Protected Earnings Amount
The Protected Earnings Amount (PEA) is the amount of an employee’s / contractor’s wages that are exempt from Child Support deductions.
To make sure you don’t deduct all of an employee's / contractors wages for Child Support payments, there is a set minimum amount, known as the PEA, which must be left after tax and Child Support is deducted.
The PEA is indexed annually to allow for increases in the cost of living. Employers are notified in writing of the new amount by December each year. Please note that the PEA does not apply to Section 72A notices.
When making the full Child Support deduction that would take the employee's/contractors pay under the PEA amount, you should only deduct an amount that will leave the PEA. You must not make a deduction of Child Support that leaves an employee / contractor with a net pay (after tax-withheld and Child Support deductions) of less than the PEA.
How to calculate the PEA
The weekly PEA is equal to 75 per cent of the maximum fortnightly basic rate of the Newstart Allowance for a person who is over 21, partnered and has no dependent children.
The weekly PEA for 2013 is $333.53. This is the amount that must be set aside for your employee / contractor after tax and Child Support is deducted.
| Pay cycles | Calculation |
|---|---|
| Daily | $333.53 ÷ 7 days = $47.647142 |
| Weekly | $47.647142 x 7 days = $333.53 |
| Fortnightly | $47.647142 x 14 days = $667.06 |
| Four weekly | $47.647142 x 28 days = $1334.12 |
| Monthly | $47.647142 x 30.4375 = $1450.26 |
| Bi-monthly | $1450.26 x 2 = $2900.52 |
Note: a year is equal to 365.25 days (allowing for the leap year), 30.4375 days in a month is equal to 365.25 divided by 12. Figures are rounded where applicable.
These amounts are effective from 1 January 2013.