Can the Child Support Deduction (CSD) be less than the required amount?
Yes. This can happen if the employee does not have the funds in their pay to accommodate the ful CSD payment. In this case you are required to deduct what's available.
Can an employee have a CSD but no Protected Earnings Amount (PEA)?
Yes. In some cases you will not be advised a PEA amount for an employee with a CSD. In such cases you should set the CSD value but leave the PEA as zero.
Can an employees NET pay ever be less than the PEA?
Yes. This can happen if you have deductions in the employees pay other than CSD. This is explained below.
When do I apply the CSD? At what point in the calculation of the pay does it get deducted?
CSD's take precedence over all other deductions in a persons pay other than PAYG tax and general salary sacrifice (before tax) deductions that are not related to superannuation.
This means when calculating the amount available for paying child support, you should deduct tax and any general salary sacrifice deductions from gross pay first, then determine if the CSD can be paid and set the CSD amount appropriately. If the full amount can be paid, it should be. If not, pay as much as possible.
What effect does the PEA have on the calculation of the CSD?
If the employee has a CSD and a PEA specified in their child support schedule, then the amount of funds available for the CSD after deducting tax and any general salary sacrifices is the remaining gross less the PEA amount.
For example:
CSD = $320, PEA = $700
Gross = 1800
Tax = -600
General Salary Sacrifice = -200
PEA = -700
Available for CSD = 1800 - 600 - 200 - 700 = $300.
What if there are other deductions in the persons pay other than general salary sacrifices and tax?
If your employee also has other deductions in addition to child support, then these are applied after you have applied the CSD. This includes salary sacrifice to super, and any other deduction types other than the CSD.
How do I make sure I have applied deductions in the right order?
Follow these steps in the payrun if you are receiving warnings or are unsure of whether the CSD calculation is correct:
- Enter the employees normal working hours.
- Remove all deductions from the persons pay if they are present.
- Add any deductions of type general salary sacrifice (does not include salary sacrifice to super).
- If there is any NET pay available at this point, then add the CSD.
- If a PEA is specified, ensure the CSD amount does not reduce the employees NET pay at this point to a value less than the PEA. Adjust the deduction value so that the NET pay is at least the PEA amount. If there is no PEA amount, then pay as much of the deduction as possible using the entire pool of NET available.
- You can now apply any other deductions to the employees pay (even if the NET pay available at this point is less than the PEA).
What should I do if there are no funds available to pay the CSD in a given payrun?
Where the funds do not exist to pay the CSD (at all), you can either leave the deduction out of the employees pay, or add one of zero value. If you add the deduction it will appear on the payslip.
There are reporting procedures you must follow for communicating shortfalls to the Child Support Agency
Related Articles
Managing child support deductions and the protected earnings amount
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