Support Groups for Paying And Receiving Child Support

If you are interested in joining a closed Facebook group for child support paying parents (and their partners) please go here.

If you are a receiving parent (or partner of one) the closed Facebook group is here.

Image: Flickr

Please remember these are groups for people that want to help and support each other.

Not to judge people.

Everyone has unique circumstances.

Anyway come join us and tell us your stories.

If you know a paying or receiving parent that is struggling, please share the group with them.

How is the Dependent Child Allowance Calculated? – Does it have a Problem?

The dependent child allowance appears to value one child differently to another. Until the relationship splits up.

What exactly is the Dependent Child Allowance?

On top of the living allowance that a paying parent receives, there is also an allowance given for any biological children that live with you.

We are told that the Child Expenditure Table is used to work this out.

How is it worked out?

In one of the examples on the IRD website there is a father earning $45092. He has two children to his ex and also has a new child with his new partner. By having a dependent child he gets a raise to his living allowance of $4,642.53 a year. This is around 10.3% of his total income.

For the original two kids the calculation of how much they cost is different:

The annual cost of raising Thomas and Ben based on Cameron and Holly’s combined child support income and using the child expenditure table is $16,505.26.

According to the Child Support formula the two original kids have an annual cost of around $8250 a year each. That is almost double what the new kids cost of living was estimated at.

Our own formula based example

In this example we have a man earning 65k a year. His ex and him have 1 child together and she earns 45k a year. She has the majority of the care so he doesn’t reach any of the thresholds to trigger shared care.

This results in him paying $592.80 a month for his first child.

Lets say he then has new kid with his new partner. Now he can add a dependent child into the formula.

He will get a living allowance for the new kid. The formula changes a bit to $508.30 a month. Basically out of his income he has $84.50 extra per month to spend on his second child.

What if he split from the new partner as well, and the new partner went on a sole parent benefit with full care of the baby?

If that happened he would then need to pay $464.40 to the first ex, and $464.40 to the second ex.

By the relationship splitting the children suddenly become worth the same amount of money.

This is wrong in so many ways it is hard to know where to begin but think about this:

The first child/ex get a substantial reduction in child support if our guy here splits with his new partner. One could argue that a flat rate from the beginning here would be the best way to go based on actual costs of a child that was unaffected by what life choices either partner made.

The second child is seen as not needing to be supported as much as the first child if the relationship stays intact, as soon as the split occurs then they suddenly become worth exactly the same amount.

A logical, fact based, and realistic flat rate of child support would seem to be fairer for all parties.

The Child Support formula in NZ, in it’s current state, is inconsistent when it comes to the cost of raising a child.

Child Support Review Requested by NZ Parents

With all the political changes going on right now the future of our country is in the hands of the voters.

That is you, and me.

Do you support change?

Do you think we need a review of our ‘Hand me down Australian Child Support system’?

Image: Flickr

The time to state that is now.

Please comment and share.

We want to show MPs how many thousands of voters would be prepared to support a party that was not afraid to admit that our child support system is far from acceptable.

We simply demand a fair and honest 3rd party review (i.e not the government reviewing itself).

Questions we asked the Government – #2

One of the things we are concerned about is making sure that the changes (April 2015) that the government instigated are fair.

Is NZ as a country better off and how exactly is that measured?

So with that in mind, our trusty correspondent made a request under the OIA to try to get a gauge on how the Government measures the success or otherwise of the changes.

The Question

Is the government actively measuring the difference the changes have made?

  • If so, what KPI’s (and KPI components) were used before the changes and are still used to measure the success of the changes to the Child Support Act.
  • Is one of the KPI’s “A % increase of Child Support Income / Beneficiary payments by the government”
Image: Flickr
Image: Flickr

The Answer

The KPls used to report to Government on performance have not changed since the review. These are:

  • Minimum percentage of child support assessments issued within 2 weeks,
  • Minimum percentage of child support administrative review decisions issued within 10 weeks, and
  • Minimum percentage of child support New Zealand paying parent debt cases resolved within 12 months.

