To have people believe in you as an organisation you need to do two things:
First, you should be consistent in your approach across different areas. People feel unfairly treated if they can’t understand how things that affect them, are worked out.
Second, own up to your mistakes. If something is clearly wrong you will get a lot more respect by admitting it rather than trying to explain it away with gobbledygook.
Here’s what we are talking about:
When determining the living expenses for a child support paying parent, one has to wonder where IRD got their figures from?
The general living expense allowed is $17,687 a year (gross before tax) for a paying parent, no matter where they live or whether or not they are supporting a partner.
What we stumbled across:
A member of our community directed us to a current guide, published by IRD that points towards a massive disparity between a) what IRD state are general living costs, and b) what IRD allow for living costs.
What is the purpose of the household expenditure guide?:
This guide provides information on some of the categories of living costs that are generally incurred by New Zealand households. It provides a base to use as a first step in determining whether household expenses have been reported correctly and therefore determine any ability to repay debt.
Our understanding is that the costs in this guide, published by IRD, are indicative of the living costs generally incurred by NZ households.
This guide is part of the Government’s responsible lending code.
It gets worse:
Lets do a quick comparison of the living allowance for child support paying parents, as calculated by IRD, and what IRD state are the living costs generally incurred by NZ households, broken down by region.
Living costs, according to the IRD guide, for a single person household (in yearly $$):
Waikato & BOP: $31,304
Rest of NI: $32,728.8
SI Urban: $29,827.20
Compare this to the living allowance given to parents that pay child support: $17,687.00 (Gross)
What? Less than half in some cases?
How then, have IRD worked out the child support formula living allowance?
When we asked this question recently on our Facebook page, IRD themselves advised us how it was calculated:
Thanks for your questions. We do appreciate that every families’ costs and circumstances are different.
Under the new rules, the living allowance recognises the living cost parents have to financially support themselves. It is what the government considers is the minimum level of income necessary to cover a parent’s own living costs, before child support is assessed.
It is income that is not considered when making a child support assessment.
If the parent also has other dependent children of their own living with them, they will be entitled to a separate dependent child allowance. Dependent child allowances are also taken off the parent’s income before child support is assessed.
For a parent who earns more than the living allowance and dependent child allowance, they will still have income over and above their child support payment available to support themselves.
The living allowance for a parent is the same amount as either the sole parent support or supported living payment benefit.
As with the benefit, it is not broken down into amounts for different types of expenses.
They also state that it is the same as the sole parent support benefit. However this is not correct as on a sole parent benefit you can also apply for an accommodation supplement that varies depending on where you live. There is also additional assistance available for childcare expenses.
IRD also made the following statement in answer to a similar question:
The living allowance recognises the cost a parent has to support themselves.
Why are IRD not accountable for providing a detailed breakdown of the living allowance?
How can they just say it is the same as the sole parent support benefit when it is clearly not?
Recently we were told that IRD are trying to “align” with Australia.
Did you ever wonder what the living allowance is over the ditch?
Another eye opener:
The living allowance in Australia is $23,610 a year in Australian dollars, which today is $26,563.82 New Zealand Dollars.
Not 2%, not 5% but more than 50%!
IRD need to decide which of the following statements are correct:
1./ The current living allowance of $17,687 a year is a ridiculously low amount and by no means reflective of today’s high living costs (in which case some paying parents, that are not on high incomes are being forced into critical financial situations where they simply can not make ends meet).
2./ The IRD Guide AD164 is grossly over inflated, not an accurate reflection of actual average living costs and should therefore not be used as part of the responsible lending code.
Do you think the living allowance is fair?
Could you, as an adult (who more than likely has to look after kids for a portion of the week as well as yourself), live on 17k a year regardless of where in NZ you lived? We realize of course that some may earn enough above and beyond the living allowance and will have extra money available, however a lot of us do not, and are therefore really struggling.
We will continue to highlight obvious flaws in the new child support formula as and when we find them.
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