What to do when you receive a Child Support deduction notice for an employee?

If your business has received a notice from Services Australia (the Child Support Registrar) requiring you to deduct child support from an employee’s wages, you have immediate legal obligations. This article explains what the notice means, what you must do, and what happens if an employee objects.

What is the notice?

Under Section 45(1) of the Child Support (Registration and Collection) Act 1988 (Cth) (“the Act”), the Child Support Registrar can issue a written notice to an employer directing that periodic deductions be made from a named employee’s salary or wages and remitted to the Registrar.

The notice will identify the employee, specify a weekly deduction rate, and nominate the date from which deductions must commence.

This is not a request. It is a statutory direction that creates binding legal obligations on your business from the date specified.

Your core obligations

Once a valid notice is in force, Part IV of the Act imposes the following duties on employers:

1. Make the deductions (Section 46 of the Act)

Each time you pay salary or wages to the named employee, you must deduct the amount calculated by applying the weekly deduction rate specified in the notice to the relevant pay period.

The deduction is not optional and does not require the employee’s consent.

2. Observe the protected earnings amount

You must not reduce the employee’s net pay (after PAYG withholding) below the protected earnings amount (currently $544.88).  If the deduction would do so, you deduct only the amount that keeps the employee above that threshold. Contact the General Child Support Line on 131 272 if you cannot make the full payment.

3. Remit deductions to the Registrar (Section 47 of the Act)

All amounts deducted during a calendar month must be paid to the Registrar no later than the seventh day of the following calendar month, together with a report in the form specified by the Registrar.

4. Notify the employee

On each pay, you must notify the employee in writing of the amount deducted, or that no deduction was made.

5. Report if no deduction is made or employment ends

If no deduction is made during a month when the notice is in force, you must notify the Registrar by the 7th of the following month. If the employee ceases employment, you must likewise notify the Registrar within the same timeframe.

6. Keep records (Section 59 of the Act)

You must keep records that explain all amounts deducted (or required to be deducted) and retain them for five years in English or a form readily convertible to English.

What if the employee disputes the deduction?

This is the most common difficulty employers face.

Irrespective of what your employee(s) says, you must continue complying with the notice unless and until the Registrar issues a written variation or revocation.

An employee who disagrees with the amount being deducted has no claim against you. Their dispute is with the underlying Child Support Assessment, not with your payroll. Here is what you should do:

1. Confirm the basis of the deduction. Show the employee that you are acting under a Registrar’s notice and have no discretion to alter or stop the deductions.
2. Provide payroll information. Give the employee details of the amounts deducted each pay period.
3. Direct the employee to Services Australia. The employee’s remedy is to contact the Child Support Registrar to query the assessment, apply for a change of assessment, or lodge an objection. If the assessment is varied, the Registrar is required to promptly issue your business a new notice adjusting or revoking the deductions. 
4. Do not unilaterally stop or reduce deductions. Even if the employee produces correspondence suggesting their assessment has changed, you must wait for a formal written notice from the Registrar before altering the deduction. Anything less exposes your business to penalties.
5. Maintain confidentiality. Limit knowledge of the notice to payroll and HR staff who need to process it. Child support information should not be disclosed more broadly within the workplace.

What happens if the notice changes?

Under Section 45(2) of the Act, when the particulars in the Child Support Register for the employee’s liability are varied, the Registrar must promptly issue you a written notice varying or revoking the earlier notice.

You then apply the new deduction rate from the date specified. Until you receive that written variation, the original notice remains in force and you must continue deducting at the original rate.

The Registrar may also increase the deduction rate under Section 45(2A) of the Act to recover arrears already owed, even where the periodic assessment has not changed.

Penalties for non-compliance

The penalties for failing to comply with a child support employer withholding notice are significant:

• Failure to deduct: 10 penalty units ($3,640), on a strict liability basis, meaning intent to commit the offence is not required. The court may also order you to pay the Registrar the amount you failed to deduct, plus a 20% per annum penalty on that amount.
• Failure to remit deductions or report: Up to 50 penalty units ($18,200), 12 months’ imprisonment, or both. This is the most serious offence in the regime.
• Failure to notify the employee or provide nil-deduction notices: 10 penalty units (strict liability).
• Failure to notify cessation of employment: 5 penalty units (strict liability).
• Failure to keep records: 20 penalty units (strict liability).

Key takeaway

The single most important point for employers is this: a child support deduction notice is not discretionary and is not subject to employee consent. Once a valid notice is in force, your business has direct statutory obligations. An employee’s objection, hardship claim, or disagreement with the assessment does not relieve you of those obligations. Only a written variation or revocation from the Registrar changes what you must do.

If you receive a notice and are unsure of your obligations, or if an employee is pressuring you to stop deductions, please contact our firm on (02) 4944 3322 to make an appointment with Baker Love Lawyers.

Legal advice is essential. If you have a parenting matter, please contact our firm on (02) 4944 3322 to make an appointment with our Accredited Specialist in Family Law, Hayden Carr, or via the form below.

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