This seems to be an area that the Government could have put more effort into.

What do you think? Discuss!

Questions We Asked the Government About Child Support – #1

In a recent letter to one of our community Hon Michael Woodhouse (National Minister of Revenue) stated the following:

I refer to your further letter of 13 September 2016 about the child support scheme.
Governments around the world endeavour to create laws that best serve all their people. Internationally New Zealand’s state child support system is seen as one of the best when parents cannot, or are unable to come to a private financial arrangement over the care of their children themselves.

He appears to specifically point out that the NZ Child support system is seen as a world leading solution.

Our correspondent then asked (under the Official Information Act) for references to the reports and studies that Hon Michael Woodhouse had referred to when making this statement.

The reply has come through and is below:

My letter of 13 October 2016 made no reference to reports and studies. Your request for this information is refused in accordance with the provisions contained in section 18(g) of the OIA as the information requested is not held by me and I have no grounds for believing that the information is either held by another department or Minister of the Crown or connected more closely with the functions of another department or Minister of the Crown.

My comment was expressed as an opinion. I acknowledge that the current child support scheme is not perfect and does not account for every situation but I believe it is a vast improvement on the previous scheme.

Image: Wikipedia


If you find these kind of updates useful please let us know so we can share more with you.

6 Reasons Child Support Admin Reviews are a Sham

Imagine a justice system that is not open to the public, does not allow you to hire a lawyer to represent you, has no jury to decide who is guilty and no judge to deliver a verdict.

Child support review officers appear to have the power to make decisions on whatever they decide is right and fair. From what we can tell, they don’t have to worry about anyone challenging their decisions.

Child Support Admin reviews are for both paying parents and receiving parents. The theory is that if the standard assessed formula is unfair in some way then you can get a review done and perhaps get an adjustment made to the formula.

From a number of reviews experienced ourselves (liable and receiving), and the feedback from our community we would have to say that overall they appear to be a sham.

Here are our six reasons why:

Image: Flickr
Image: Flickr

1. Admin reviews are an abuse of privacy

If you are the person applying for an admin review, the entire submission and every aspect of your financial situation that you submit to IRD, will be given to the other party (should they want to see it).

But here is the kicker – there is no need for the other party to supply the same.

They get to see all your stuff.. but don’t have to show you theirs.

It is not the other party deciding what is fair or not, so there is no good reason as to why they need to see your financials.


Full disclosure should go both ways – or no way at all. Why do IRD have the power to send private information to those that do not need to see it?

2. The decision cannot be shared or published

The review decision itself, even though you may think it is completely unfair and others would to, must be kept secret and you cannot show anyone.

If you publish the decision, despite how unfair or unreasonable it may seem, you could be prosecuted.

You are reminded it is unlawful to discuss or pass on information provided by any party in a review or any information contained in the review decision. If you breach this restriction, you commit an offence for which you can be prosecuted

Why the secrecy in terms of the decision itself? Why threaten to prosecute parents, for sharing a decision made by a government organisation?

3. Family court has no power over IRD

If you disagree with the outcome of an admin review you are told to take it up with the family court.

Another kick in the guts – unbelievably it appears the family court has no authority over the IRD. This is despite the following statement in the legislation:

If you disagree with a child support review decision you have the following options:

1./ If you applied for the review you can have the same grounds that were considered at the review looked at again. To do this you should apply to the Family Court for a departure order. You can only rely on grounds that were put to the review officer in the administrative review.
2./ If you were the other party to an administrative review you can appeal the decision in the Family Court. The Court will then rehear the original case.
3./ If there’s a new matter not considered by the review officer, or a change of circumstances since the last review, you can apply to us for another administrative review.

When one of our community sought help, after a disturbing admin review decision, they were told via email from a Manager at the Ministry of Justice:

The court has no jurisdiction to overrule an IRD ruling. I suggest you seek legal advice.

The family court has no jurisdiction yet is listed as an option to help resolve any issues? Really?

We are still trying to get to the bottom of this, if someone from IRD or the Government could actually shed some light on this, we would welcome it and be happy to adjust this article accordingly.

