Protected Earnings Amount when deducting child support

The Protected Earnings Amount (PEA) is a set amount of an employee's or contractor’s wages that are exempt from child support deductions.

It ensures that you don’t deduct all of an employee’s or contractor’s wages for child support payments. This amount must be left after both tax and child support deductions.

The PEA is adjusted annually to allow for increases in the cost of living. Employers are notified in writing of the new amount by December each year. The PEA does not apply to section 72A notices.

If making the full child support deduction would take the employee's or contractor’s 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 or contractor with a net pay (after tax withheld and child support deductions) of less than the PEA.

If you were unable to deduct the full amount, you will need to send this reduced deduction to us and explain 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, by posting or faxing a Child Support Deduction form. You do not have to do anything further regarding the amount of child support that could not be deducted due to the PEA.

How to calculate PEA

The weekly PEA is equal to 75% of the maximum fortnightly basic rate of Newstart Allowance for a person who is over 21 years of age, partnered and has no dependent children.

The weekly PEA for 2016 is $354.45. This is the minimum amount that must be available for your employee or contractor after tax and child support is deducted.

Pay cycles Calculation
Daily $354.45 ÷ 7 days = $50.635714
Weekly $50.635714 x 7 days = $354.45
Fortnightly $50.635714 x 14 days = $708.90
Four weekly $50.635714 x 28 days = $1,417.80
Monthly $50.635714 x 30.4375 = $1,541.22

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 2016.

Page last updated: 31 March 2016

This information was printed Friday 9 December 2016 from humanservices.gov.au/business/enablers/protected-earnings-amount 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.