In a fair world if you had equal shared care of your children, with your ex-partner, you would reasonably expect that the cost of the children would also be shared.
But what if it wasn’t?
What if you, as the mother, or father of these children had to pay the other parent and/or the Inland Revenue Department thousands of dollars a year, yet you didn’t earn a big wage.. (and your ex partner hadn’t worked for years)?
How would you feel?
Of course you would never want tax payers to have to pay for your children. You would expect to pay your half while they were at your house, and the other parent in the equation should be paying for the other half of the basic expenses.
Changes to the child support formula came into effect from April 1st, 2015.
These changes are affecting NZ’ers that were already struggling to make ends meet.
In some cases this might be the fair thing to do, but in many situations money is being taken away from the parents that were already the primary financial contributors to their kids.
Previously if your ex didn’t want to work, and wanted to cruise along in life that was their choice and it did not greatly affect the other parent.
When you have to pay your ex money to sit on their butt while you work like a dog it can be extremely hard to make sense of it all.
IRD’s answer to the question of why someone has to pay child support in a 50/50 care situation
Even when the care of a child is shared equally, child support is usually required to be paid by the parent with the higher income.
This is to ensure that the child’s standard of living remains relatively unchanged when moving from one parents care to the other and reflects the support they would receive if the parent’s and child all live together.
Parents who share care together can choose to have a private arrangement outside of Inland Revenue as long as the receiving carer is not on a sole parent benefit.
Note that answer also applied to some that have more than 50% custody! And still had to pay for the other parent.
Example of 50/50 Care Where One Parent Pays
In this simulated example which we have conjured up with the IRD magic calculator we have parent x and parent y. X earns 70K a year and y owns there own business, manages to write off most of their expenses via the business and declares a taxable income of 10k a year.
From our calculations on 2 kids that would then point to the fact that parent x has to pay parent y $621.80 per month. This is despite them spending one week at x’s house and the following week at y’s house.
What Can Be Done About An Unfair Formula?
Of course if you believe the formula is unfair you can file an admin review, however from the feedback we have had to date, this is extremely difficult to succeed with unless you have “extraordinary circumstances”.
One of our community members, who has found herself in this horrendous situation has asked the following questions of the government:
- How is this fair?
- Why am I being penalised for working?
- How do my children benefit from this?
- How do you justify making me pay 90.02% of the child care costs when I only have my children 50% of the time? i.e. Why do I HAVE to pay for my ex-husband to look after his children?
- Why isn’t my ex-husband expected to work full time?
The problem is that the answers received to date just rehash how the formula is worked out and advise that if one considers it not fair then there is the option to do an admin review.
This does not help anyone understand why this is the way it is.
We have essentially, it appears, copied a system similar to what Australia implemented in 1998.
When we look at Wikipedia for Australian child support it states as one of its criticisms:
For those where 50/50 shared care agreements are in place further issues have arisen often creating bitterness, fuelling arguments and generally breaking down goodwill between the parents. An example where both parents are gainfully employed yet one parent has to pay the other parent a percentage of their income.
Many consider this unfair as one parent is simply collecting money from the other when they are more than capable of paying their own share. The argument being that if both parents share care and both parent pay 50% of all shared costs why would one parent have to provide the other parent with more money?
The CSA don’t appear to have a specific clear response to this. Responses have ranged from “it’s a little top up for the kids” to “it’s just the rules of the system”. Critics of this particular aspect of the system argue it should be on a case by case basis yet response from CSA representative has been that it’s too much micromanagement.
The Wikipedia article is a little short on references, but hopefully you get the idea.
Why did we not learn from the mistakes of our tran-tasman colleagues?
If you were in charge of implementing a new system worth 163 million dollars, would you not look at any current concerns and try to address them as part of the implementation?
What Should Happen in a 50/50 child support situation?
We believe that each parent is equally responsible for the upbringing of their child.
The starting point should be no money changes hands, and expenses should be shared.
If one party earns substantially more than the other, they can agree to pay more of the expenses.
This solution offers the following benefits:
- There is more incentive for both parties to work hard and earn money. (the current method, could be perceived as discouraging both parties)
- IRD does not need to even be involved saving the country money spent on time, and administration
- There will be less bitterness and aggravation between parents, with both parties being made responsible for the support of the children they brought into this world
- Laziness and/or hiding behind accountants will not be a financially rewarding career option
Please share what is happening, a lot of people don’t understand how unfair this new formula is.
We want both parents to take responsibility for their children. Not just one of them!
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