4. Receiving parents success on reviews vs paying parents

Sometimes paying parents have more custody of the kids than receiving parents do. We have had paying parents that have 65% custody of the kids and sometimes even more.

Imagine if you had your kids 4 or 5 days out of 7 and yet you had to pay the other parent for the privilege of having them 2 or 3 days a week?

What if you had them week about, were barely surviving and yet your ex was working for cash (or had a good accountant) so you had to pay them?

There are many situations where you should be able to do an admin review, as a paying or receiving parent, and get some kind of adjustment when the formula is not being fairly applied.

Under the official information act one of our proactive community members requested the breakdown of admin reviews around the numbers of paying vs receiving and this is what was provided:

Information received under the Official Information Act

Since the new child support laws were implemented in April 2015, until 18 April 2016 there have been 2,739 applications. 1,470 by receiving carers and 1,269 by liable parents.

You may think that the results of these reviews would be roughly even, for every receiving parent getting the short end of the stick, odds would have it that a paying parent is getting a raw deal.

Well not so fast..

    • 711 applications for departure were awarded to receiving parents (48.37%)

receiving

    • 374 applications for departure were awarded to liable parents (29.47%)

liable

Receiving parents have a nearly 50% success rate at getting a departure, and liable parents almost 20% less.

5. Even acknowledged unfairness may be ignored

Remember, even if you have a valid reason for a review, this alone doesn’t guarantee the assessment will be changed. Ref: IR175

This just does not make sense.

Is our society and government so flawed that even if someone has a valid reason and complaint, it should just be shoved aside?

6. Special Circumstances must exist but no one knows what they are

One of our community recently had some questions for the IRD, on the back of a child support admin review.

The questions were around Ground 3 and were asked under the Official Information Act.

For those of you not familiar with Ground 3 here it is.

Ground 3 – You have necessary expenses in supporting yourself

This ground applies when the ability of either parent to support their children is significantly reduced by commitments that are necessary for that parent to support themselves.

Ref IRD Website

Note in the answer immediately below a ground 3 application allows for an administrative review by virtue of special circumstances..

The questions asked are in red, the replies from IRD in blue.

1. When applying under ground 3 and where vehicle expenses are involved, what vehicle expenses are IRD to consider, is it only fuel costs or is it actual complete running costs including insurance, maintenance etc?

Section 105 (2) (a) of the Child Support Act 1991, commonly known as ground 3, allows for an administrative review by virtue of special circumstances the capacity of either parent to provide financial support for the child is significantly affected because of commitments of the parent necessary to support themselves.

There is no list of what vehicle expenses, or any other expenses, that can or should be taken into consideration under ground 3. I have therefore declined to provide you with this information under Section 18(e) of the Official Information Act (OIA) 1982-document alleged to contain the information does not exist or cannot be found.

What is the definition of “General” running costs and what does that cover?

There is no definition of “general” running costs. I have therefore declined to provide you with this information under Section 18(e) of the Official Information Act (OIA) 1982-document alleged to contain the information does not exist or cannot be found.

All expenses have to be considered as to whether or not they are “necessary commitments” and then it has to be shown that the total necessary commitments significantly affect the ability to pay financial support. There is no definition of “necessary commitments”. For the review office to recommend a departure from the formula assessment, they must be satisfied that:

  • special circumstances exist if applying under grounds 1 to 10 (special circumstances are not considered for grounds 11 and 12 which come into effect on 1 April 2016), and
  • a change in the assessment would be just and equitable for the child, the receiving carer and the liable parent, and
  • a change in the assessment would be appropriate.

special circumstances must exist

2. Can I please have the complete list of “Special Circumstances” IRD must accept under ground 3?

There is no list or definition of “special circumstances”. I have therefore declined to provide you with this information under Section 18(e) of the Official Information Act (OIA) 1982-document alleged to contain the information does not exist or cannot be found.

