Notice to Commence Child Support Deductions

If you get a Notice to Commence Child Support Deductions, for one of your employees’, you must do as requested. You’re legally required to do this.

How much child support to deduct

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

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

Deductions of child support are made after tax withheld deductions and formal salary sacrificing. This is 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're legally required to pay it to us. There's a few ways to do this.

Your employee or contractor can call us on the Child Support information line if they have any questions. This could be about whether their salary sacrificing arrangements or other reportable fringe benefits will affect their child support. We’ll give them accurate advice that is specific to their situation.

What you don't deduct

You don’t deduct the Protected Earnings Amount (PEA), it’s exempt from child support deductions.

This is to make sure you don’t deduct all of your employee’s or contractor’s wages for child support payments.

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

How to deduct child support

Deduct child support after:

  • tax withheld deductions
  • formal salary sacrifice deductions.

But make sure you deduct child support before other deductions such as:

  • voluntary superannuation
  • health fund repayments
  • loan repayments.

For each person:

  1. check the schedule for the amount you need to deduct
  2. make tax withheld deductions from their wages
  3. make formal salary sacrifice deductions from their wages
  4. set aside the PEA
  5. deduct the child support or as much of the specified amount as possible.

Make sure you include the details on the person’s pay slip.

You can then pay the person the remaining pay and the PEA or make other deductions from it.

You can make payments to us at the end of each pay period. For example, weekly, fortnightly or monthly. You must pay the deductions to us by the 7th day of the next month. How to do this is explained on the back of your notice.

If you’re deducting child support from more than 1 persons’ wage, you can pay us all the deductions together. But you need to give us a breakdown of:

  • the total of all the deductions
  • any deduction variations.

If you're registered for Child Support Business Online Services, you can report online. You can let us know by either:

To find out how to send child support payments to us, read payment options for child support deductions.

Use the Child Support employer calculator to work out your employee’s or contractor’s net pay, taking into account:

  • child support payments
  • the PEA
  • basic tax liability.

Getting more than 1 notice

You may get more than 1 notice asking you to make deductions. They could be separate notices from Child Support and Centrelink, or another government authority.

For more information about the order in which you must comply with notices, refer to Deductions under a section 72A notice.

Examples of how to calculate deductions

Example 1 - basic deduction

You've been asked to deduct $75.00 in child support each week from Joseph’s pay.

The calculation is:

Step Amount Total
Gross weekly pay   $500.00
Minus tax withheld amount each week $36.00 $464.00
Set aside the PEA $372.53 $91.47
Deduct child support $75.00 $16.47
Add PEA $372.53 $389.00

Joseph’s net weekly pay is $389.00.

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

Other voluntary deductions such as Joseph’s self contribution to superannuation and loan repayments can come from his $389.00 pay.

You must send Joseph’s deduction of $75.00 to us by the 7th day of the next month. For example, Joseph’s pay day is 4 August, you should deduct and send the payment to us by 7 September. You can send the deductions to us at the end of each pay period if it is more convenient. We must get the full amount by the 7th of each month.

If Joseph’s employment ends, you only need to make one deduction for the last pay period he was employed. This is because deductions are specific to that period. You don’t need to deduct beyond the amount requested for that pay period or pay date.

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

Example 2 - unable to deduct full amount because of PEA

You've been asked to deduct $75.00 in child support each week from Ellie's pay.

The calculation is:

Step Amount Total
Gross weekly pay   $410.00
Minus tax withheld amount each week $11.00 $399.00
Set aside the PEA $372.53 $26.47
Deduct child support $26.47, as deducting $75.00 would leave Ellie with less than the PEA of $372.53 $0.00
Add PEA $372.53 $372.53

Ellie’s net weekly pay is $372.53.

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

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

You must send the varied employer deduction amount of $26.47 to us by the 7th 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

You've been asked to deduct $30.00 in child support each week from Ben's pay.

Ben is going on paid holiday leave for 2 weeks. He's arranged to be paid in advance with this week’s pay.

The calculation is:

Step Amount Total
Total pay received   $1,260.00
Tax withheld for 3 weekly payments $39.00 $1,221.00
Weekly PEA x 3 ($372.53 x 3) $1,117.59 $103.41
Deduct child support (3 x $30) $90.00 $13.41
Plus PEA $1,117.59 $1,131.00

Ben’s net pay is $1,131.00.

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

In this case, you're required to deduct $90.00 from Ben’s pay and notify us of the variation.

If Ben was cashing out leave, you don’t need to deduct beyond the amount requested for that pay period or pay date. This is because deductions are specific to that period.

If Ben got paid his annual or long service leave in advance, you would also take out child support deductions. You would take the deduction from his advance leave payments for each specific pay period or pay date.

If Ben was taking leave without pay, you must notify us of the period he intends to take this leave.

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 the Child Support deductions report for employers form.

Example 4 - deductions for a part time employee

You've been asked to deduct $40.00 in child support each fortnight from Johanna's pay.

The calculation is:

Step Amount Total
Gross fortnightly pay   $498.00
Minus tax withheld amount each fortnight $0.00 $498.00
Set aside the PEA
available (2019 fortnightly rate $745.06)
$498.00 $0.00
Deduct child support $0.00 as there is not the $40.00 requested available to deduct after PEA
Add PEA available $498.00 $498.00

Johanna’s net fortnightly pay is $498.00.

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

In this case, you can't 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
  • wages, in return for employer provided benefits of a similar value.

Susan has a remuneration package valued at $2,000.00 per fortnight. Susan salary sacrifices $900.00 of the $2,000.00 for all of the following:

  • mortgage
  • car lease
  • health insurance
  • school fees.

You've been asked to deduct $398.00 in child support each fortnight from Susan's pay.

The calculation is:

Step Amount Total
Gross fortnightly pay   $2000.00
Less salary sacrifice $900.00 $1,100.00
Less tax withheld $96.00 $1,004.00
Set aside the PEA
of $745.06 per fortnight
$745.06 $258.94
Deduct child support $258.94 $0.00
Plus PEA $745.06 $745.06
Net pay to Susan   $745.06

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

In this example, the full amount of $398.00 can't be deducted. This is because it would leave Susan with less than the PEA of $745.06 for that fortnightly pay. Instead, you must deduct the amount of $258.94 and pay it to us. You must tell us the reason for the variation either:

As you're unable to deduct the full $398.00 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. However, it mustn’t result in your employee having less than the PEA left in their pay.

You need to deduct child support before deducting after tax deductions for a health fund or social club from employees pay. This is if your employee doesn’t have a formal salary packaging arrangement.

Page last updated: 9 August 2019

Was this page useful?
Why?
Why not?

Thank you for your feedback.