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.

Featured Image Credit

6 Reasons Why Richie McCaw Should Become the Minister of Revenue (IRD)

Word on the street is that Richie is soon to be looking for a new career.

We think he would be great at running IRD, and here are our reasons why:

1 – Richie would NEVER try to align us with Australia

He understands that copying a bad system will never help you win the game.

Richie knows a good organization has its own unique game plan, and sticks to it.

2 – He knows how to count

Counting is very important in rugby:

  • You need the right amount of players on the field
  • You can only have so many in the lineout
  • It’s important to keep an eye on the scoreboard

Richie would crunch a few basic numbers and understand that a kid costs more than $73.75 a month to survive.

He would also probably question that a 13 year old girl costs $1587 a month and try to find some sensible middle ground where ALL kids were treated fairly.

3 – He realizes that things are not always black and white

Richie, I think it is fair to say, knows when a rule doesn’t relate to common sense.

He is not afraid to push the limits and challenge the boundaries of the rules.

Not everyone likes, or agrees with what he does but he does it anyway.

4 – Richie is great at giving honest answers to hard questions

There is noone better at facing up to the country and answering the tough questions.

He would never hide behind legislation, or simply not answer important questions.

5 – He understands what 50/50 means

Rugby is all about 50/50 decisions.

  • It is, as we all know, a game of two halves
  • There are plenty of 50/50 calls by referees
  • If you don’t get the breakdown right you will probably lose the game

There is no way Richie would let a parent like Helen, who has 50/50 custody of her kids, be forced to pay money to the government because of another parent that didn’t contribute – we just know he would understand that, and many similar situations are wrong.

6 – Richie knows how important kids are

Dan Carter
Image Credit

This is the man that turned up to a primary school and apologized to the kids that it was him instead of Dan Carter.

R eliability
I ntelligence
C haracter
Honesty
I nspiration
E xcellence

Richie – no matter what happens on the early hours of Sunday morning we as a nation stand strongly beside you.

We look forward to watching proudly, as you move on to the next stage of your career.

Do you think Richie would make a great Minister of Revenue?

Join us in our fight
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50/50 Care dilema – Looking for answers and discussion

50 50 care dillema

The current system does not appear to deal well with all cases that are 50/50 and the below is an example.

We have real people in these situations reaching out to us all the time, and really struggle to give helpful advice as we have a child support formula that seems to take money away from families that are trying to care for their kids.

This was sent to us anonymously – we would really value your feedback as always:

So my husband and I have his 2 children shared care 5 nights a fortnight.

We are going through family court to try extend this to 50/50 split.

At first ex wife (their mum) was fighting it and now is saying that we can have 50/50 split if we pay half of everything – school uniform fees etc plus extra activities (they do a large amount of activities which we have no say in) thing is my husband pays child support and she is on a benefit so she doesn’t actually see the money.. (not really our problem) ird have worked it out and say he will still be paying 220pw so $880 per month!!

And on top of that she wants us paying half of everything.

The way I see it is 50/50 split each home is already sharing costs of everyday needs so no money should need to exchange for that and the $880 per month he will pay will cover his half of everything else. Why should we be punished and made pay more on top of that because she is on a benefit.

At the moment he is paying $1300 per month.

If she was not on a benefit she would receive $880 per month thru child support assessment, would she still then expect more? I would hope not.. so why do we have to pay more because she choosing to be on a benift.

Children are 8 and 11.

Ps we also travel one side of chch to the other for school ect activities ect

There are a number of questions that come up regarding this.

Firstly why does one party have to pay $880 in child support to the government, when they have their kids half the time?

We know the government is recouping the benefit money, but is it really fair to take that from the other parent?

Should it not be one parent pays the costs when they have the kids in their house, the other pays when they are with them and expenses are shared?

It seems like an impossible situation, that doesn’t appear to have the child support system looking out for the best interests of the children.

If you were this Dad what would you do? Offer to pay the 50% of extras even though you were already paying $880 a month? Or what is your suggestion/thoughts?

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Gaping Loopholes and Issues With the Child Support System In NZ

Do you struggle to understand how exactly the NZ Government came up with the current child support system? Are you a paying parent that works your ass off yet you are completely broke? Are you a receiving parent that works your ass off and yet you are completely broke?

Try to imagine anything worse than being tasked with creating a child support formula that actually worked fairly.

Much of the time the system is required to enforce a type of contract between two people that intensely dislike each other.

You have 6 main groups of humans directly or indirectly affected by child support, 5 of which are very outspoken.

  • Paying parents
  • Receiving parents
  • Partners of paying and receiving parents
  • Parents that should receive but don’t
  • Parents that should pay but don’t
  • Kids

(some people cross multiple groups – yes we realize that but are trying to keep the explanation as straightforward as possible)

The only group that doesn’t complain if things do not appear to be fair is of course the most important group – the kids themselves.

Each group has different priorities and views of the world. In many cases a paying parent has no idea of what life is like as a receiving parent, and vice versa.

