Deductions and protected net earnings

Protected net earnings and child support

Employees must be allowed to keep 60% of their net (after tax) earnings. This percentage is their protected net earnings to cover their living expenses.

You should not deduct the full amount of child support if this leaves an employee with less than 60% of their net earnings. However, this protection applies only to child support payments. If there are other deductions from an employee's salary (for example, student loan repayments, insurance, superannuation and union fees), these will then need to be taken out of the protected 60% of their net earnings.

If you do not deduct the full amount of child support from one pay, do not make up the difference from future pays. Inland Revenue Child Support will make arrangements with the employee to pay the balance owing. The situation usually only arises when an employee earns less pay than usual.

Date published: 27 Jan 2005

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