Abdul Rafik –
Major changes are being made to the current child support scheme, starting April 1, 2015, with a new formula for calculating child support payments.
New Zealand Child Support is a scheme designed to ensure that New Zealand children are financially provided for when their parents live apart.
The changes to child support were decided by Government following extensive public consultation and are set out in the Child Support Amendment Act 2013.
Evolving needs
These changes represent the first major overhaul of the Scheme in 20 years and reflect 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 1 April 2015, we will use a new child support formula to calculate how much child support you will pay or receive. The formula will be based on (a) Both parents’ income (b) The cost of raising children based on their ages (using up-to-date estimates of the costs of raising children in New Zealand), and (c) The amount of care both parents provide.
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 takes into account both parents’ incomes and the care they provide.
The new formula means, in some cases, the amount of child support you pay or receive may change.
Some concessions
If you are a parent or caregiver receiving a sole-parent or unsupported-child benefit from Work and Income, the new child support formula will 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, 2015).
From mid-February this year, we would have sent you a new notice of assessment or entitlement to let you know how much you will pay or receive from April 1, 2015.
We would have also checked to see if we have your correct details and ask for any updates if we need them.
Voluntary Agreement
Parents living separately can choose to make a private arrangement, ask us to administer a voluntary agreement or enter into the child support scheme.
The child support scheme is voluntary, unless one of the parents or the caregiver receives a sole-parent or unsupported-child benefit.
The new formula takes into account both parents’ incomes and the care they provide. The new formula means, in some cases, the amount of child support you pay or receive may change.
Find out more about child support including a video explaining the changes at www.ird.govt.nz/cskey
Abdul Rafik is Community Compliance Officer at Inland Revenue Department. He can answer readers’ queries, which should be sent to venkat@indiannewslink.co.nz
If you are setting up or run a charity, and would like to attend Inland Revenue’s free tax seminars and workshops held throughout New Zealand, please visit www.ird.govt.nz (‘Seminars’).
