New Formula adds value to Child Support Scheme

Major changes are being made to the Current Child Support Scheme, effective April 1, 2014, with a new formula for calculating child support payments.

‘New Zealand Child Support’ is a scheme designed to ensure that our children are financially provided for when their parents live apart.

Parents living separately can choose to make a private arrangement. Please ask us to administer a Voluntary Agreement or enter into the Child Support Scheme.

The Scheme is voluntary, unless one of the parents or the caregiver receives a sole-parent or unsupported-child benefit.

New statute

The Government decided to make the changes to child support following extensive public consultation. These changes are set out in the Child Support Amendment Act 2013, representing the first major overhaul of the scheme in 20 years. The Act also reflects how life has changed significantly for Kiwi families during this time.

Currently, child support payments are based only on the paying parent’s income and living circumstances. Shared care is recognised when a parent looks after the children for at least 40% of nights.

From April 1, 2014, we will use a new child support formula to calculate how much child support you would pay or receive. The formula will be based on (a) The income of both parents (b) The cost of raising children based on their age (using up-to-date estimates of the costs of raising children in New Zealand), and (c) The amount of care provided by both parents.

The Formula

We will recognise care when a parent looks after their children for 28% or more of the time (28% is equivalent to two nights a week).

The new formula would take into account the circumstances of both parents, meaning that in some cases, the amount of child paid or received may change.

If you are a parent or caregiver receiving a sole-parent or unsupported-child benefit from Work and Income, the new formula would not affect these payments.

If you currently pay or receive child support, these arrangements continue as usual until the end of the tax year (March 31, 2014).

We will contact you between July and November 2013 to give you more information about the changes. We will also check to confirm if we have accurate details about you in our records.

For further information, please visit www.ird.govt.nz/childsupport-changes

Free Workshops

If you are in business, you may like to attend one of our free tax seminars or workshops held in various parts of the country. Please visit our website for details.

Abdul Rafik is Inland Revenue’s Community Compliance Officer based in Auckland. He will answer your queries emailed to venkat@indiannewslink.co.nz

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