Notice to Commence Child Support Deductions

If you receive a Notice to Commence Child Support Deductions, you are legally required to deduct the amount of child support that we ask you to.

If you receive a Notice to Commence Child Support Deductions, you are legally required to deduct the amount of child support that we request.

How much child support to deduct

The letter you get from us will include a schedule of deductions that tells you how much child support to deduct. You must not change the deduction amount listed in the schedule, even if your employee or contractor, their solicitor or anyone else asks you to.

You can only change it if we tell you so in writing, or if the Protected Earnings Amount (PEA) applies.

Deductions of child support are made after tax withheld deductions and formal salary sacrificing but before other deductions such as voluntary superannuation, health fund and loan repayments.

Once you make a deduction from your employee’s or contractor’s pay, you are legally required to pay it to us. There are a number of ways to pay the child support deductions to us.

Protected Earnings Amount

To make sure you do not deduct all of an employee’s or contractor’s wages for child support payments, the Protected Earnings Amount is exempt from these types of deductions.

Read more about the Protected Earnings Amount when deducting child support and the current rate.

Guidelines for making deductions

Deductions of child support are made after tax withheld deductions and formal salary sacrificing, but before other deductions such as voluntary superannuation, health fund and loan repayments.

For each person:

  1. check the schedule for the amount to be deducted
  2. make tax withheld deductions from the person’s wages
  3. set aside the PEA
  4. make the deduction of child support, or as much of the specified amount as can be deducted after the PEA has been set aside and include the details on their pay slip

The remaining pay and the PEA can then be paid to the person or used to make other deductions from their pay.

You can make payments to us at the end of each pay period for example weekly, fortnightly or monthly but you must pay the deductions to us by the seventh day of the next month.

You can also pay all the deductions together. If you are deducting from more than 1 person’s wage, you need to give us a breakdown of the total deductions you pay us along with the report of any deduction variations. If you are registered for Child Support Business Online Services, you can report the variation online. Otherwise you can let us know by phone, posting or faxing a Child Support deductions report for employers form.

Read more about payment options for child support deductions.

Examples of how to calculate deductions

Tax amounts quoted are examples only. Refer to the Australian Taxation Office for rates applicable to your employee.

Example 1 - basic deduction

You have been asked to deduct $75 in child support each week from Joseph’s pay.

The calculation is:

Step Amount Total
Gross weekly pay   $500
Minus tax withheld amount each week $35 $465
Set aside the PEA $354.45 $110.55
Deduct child support $75 $35.55
Add PEA $354.45 $390

Joseph’s net weekly pay is $390.

Other voluntary deductions such as Joseph’s self contribution to superannuation and loan repayments can be made from his $390 net weekly pay.

You must send Joseph’s deduction of $75 to us by the seventh day of the next month. For example, if Joseph’s pay day is on 4 August, deductions for this pay should be sent to us before 7 September. You can send the deductions to us at the end of each pay period if it is more convenient, but the full amount must be received by the seventh of each month.

If Joseph’s employment ended and his final wages were being paid, you would need to deduct only for the last pay period he was employed. This would be calculated as a basic deduction.

If one of your contractors or an employee who pays child support is terminated or resigns, you must notify us as soon as possible, preferably before their final payment is made.

Example 2 - unable to deduct full amount because of PEA

Ellie’s employer has been asked to deduct $75 in child support each week from her pay.

The calculation is:

Step Amount Total
Gross weekly pay   $410
Minus tax withheld amount each week $34 $376
Set aside the PEA $354.45 $21.55
Deduct child support $21.55, as deducting $75 would leave Ellie with less than the PEA of $354.45 $0
Add PEA $354.45 $354.45

Ellie’s net weekly pay is $354.45

In this case, you cannot deduct the full amount because it would leave Ellie with less than the PEA.

You must send the varied employer deduction amount of $21.55 to us by the seventh day of the next month. You will need to let us know reason for the variation. If you’re registered for Child Support Business Online Services you can report the variation online. Otherwise you can let us know by phone, posting or faxing a Child Support deductions report for employers form.

