Quick Summary
The amount of paid parental leave you receive in NZ is based on your average weekly income before starting leave, up to a maximum cap set by the government. The payment is the lesser of your ordinary weekly pay or the maximum weekly rate.
Details
Calculating Your Paid Parental Leave Entitlement in New Zealand
The amount of paid parental leave (PPL) you receive in NZ is determined by your average weekly income prior to starting your leave, subject to a government-set maximum.
Calculation Method:
- Average Weekly Income: The IRD will calculate your average weekly income based on your earnings over a specific period before your leave starts.
- Maximum Weekly Rate: There is a maximum weekly PPL rate, which is updated annually. You will receive either your average weekly income or this maximum rate, whichever is lower.
Key Considerations:
- Employee vs. Self-Employed: The calculation method is similar for both employees and self-employed individuals, but the income assessment for self-employed people may involve different documentation.
- Taxable Income: PPL payments are considered taxable income, so PAYE deductions will apply.
- Duration: The duration of paid parental leave is also set by legislation, determining the total amount you could receive.
It's crucial to check the most current maximum weekly rate on the IRD website as it changes. The IRD's online tool can help you estimate your entitlement.
Source: https://www.ird.govt.nz/paid-parental-leave