Income tax applies to paid parental leave, and it may also impact other government benefits including child support, health care cards, and public housing. On the other hand, the Newborn Upfront Payment and Supplement are exempt from taxation and are not considered as income for family assistance or social security purposes.

To prevent “double-dipping” in parental leave, parents cannot receive simultaneous access to employer-funded benefits at an equal or higher level than the government scheme. If the employer-funded leave is less, then they will only receive the difference in benefits.

If your child is born on or after 1 March 2014, recipients of Family Tax Benefit Part A may receive a Newborn Upfront Payment of $575 and up to $1725.36 for a Newborn Supplement (which reduces to $1151.03 for subsequent children). These payments will be made over a three-month period through regular fortnightly payments and are exempt from taxation.