What is Paid Parental Leave?
PPL is an Australian Government initiative to allow payments from an employer to an employee, while they are caring for a newborn or recently adopted child, for up to 18 weeks.
Some eligibility criteria must be met to be able to take advantage of PPL, which can be found on the Australian Government website.
How it works is PPL is paid to the employer, who then forwards the payments onto the employee through payroll.
Paid Parental Leave does not affect annual or long service leave entitlements and can be paid before, after, or at the same time as these payments.
Accounts Used for Paid Parental Leave
When setting up PPL in your accounts, you need to have both an Income and Expense account (or more usually a Clearing account), in which the payments can be posted.
This is because the Australian Government will pay you the funds for the leave (income), which are then paid to the employee (expense).
All double-entry accounting systems will need this set up correctly to be able to easily identify any mistakes that need to be fixed so the PPL balances.
Setting up Paid Parental Leave
To setup PPL, it’s not mandatory to create both income and expense/clearing accounts strictly related to them, but it is best practice for income specifically.
Create or link to an Expense or Clearing account, and create an income account called PPL.
The Income account should be linked to the Expense/Clearing account to ensure they balance.
There is usually no superannuation or payroll tax attributed to PPL payments, however, you should confirm this with your relevant state or federal legislation.
Ensure that the rate for the payments are set to the Government’s stipulation.
Checking Paid Parental Leave Balances
At the end of each month, check that your PPL clearing account has a zero balance, or you can account for the difference.
Basically, the payments IN that your business receives from the Government should be equal to the payments OUT to the employee through payroll.
Given that PPL is a Government subsidised payment to the employee, you should always check for the latest information from them before configuring and running a Pay Run.
Paid Parental Leave in Accentis
When using PPL in Accentis Enterprise, configuration of your accounts will take less than 5 minutes.
You can view reports, track any payments that have been made and track the reimbursements you have received.
There are no expenses incurred by the business when using PPL for employees.
Conclusion on Paid Parental Leave
Should you wish to find out more about setting up PPL in Accentis Enterprise, head on over to our user guide.
Accentis Enterprise is a fully-featured double-entry accounting system capable of the functionality required by small-medium sized businesses (SMB/SME).
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