Example 3 - deductions during paid periods of leave

Ben’s employer has been asked to deduct $30 in child support each week from his pay for remittance to us.

Ben is going on paid holiday leave for 3 weeks and has arranged with his employer to be paid in advance with this week’s pay.

The calculation is:

Step Amount Total
Total pay received   $1,200
Tax withheld for 3 weekly payments $27 $1,173
Weekly PEA x 3 ($354.45 x 3) $1,063.35 $109.65
Deduct child support (3 x $30) $90 $19.65
Plus PEA $1,063.35 $1,083

Ben’s net pay is $1,083.

Tax amounts quoted are examples only. Refer to the Australian Taxation Office for rates applicable to your employee.

In this case, the employer is required to deduct $90 from Ben’s pay and notify us of the variation.

If Ben was:

  • cashing out leave, you do not need to deduct beyond the amount requested for that pay period or pay date as deductions are specific to that period
  • getting paid his annual leave in advance, you would also take out child support deductions from his advance leave payments for each specific pay period or pay date, or
  • taking leave without pay, you must notify us of the period he intends to take as leave without pay. If you are registered with Child Support Business Online Services, you can provide this information to us online. Otherwise you can let us know by phone, posting or faxing a letter to us with this advice.

Example 4 - deductions for a part time employee

Johanna’s employer has been asked to deduct $40 in child support each fortnight from her pay.

The calculation is:

Step Amount Total
Gross fortnightly pay   $498
Minus tax withheld amount each fortnight $2 $496
Set aside the PEA
available (2016 fortnightly rate $708.90)
$496 $0
Deduct child support $0 as there is not the $40 requested available to deduct after PEA
Add PEA available $496 $496

Johanna’s net fortnightly pay is $496.

In this case, you cannot make the employer deduction because her net pay falls below the PEA. You are required to notify us of the variation.

Example 5 - deductions under a salary sacrifice arrangement

A salary sacrifice arrangement is when an employee agrees to give up part of their salary or wages in return for employer provided benefits of a similar value.

Susan has a remuneration package valued at $2,000 per fortnight, with $900 of the $2,000 being salary sacrificed for Susan’s mortgage, car lease, health insurance and school fees. You are asked to deduct $398 in child support each fortnightly pay.

Amount total remaining
Step Amount Total
Gross fortnightly pay   $2000
Less salary sacrifice $900 $1,100
Less tax withheld $108 $992
Set aside the PEA
of $708.90 per fortnight
$708.90 $283.10
Deduct child support $283.10 $0
Plus PEA $708.90 $708.90
Net pay to Susan   $708.90

In this example, the full amount of $398 cannot be deducted as it would leave Susan with less than the PEA of $708.90 for that fortnightly pay. Instead, you must deduct the amount of $283.10 and pay it to us. You must tell us the reason for the variation either online, by phone, fax or posting a Child Support deductions report for employers form.

As you are unable to deduct the full $398 in child support, we would contact Susan directly to arrange for payment of the outstanding amount.

If a salary sacrificing arrangement is in place, the employee’s obligations in relation to child support deductions remain. You must continue to deduct the requested amount of child support, unless doing so will result in your employee having less than the PEA left in their pay.

If an employee does not have a formal salary packaging arrangement and has requested after tax deductions from their pay for a health fund or social club, you need to deduct child support before these after tax deductions. The employee can still have these other deductions taken after their child support obligation has been met.

If your employee or contractor has questions about whether their salary sacrificing arrangements or other reportable fringe benefits will affect their child support, ask them to call us on 131 272 and we will give them accurate advice that is specific to their situation.

Page last updated: 14 September 2016

This information was printed Thursday 8 December 2016 from humanservices.gov.au/business/enablers/notice-commence-child-support-deductions It may not include all of the relevant information on this topic. Please consider any relevant site notices at humanservices.gov.au/siteinformation when using this material.