After hearing case after case of parents upset by the recent changes we decided to try an experiment of comparison.
By taking a fictitious family on an average income we would be able to see exactly how bad things really could get by comparing the exact same salaries and circumstances from one year to the next.
Luckily for us the old calculator is still available on the IRD site so we were able to go back and see how it used to be.
Then we crunched the numbers with the new “fairer” system and had a look at the results.
Background of our couple
We are going to call our couple Harry and Veronica.
They are recently married, and were both previously married before.
Harry has two kids that live with his ex wife Sally. One child is under 13 and the other is over.
Sally recently moved to another town so he only sees them every second weekend and sometimes in the school holidays.
Veronica has 3 kids that live with her and Harry. Her ex partner has recently discovered the joy of surfing, and decided to take a break from the working world for a while.
Harry earns $68000 a year as a Delivery Driver, he does a lot of overtime to get that amount.
Veronica earns $20000 a year as a part time Office Administrator at a nearby company.
Sally, Harry’s ex wife is trying to find work but is currently on a benefit.
How much would Harry pay under the old system?
We plugged in the figures and Harry would need to contribute $658.75 per month towards his two children.
Note the living allowance given to Harry of just over 35k.
How much would Harry pay according to the new child support formula?
Harry is not the legal parent of the kids that live in his house according to the IRD.
They have another biological parent that should be paying for them (except he is off surfing remember).
Veronica only receives $73.75 a month in child support for her 3.
The calculator we used for this can be found here.
We pretty much went with the defaults (Note we put Sally’s income as $0 as she is not working):
As we filled out the nights of care we imagined Harry at this point was probably not too worried.
If he had been listening to the radio and seen the news he would have known a much fairer child support system was about to be implemented.
Finally we click through to the end result.
Harry now, according to the calculator and assuming we have plugged in the right numbers, will have to pay $1092.20 cents a month.
The new formula calculation states that Harry’s child support payments have an enormous increase of 65.8% – or $433 more a month.
Just to make sure we weren’t messing things up with Sally’s 0 income we went back, changed her income to $45000 a year and re submitted the form.
The amount only dropped to $1047.80 per month.
We understand that the new formula has been created with the best of intentions, however it should be recognized that a lot of people are in similar situations to Harry and Veronica (just take a read through our case studies).
It should be noted if there was more shared care by Harry the amount would be reduced substantially, however often in cases like this due to geographical challenges, and/or parental alienation this is not easily accomplished.
Although they could apply for an administrative review would they really get anything from it? These are the new rules.
We think that although the formula may be fair in some cases, it needs a considerable amount of tweaking when it comes to living expenses and this should be addressed immediately before too much damage is done.
What are your thoughts?
Is it unfair or do you think that it’s perfectly acceptable to push out a new child support formula that in some cases has a drastic financial impact on the parents involved?
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The figures in this article are intended as an example only of a situation that could be similar to family circumstances.
IRD website copyright states that we can reproduce the content as long as it is not misrepresented. By showing the calculations with example numbers we do not consider that to be any misrepresentation.