Aussies face parent tax as women exposed to $325,000 ‘timing problem’ despite super rule change
It might be impossible to avoid, but there are ways to limit the financial damage which overwhelmingly impacts women.
When people plan a career break, they budget for the missing pay. Most don’t think about the missing super, and if they do – it’s often that a couple of years off means a couple of years of contributions gone.
But the numbers show this issue is much bigger than that. Take two years off at 32 and ease back part time for three more, and it feels like five missed years of contributions. What it costs you is 33 years of compounding on the money that never arrived, and by 65 that gap can be worth around $325,000.
We see this constantly with clients coming back from parental leave. Nobody did anything wrong, and nothing was wasted. The money just never turned up, and then it didn’t compound for three decades.
-
New trust rules introduce a ‘newborn tax’ for Aussie families
-
Warning over silent $100,000 superannuation hit amid fee increases
-
Mum’s bank account ‘wiped completely clean’ after phone call
Say you’re 32, earning $110,000, and you take two years off before coming back at 60% hours for three years, with no employer-paid leave on top. On full pay, your compulsory employer contributions are $13,200 a year, and $11,220 of that lands in your fund after the 15% contributions tax.
Across the five years, the contributions that never get made add up to just $33,239. If your fund earns 7.5% after fees and taxes, in line with the long term investment returns growth funds have averaged, that missing $33,239 compounds to $324,646 by 65.
The first year off does the most damage on its own. The $8,555 that doesn’t arrive at 32 would have become $93,046 by retirement, all by itself. And because career breaks still skew heavily to women, gaps like this are one of the biggest drivers of the gender super gap.
Why the timing does the damage
The gap is a timing problem more than an amount problem. Run the same five-year break starting at 40 instead of 32 and the cost drops to $182,030, which is $142,000 less for exactly the same missing contributions. The gap just sits closer to retirement, so the money has less time to compound against you.
Your fund’s returns swing the number too. At 6% the same gap costs $208,000, and at 8% it’s $376,000, so the range is wide and your own fund matters. Super is the most tax-efficient investing structure most people will ever have, so making sure you’ve got a good fund with a good return is critical.
The good news is the gap can be patched, and the earlier the patch goes in, the cheaper it is.
The new parental leave super credit
For babies born or adopted from 1 July 2025, the government now pays 12% super on top of its paid parental leave, with the first payments landing in funds from July 2026. On 26 weeks of leave at the current rate, that’s $3,135 before the fund’s 15% tax, paid as a lump sum with interest after the end of the financial year.