The system as it stands now actually makes one person financially accountable for the actions and life choices of the other, this is despite them being no longer in a relationship.

  • Example 1: If the receiving parent has another child in a new relationship the paying parent will likely have to pay more due to circumstances entirely out of their control.
  • Example 2: If the main paying parent has another child then the receiving parent will normally receive less.
  • Example 3: If one parent works less hours or quits their job the other will have to pay more money.

Parents ARE accountable for providing for their kids, they should NOT be accountable for the personal life choices of the other parent.

Child support is like being forced into a marriage with your worst enemy. It is rare to find parents that can form an agreement that doesn’t involve a gun to the head (aka IRD) of one or both parties.

The loopholes within the current child support system

There are currently (at least) three glaring and gaping loopholes that can be used to either get more, or pay less child support – these are important to address because they directly affect the lives of the most important group that this whole system is meant to be based around (remember those little humans we mentioned earlier on).

The Glaring Loopholes:

  1. Quit ones job and go on the dole
  2. Go into business and cover up true income
  3. Find a country to live in where you can hide from the NZ IRD

The first two loopholes work well for either receiving or paying parents. The third is usually only an option for paying parents.

Those are the loopholes that enable people to get out of paying what they should be paying, or to receive more than what they should be getting (child support is now based on the incomes of both parents).

And as if these loopholes were not enough of a problem in themselves, we then have the issues….

Issues with the child support system

When looking at the issues within the child support system it is easy to see that we are looking at an enormous Pandora’s box of icky problems.

Time and time again, these and other issues have been brought up to our members of parliament as well as the IRD.

IRD even came onto our website a couple of months ago in order to answer everyone’s questions. If we were lucky enough to get an explanation, it was at best a brush off.

It is clear to see that the powers that be wish to hide from these difficult, and hard to solve, problems.

Unless a huge fuss is made we are allowing our Government representatives to continue to hide their heads in the sand, like a herd of petrified ostriches.

head in sand
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1./ Living allowance Issue

To understand the true significance of this issue, we need to look at a study done every year, by the government around the average living costs of private households in NZ.

The study is called the Household Economic Survey.

From one of these studies the IRD created a guide called the AD694 which is to be used by lenders to ensure that borrowers are correctly reporting their expenses.

In other words if you are trying to borrow a large sum of money, and you state your household expenses are $480 a week and you live in Auckland they would probably not believe you as the average household living expenses for Auckland are reported (as per the IRD guide) to be $750 a week.

The point of all this (in case you were wondering!) is that IRD know full and well approximately how much it costs to live, on average, around the different towns and cities in NZ – YET when calculating the living expenses for a child support paying parent the amount is calculated at only $17,687 per year – $340 a week (update now in 2017 it is $19,359 per year).

When asked why the amount is calculated at such a low amount the IRD could not directly answer how the figure was arrived at. They told our community that it is based on a sole parent support amount, which is a pointless answer as a benefit allows the person receiving it to also apply for an accommodation supplement – the child support living allowance does not include an accommodation supplement.

We have covered this more fully in a previous article.

Suffice to say the amount is ridiculous and not only out of date, but completely different to what the IRD’s own research is telling them.

Sidenote: In Australia the living allowance is approximately 50% greater at NZD $26101.58 (AUD $23,610)!

2./ How is Child Support calculated?

You would think that such a question would be easily answered by the organization that is responsible for doing the calculation however the fact is they simply cannot tell us. The IRD, it is fair to say, cannot explain why or how our child support is calculated at the rate that it is.

As part of the calculation used a “basket of goods” approach was implemented – unfortunately neither IRD, nor the department of statistics (who apparently supplied IRD with the information) can tell us what was in that basket of goods despite a request under the official information act.

Statistics NZ does not hold the exact list of goods that was used by the study’s authors to estimate the costs of raising children.

Please refer to our article on this for more information.

3./ Private agreements?

We are also concerned that private agreements were meant to be the default – the IRD governed child support system was to be a backstop, yet that is not the reality.

Private agreements are very rare, an exception you could say.

Surprisingly if the receiving parent is on a benefit there is no option to even have a private agreement.

Is it even lawful to state that private agreements should be the overriding way to go, and then not allow them?

Check out around 2:30 into PD’s speech.

4./ Wild extremes of the formula show that it is NOT based on the cost of a child

Why when we are told that child support is worked out on the cost of a child, can one child be worth so much more or less than another?

E.g (Actual real world examples):

  • Jonathan pays $1587 for one child per month.
  • Apryl receives $62.80 a month for her child.
  • Tracey receives $0 a month for her child.

Please refer to our article on the worth of a child for more information.

5./ Different rules for similar scenarios

In the Working for families entitlement calculation both partners incomes are included despite the lack of biological linkage. Why then is it not the same when calculating child support living allowance and why is the paying parent treated as single when they are a in a relationship?

For more discussion on this check out our article.

How can it be this wrong?

The NZ Government doesn’t appear to need to justify or explain anything. (Any serious questions or doubt cast on the system can, from what we have experienced, be completely ignored.)

