acknowledge that whilst on Paid Parental Leave a certain level of work is still required by a self-employed person in order to keep the business operating. IRD have made certain allowances for this to ensure the work involved to keep the business running does not affect your Paid Parental Leave entitlements.
Paid Parental Leave can be backdated as long as your application is at IRD before the baby’s first birthday.
As well as Paid Parental Leave, there is the “Best Start” initiative to. This is an additional credit available to parents - introduced to assist families with the cost of caring for young children. For the first year of your child’s life, you can earn up to $60 a week regardless of income.
If you are registered for Working for Families (and have ticked the Best Start box on the baby’s birth certificate application form) the payments will start automatically to you once your Paid Parental Leave ends. The nature of farming and self-employment often means your income is not determined until the end of the financial year. This can make completing financial information on application forms more complex.
In order to take full advantage of the financial benefits on offer, we recommend contacting your BDO Adviser for assistance well before your baby’s due or adoption date.