How to make deductions

Child support employer deductions - examples

Example 1: Where deductions leave net pay above protected net earnings

John's weekly wage is $420. PAYE deductions are $83.11. This leaves John with a net pay of $336.89 ($420 - $83.11).

Out of his net pay, John has to pay child support of $70 per week, which leaves him with a take-home pay of $266.89 ($336.89 - $70).

Since 60% of $336.89 (net pay) is $202.13 and John receives more than this in the hand, his employer can deduct the full $70 of child support. If, for example, John also had superannuation contributions deducted from his wages, the employer would deduct such contributions from his $266.89 take-home pay, even if this payment (of, say, $70) then leaves him short of the 60% earnings protection.

Example 2: When protected net earnings apply

John's weekly wage is $ 420. PAYE deductions are $83.11. This leaves John with a net pay of $336.89 ($420 - $83.11).

Assume that John has had three days' leave without pay in a week. John's reduced wage is therefore $168.00. From this amount he is liable for PAYE deductions of $27.55, leaving him with a net pay of $140.45.

Since the protected 60% of $140.45 is $84.27, the amount available for child support is $56.18 ($140.45 - $84.27), rather than the full $70.

John's take-home pay before other deductions would therefore be $84.27 ($140.45 - $56.18). Any other deductions need to come out of the $84.27.

Date published: 27 Jan 2005

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