However the courts have considered and commented on special circumstances and it is expected that review officers will follow and apply any precedent.

no list or definition

3. Can I please have the complete list of “Expenses” IRD accept under ground 3?

There is no specified list of expenses. I have therefore declined to provide you with this information under Section 18(e) of the Official Information Act (OIA) 1982-document alleged to contain the information does not exist or cannot be found.

4. Is there a formal process to review and challenge the review officers report (NOT the outcome of the report)

If the process has not been followed correctly to the extent that one of the parties has been denied natural justice, or the review officer makes a decision which was not legally open to be made, then a rehearing can take place. I confirm this would not extend to cases where the parties consider that the review officer has come to the wrong conclusion.

Why should you care?

The NZ child support system, modeled after the Australian child support set up, appears to be failing to meet the needs of children, and their parents.

Child support should be about supporting the kids in the best way possible after a relationship break up. Ideally, as a default option, it should be left up to the parents to sort out between themselves. Some parents, that can get along after a relationship breakdown, do actually do this.

There are so many underlying factors around shared care, access to kids, ability to survive and so on that most people just don’t really understand what it is like so tend to judge quickly and think that if anyone complains, it is because they don’t want to pay for their kids. This is simply not the case in many situations, so it is best to carefully examine all sides of any particular case, including what the children want and need before a decision is made as to who and what is right or wrong.

Every situation is unique with different levels of shared care, varying expectations over who should pay for what, and more than a few hard to understand IRD policies to contend with.

We need answers from those that govern these laws to give us clear guidelines. If there are special circumstances that must be met, show us or tell us what they are. Apply those financial restraints that are separate from the children, to both sides of the equation in a fair and consistent way.

Open up the decisions made (minus private information) to review and feedback.

Every child needs and deserves two parents that take an interest in their lives and support them.

Times are changing. The government party that takes this all on board and dedicates some resources to facing some of the issues, is going to get a lot of support.

Are Child Support Admin Decision Reviews Fair?

I received an email today, highlighting some concerns around the fairness of admin review decisions.

Of course they will always seem fair to one of the parties involved, and more than likely unfair to the other party. But are they generally fair overall without bias to sending or receiving parents?

There are many sides to this, and points of view however if you have an opinion, or an experience, it would be great to hear it.

Image: flickr
Image: flickr

Here is the email:

“Hi Rob

It has come to my attention via bitter experience that Grounds for a child support administrative review particularly Ground 8 are being applied unfairly.
Ground 8 states that I have grounds for an administrative review if the child support assessment doesn’t take into account the income, earning capacity, property and financial resources of either parent or child (or children).

As I understand it, both parents are responsible for providing as best as they can for their children and this rule is intended to ensure both parents are earning as much as they are capable of through their working.

My situation is that my ex-wife obtained a full-time job earning $70K/Year but because she was unwilling to share custody (which would have reduced her child support) or utilise child care services and so curtailed her hours to 30hrs/Week (earning her approximatelly $55K/Year) so as to be able to work without paying for child support.
Now that I have won 50/50 shared custody of the children (whilst working 40hrs/Week) my ex-wife is still working part-time, in part this is because her employer hired additional staff due to her part-time working; however, she has not applied for any full-time work nor does she believe that she should.

I applied for an administrative review on the grounds that my ex-wife should be working full-time and hence assessed on her established and potential earning capacity of $70K/Year.
I thought that this case was pretty clear cut given she has a current contract establishing her current market worth but the review officer found that it was reasonable for my ex-wife to continue to work part-time (presumably indefinitely).

This seems crazy to me!

It would have been reasonable to find in my favour because clearly she is not earning to her full potential through her own life-style choices but to modify the downward adjustment of the child support to ensure there was no undue hardship for my ex-wife.

However it seems this ruling supports the position that it is OK for the receiving parent to not maximise their earning potential because it provides no incentive at all for my ex-wife to earn more and assist me in supporting our children – after-all I pick up the short-fall, so I’m the only one who loses money ($300-400) every month.

I am having great difficulty getting accurate figures but anecdotal evidence suggests that this ground is being routinely applied to contributing parents who try to reduce their income but is almost never applied to receiving parents who similarly reduce their income by working in a menial job, part-time or simply rely on the DPB.

