Child Support Scheme

If you have employees with Child Support Scheme obligations, you may have to withhold a certain amount from their wages and send this money to the Child Support Agency (CSA). If this is that case, you will be contacted by the Child Support Agency. If you receive a Notice to Deduct Maintenance Payments from an Employee’s Salary or Wages you need to:

$image\bullet.gif$ Deduct the amount of child support specified at the same time you make instalment deductions;

$image\bullet.gif$ Send the deducted amounts to the CSA once a month with a payment advice slip by the 7th of the month following the month.

$image\bullet.gif$ Do not change the amount that CSA has asked you to deduct unless CSA advises you in writing, or unless protected earnings (see below) prevents you from deducting the full amount.

For full and up-to-date information on the Child Support Scheme and your obligations, contact the Child Support Agency or go to their website: www.csa.gov.au You should also obtain the Employer's handbook, also available on their website.

How much to deduct

The CSA will send you a letter stating the amount your employee is required to pay. You are legally required to deduct the specified amount of child support from payments to your employee as directed, unless protected earnings apply.

You can only change the amount of child support that is deducted if the CSA advises you in writing, or if protected earnings apply. You must not change this amount even if your employee, their solicitor or anyone else asks you to. If you are in doubt, contact the CSA.

The protected earnings amount

You must not deduct a child support payment that leaves an employee with a net pay (after tax and child support deductions) of less than the protected earnings amount.

The protected earnings amount is adjusted annually to allow for increases in the cost of living. The CSA will advise you each December of the new amount for the next calendar year.

For details on the protected earnings amount, refer to your CSA documentation.

Applying the protected earnings amount

Child support is deducted after tax and before other deductions such as superannuation, health fund and loan repayments.

STEP 1 Deduct the employee's income tax instalment.

STEP 2 Set aside the protected earnings amount.

STEP 3 Deduct the child support payment, or as much as can be deducted after the protected earnings amount has been set aside.

STEP 4 The remaining pay and the protected earnings amount can be paid to the employee.

If the full amount cannot be deducted due to protected earnings, deduct the maximum amount possible. You'll need to send this amount to the CSA with a Variations to Maintenance Deductions form. The CSA will send you this form on request or it can be down-loaded from their website at www.csa.gov.au. The employee has to make up the amount not deducted by paying it directly to the CSA, not through you. The employee has to make up the amount not deducted by paying it directly to the CSA, not through you.

Creating a child support deduction in Elite Payroll

1 From the Lists menu, choose Deductions. The List Deductions window is displayed.

2 Click Deductions>New. The Add a Deduction window is displayed.

3 Enter Child Support as the deduction name.

3 Click to OK.

Setting up a child support deduction for an employee

1 From the Lists menu, choose Employees.

2 Click to select the employee and then click Employee>Edit. The Edit Employee window is displayed.

3 On the Deductions tab, click on the Deduction List drop-down $image\downarow.gif$ list arrow, and select Child Support.

4 Enter the amount in the Amount column.

Important: Make sure that you don't deduct a child support payment that leaves an employee with a net pay (after tax and child support deductions) of less than the protected earnings amount.

5 Click OK.

When the employee's pay is processed, the child support will be deducted, with PAYG withholdings calculated based on income after the child support deduction.

Note that Child support must be deducted from the advance payment of wages or salary, for example when an employee goes on leave and receives an advance payment.

Remitting the payments

Send the deducted amounts to the CSA once a month. These payments must be received by the 7th of the month following the month in which the deductions were made.

You can determine the amount to remit from the Deductions Report.

For further information on Child Support deductions

Further details are available in the following publications:

$image\bullet.gif$ The Child Support Scheme – General Information for Employers (from the ATO).

$image\bullet.gif$ Employer Handbook – an employers guide to Child Support Agency procedures and responsibilities (from the CSA).

You can also obtain information by phone at 13 12 72 (Ask for someone in the "Employer Withholding Team") or at the CSA Website: www.csa.gov.au/employ/index.htm