December 16, 2019   |   Tips

What is the Protected Earnings Amount?

When it comes to child support, did you know deductions are not to be taken from an employee’s or contractor’s Protected Earnings Amount?

What is the Protected Earnings Amount?

The Protected Earnings Amount (PEA) is the part of an employee’s or contractor’s wages that are exempt from child support deductions.

It is the minimum amount an employee or contractor should receive as net pay. To accommodate for increases in the cost of living, the PEA is updated annually on 1 January.

Although it is important to note, the PEA doesn’t apply to garnishee notices requesting deductions under section 72A of the Child Support (Registration and Collection) Act 1988.

What is the PEA formula?

The PEA is calculated as 75% of the maximum fortnightly basic rate of Newstart Allowance.

With the new year just around the corner, it is important that payroll personnel are ready for the updated PEA as of 1 January 2020.

The 2020 PEA has increased by 1.61% on the 2019 calendar year to the following values;

Protected Earnings Amount

*To accommodate for leap years, every four years, for child support purposes, a year is considered as 365.25 days. This is how we get the 30.4375 days in a month (365.25 / 12).

When do the new amounts come into effect?

The 2020 PEA comes into effect from the first full pay cycle within the 2020 calendar year. Please be aware, the PEA is not managed within Definitiv, so payroll personnel will need to be aware of the changes from the first full pay run processed in January 2020.

For more information, visit the Human Services website.