I am hoping to challenge this ruling in the courts but I would like to establish a body of evidence to show where this rule has been applied to the contributing parent and not the receiving parent; I’m sure the visitors to your site will be able to provide me with their experiences with this specific area of child support legislation.

Thanks”

.

If you want to tell me your story, send an email to robstgeorge at gmail dot com. Or leave a comment.

Disclaimer: Testimonials, case studies, and claims made at childsupportnz.com are unverified results that have been forwarded to us by users or told to us by clients, and may not reflect the typical person’s experience, and may not apply to the average person.

What do IRD do to Collect Child Support?

A number of parents have come across our site and asked questions around what exactly do IRD do to collect payment from parents that owe child support?

Questions like this one:

I have just work d out that I’m owed over $7000 of child support, I’ve rung and CS really don’t want to know 🙁 how can I go about getting what’s owed to me?

So we asked them and this is what they had to say.

Question to IRD: Do you have any information we can post on the web pages outlining the process those parents must follow and for re-assurance, what IRD are doing about non-payers and enforcing payments, remember, it’s the children missing out here?

Image: flickr
Image: flickr

Answer: Inland Revenue regularly monitors child support non-payments and pursues the collection of unpaid amounts. If we are unable to locate a liable parent to arrange repayments, and there is no source of income available, enforcing compliance can be challenging.

Our website outlines the options available for collection if liable parents do not make payments.

These include:

  • notices and telephone contact
  • compulsory employer deductions
  • sending deduction notices to third parties other than employers, such as banks
  • court action such as examinations, charging orders, distress warrants or arrest warrants

Receiving carers who have information that may help us locate or enforce payments from a liable parent, can contact us to provide this information if they have not already.

Non payers and the amount owed is rocketing from all accounts and it would be good to know what IRD are doing about it.
Inland Revenue continues to focus on early intervention and on reducing the size and growth of child support debt.

Budget 2014 provided us with additional funding to help improve child support compliance. We are beginning to see positive outcomes from our activities in this area, including more debt cases being closed within 12 months of opening and a reduction in the total number of debtors at the end of the year.

Early work has included an education campaign to new child support customers on their obligations, particularly taking into account the child support reform changes, ensuring they understand their obligations to help them get it right from the start. This initiative aims to progressively increase the amount of debt repaid over a five-year period with early work resulting in an extra $1.5 million recovered from liable parents.

The Child Support Amendment Act 2013 will reduce the rate at which penalties are charged from 1 April 2016. A range of provisions are also being introduced to relax the circumstances where penalties, and in some cases assessment debt, can be written off.

These measures are aimed at encouraging compliance and further reducing the size and growth of child support debt.

Question: Is it an option for the receiving parents to use a debt collection service to get payments owed and by-pass IRD all together in the collection of money?

Obviously at some point this would go through IRD as payments so its reduced etc. then the money being forwarded to the receiving parent.

Answer: (This answer is to both the above questions)
Parents who are eligible to have a private agreement for child support can choose to do so with no involvement from IR.

For parents who ask Inland Revenue to administer child support on their behalf, IR manages any debt collection activity. It is not an option at present for receiving parents to use a debt collection service to get payments owed and bypass IRD in the collection of child support payments they haven’t received.

1525.41% increase in Child Support – Why This Hardworking Mum of 3 is Very Upset

kathy

This is a situation where we have an extremely hardworking, tax paying parent.

Unfortunately, because of the shared care child support formula they are having money forceably removed from not only their household budget, but from the very children that child support is meant to be focused on.

This is due to circumstances and choices, completely out of the affected parents control.

Note: We are aware that this is just one example and that there are many unfairly treated mums and dads out there. It can be unjust on all sides of equation.

This is one of the unfair formula driven outcomes that can come about when three factors are mixed together.

  • 50/50 or similar shared care of children
  • 1 of the parents on a benefit
  • An average or less than average income of the working parent

This formula destroying trifecta is not unusual.

There are also many variations of the above, that can result in extremely unfair outcomes.

Prior to April 2015

This real world situation had its beginnings, earlier this year:

In or around February 2015 thousands of NZ parents received a notice advising them of how the new changes to the child support system were going to affect them.

When Kathy opened the IRD envelope, she was completely unprepared for what was inside.

Kathy says:

I had heard that changes were coming however as they had promoted them as FAIRER I thought YAY – I won’t have to pay anything! Joke was on me aye!

As a hard working parent with 50/50 care of her kids she was just surviving on the previous formula.

Prior to this disturbing letter she paid a few dollars to IRD in child support and took care of the kids when they were with her.

Her ex paid when they were with him, the rest of the expenses were shared.

From April 2015

Her payments had skyrocketed to $249.50 a month.

It was an extreme shock.

So it went up from $15 pm to $249.50 pm – nearly 1600%!!

She did what many of us would do in this situation, stormed down to the local IRD and tried to get some answers.

..it was a joke. Very patronising and the lady certainly didn’t know what she was talking about and simply said as we were leaving that I had to pay because my ex was on a benefit.

The Main Issue

You might be thinking that sounds fair enough, maybe she earns more than her ex.

But here is the kicker:
Her kids do not get that money.

I’m paying for a very capable man to sit on the dole while I’m having to pay $3000 per year for him.

The money goes directly to the government.

Kathy doesn’t have anything against her ex, and she realizes she cannot control what he does.

A number of you may be thinking, well why should the tax payers have to pay towards his benefit? A good point but let’s remember Kathy is also a tax payer, and so already paying her share as much as the rest of us.

Child support should be about supporting kids, not paid to the government to help support exes.

Written Letters Asking For Explanation

Kathy started writing letters to every minister she could think of.

Although she has asked, more than once, the Government has been unable to adequately explain to her how the system is fair, or good for her children.

why is it unfair

This alone should set off warning bells to every parent, and planning to be parent.

Kathy has done nothing wrong, she works hard at her job and pays taxes.

Despite earning only a modest salary she is one of those parents that does take responsibility for her kids. She is a contributing member of society.

We asked Kathy to summarize what she has been told in the correspondence to date, she had this to say:

Kathy: To sum up what I have been told over the past 7 months:
1. The policy is fair because it isn’t based on what race, religion and gender the parents are. (Great – I thought that would of been a given but so glad it was pointed out to me.)

2. Lifestyle choices are not a consideration of the Child Support Act. (Awesome – I can’t be bothered working either)

3. It’s fair for Tax payers because they should not have to pay for other peoples’ children. (That’s good – I’m a tax payer too and don’t think I should have to pay for my ex-mother in law’s child not to work)

4. I have to let the IRD or WINZ know that my ex husband is capable of working. (I already work full time with 3 children to look after – why do I have to do their jobs for them as well?)

5. The MSD base beneficiaries work expectations on their childcare responsibilities (I am a hard working tax payer that sorts out my own childcare responsibilities. Why should I be expected by this government to work full time, sort out my child care while others are given an excuse not to!)

.

It can be really tough surviving as a solo parent. Imagine having to pay out $3000 a year to the government for the kids you are already supporting.

She has the option of applying for an admin review but after hearing about all the others that have tried, and not succeeded, plus having some stressful health issues with one of her kids she is not keen to go through it.

And why should she have to?

What is your opinion?

Is this situation fair? If not how do you think the government should handle it?

If you think it is fair can you explain why?

ChildSupportNZ.com works hard to protect the privacy of individuals. As such, names are changed where necessary. Thank you for understanding.

Featured Image Credit

Why it’s OK to do Overtime (or get a Payrise) Even if you pay Child Support

overtime

I have been thinking a lot about overtime lately.

From what I have heard ( the occasional comment posted on our Facebook page) there seems to be an underlying theme that

  1. It’s not worth doing overtime because it all goes on child support
  2. It’s pointless to try to get pay rises because it will just cost you more
  3. Overtime might be great at the time, but it will bite you in the arse the next year

In my own job I have the opportunity to do occasional overtime when I go on call. Also if I work hard and accomplish all my targets at work I generally get a (small) pay rise each year.

I am a paying parent.

So it got me thinking..

Am I shooting myself in the foot by trying to work hard and get ahead?

Well, from what I can figure out, no not really.

In fact it’s likely that I am helping 3 parties, the biggest share of the pie goes to myself, some to my kids that I’m paying for and the rest to the country in the form of taxes.

Here are the reasons why I came to this conclusion:

(I’m going to try to address the most common scenarios but feel free to add your own thoughts if I am missing something here.)

Overtime

Several times I have seen parents post about doing overtime and then getting hit with massive amounts of child support.

This is obviously not a good thing, and I wanted to try to understand it a bit better.

As I see it there are two ways this could go down.

  1. Overtime that is regular (you could reasonably expect it the following year as well)
  2. Overtime that is irregular, maybe you have a busy year at work and lots of overtime

Lets say, for example in a week you do four hours of overtime @ $30 an hour = $120-00 Gross

Most of us pay around 20-30% in income tax and around the same in CS, depending on how many kids we have.

In this case I will do a best case and worst case scenario:

Breakdown of $120 $$$ Best to Worst
(Tax) 17.5 to 33% $21.00- $39.60
(Child Support) 18 to 30% $21.60 – $36.00
(Left over) 37 to 52% $77.40 – $44.40

This is definitely one of those situations where less is more.

If you earn more, and have more kids you will get less.

If you earn less and have less kids, you will get more.

Best case (Lower Income, 1 Child)

best case scenario

Worst case (Higher Income 3+ Kids)

Worst Case Scenario

Example worked out over one year

I then did an experiment with what I consider to be a worst case scenario.

When I say worst case I do not believe that any amount of income (top tax bracket), or quantity of kids (top CS rate) could make this much worse than what I have calculated here.

If you can show us some different calculations then please go ahead and share them (despite what my other and better looking half will tell you – I’m always open to being proven wrong).

In this case we take a paying parent with a Salary of $80K (In order to hit the highest tax bracket of 33%).

This parent is paying for 4 kids with no nights of care at all to hit the max CS % which I understand to be approximately 30%. (All 4 kids are over 13)

CS experiment prior

Current payments of $1626 per month.

What happens if this hard working parent does 5k of overtime in a year?

Breakdown of Overtime $5000 $$$
(Tax) @ %33 $1650
CS (worked out on calculator) $1512
Left in pocket $1838

Yes they are left with less than half, but they are still getting money they didn’t have before and it is more than the child support amount, plus it’s more than the tax amount.

CS experiment

New payments of $1752 a month (an increase of $1512 per year).

Overtime one year, none the next

One thing to keep in mind is that when you get extra money, you don’t generally pay CS on it straight away.

As many of you will know if you don’t get the same amount of overtime/money the next year it can hurt you.

Note: if you earn considerably less i.e more than 15% you can apply for a recalculation

Here are two ways to avoid that “bite in the arse”

  1. Pay a little bit extra, say the equivalent of around 25% of your overtime into your child support account, yes it just sits there as a credit ( I do this sometimes on the rare occasion when I have extra money, to help buffer when things are tight).
  2. Open a separate bank account and put around 25% of the extra money in it, you might even get a teeny bit of interest as well.

I know its a hassle thinking about and planning for this, but at the end of the day either option is not overly strenuous or out of reach for most of us.

Payrises

Some time ago I saw a comment on our facebook page along the lines of:

My husband turns down payrises at work, because he would end up having to pay more child support

I may not have phrased that perfectly but you get the general idea.

I don’t want people thinking that, because it’s not going to help anyone.

It may seem like a small amount that you get after all the deductions, but it is still money in your pocket.

So to sum up:

In my opinion, after careful research and number crunching, I believe that overtime and pay rises are worthwhile even if you pay child support.

In fact I know many of you are really struggling so hopefully you will now be in a slightly better frame of mind when it comes time to put up your hand to do a few extra hours.

Do you agree or disagree? Let us know what you think.

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