The majority of the NZ public seem to think that issues with child support should be avoided like the plague.

With such a deeply entrenched system it is very hard to break through the status quo. But even though it may be nearly impossible, or at least incredibly hard to evoke change, that doesn’t mean that we should all throw it in the too hard basket and give up.

What happened to our millions of dollars?

The first $163 million spent on our upgraded system was, from what we can tell, used to copy some parts of an already broken Australian system.

Sweeping reforms to the 27-year-old child support program will be recommended by the bipartisan committee, which is due to table its report in federal parliament today after assessing more than 11,000 public responses during a 16-month inquiry – The Australian July 17th, 2015

The Australian Institute of Family Studies report released this week shows seven out of every 10 parents who pay or receive child support are completely bewildered as to how child support payments are calculated while another 20 per cent of parents thought they knew the rules but were wrong. – The Nationals Australia

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..the desire to align the child support system with that of Australia – Hon Todd McClay

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The $163 million cost of changing the child support rules will increase further when the Inland Revenue Department implements a completely new computer system in the next few years. – NZ Herald March 2015

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Copying other parts of the Australian system, like the living allowance, would have cost the country even more money – so just got left out of the equation.

Imagine if the NZ government actually wanted to make a fairer and better system, wouldn’t they want to work with those that were struggling?

Can the government and IRD not admit the current system is extremely flawed in many ways?

Wouldn’t the children that are losing out on not only money, but time with (both) their parents be considered more important than trying to sweep all these issues under the carpet?

What is best for the kids clearly doesn’t come into it. If it did we would not hear about cases where the government took money away from parents and their kids and put it into it’s own coffers.

From what we can see the only real way out of this spiral of destructive money sucking policy is not by trying to convince everyone how right everything is, but actually accepting how broken it is.

How refreshing it would be to have a government party that took ownership of these issues.

What Do We Propose?

What we propose is to approach the issues starting with the child’s best interests:

KEY drivers

That every child under the Child Support system gets a “fair” amount of $$ support (we know the government has failed here with some kids getting very little or nothing).

Remove the WRONG incentives from the system, including.

  • Reducing/increasing access (nights) to increase/decrease the amount of CS received/paid.
  • People not working to increase/decrease the amount of CS receive/paid.
  • Having another child to avoid working and alter CS/Benefits.

Note: Not everyone abuses the system but those that do cause a lot of hardship for the rest.

The government by default should pay the CS where the paying parent isn’t/cant:

  • The government chases the money up (Norway model?).
  • This would allow them to get at people hiding their income
  • This is such an easy win…if you are the parent…you will be billed for your children.

Remove the income based model:

  • It’s not fair and drives the wrong incentives.
  • There is no proof on what the government say about the more money, the better the kids are off AFTER separation so this should be questioned.
  • Flat rate for a child (based on age and maybe sex) that BOTH parents are responsible for 50% of as a starting point.
  • Nights of contact still come into it, but one parent cannot deny access to the other (without good reason).
  • If one parent can’t survive, they apply for a extra benefit, NOT an increase in CS from the other parent.
  • Separate Child support from any other benefits and make it transparent to both parents.

We Need YOUR Support!

Our aim is to:

  1. Define a clear and better path forward.
  2. Petition the NZ Government. Once it’s tabled, it will go to a select committee to be looked at more closely.

We don’t want your money, but we would eventually like to call on you for your signature as we head down this path.

Please leave us a comment to let us know your ideas on what we are proposing.

Also please join our mailing list so we can contact you later:

Please share with anyone you know that will find this interesting, disturbing or otherwise!

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Seeking Parents of Unsupported Kids – The Lost Children

I can’t actually be the only person in the country with an unsupported child can I?

Can You Help Me?

The Citizens Advice Bureau are considering taking IRD to task and are looking for similar issues to mine from other families around New Zealand.

The information they require is minimal however they are seeking cases like mine where a blended family with one (or more) non-biological child in the home is no longer supported – the child or children were considered dependants prior to 31st March 2015 but from 1st April they are no longer dependants on either partners assessments for child support.

My situation is this:

  • From 1st April 2015 my daughter was not taken into account in my partners assessment for Child Support (she was prior to 1st April).
  • Her biological father is not a NZ Citizen, does not reside in any reciprocal child support country (eg., Australia) and DOES NOT PAY ANY CHILD SUPPORT and never has.
  • We are not entitled to any assistance because for all other legislation we are considered a family.
  • Our household lost $400 a month, that may not seem like much to many but it is a lot to us – effectively it is our grocery bill.
  • An administrative review was undertaken by my partner – there was no change, my daughter is still not considered a dependent.
  • There is no way for me to obtain support for my child therefore she (and I) are dependant on my partners income.
  • IRD legislation ignores our situation completely and the fact that we are now $400 worse off every month.

Citizens advice suggest perhaps these scenarios:

1. Blended families where one biological parent does not live in the country (or a reciprocal country) and DOES NOT pay child support.

2. A blended family where one biological parent has “disappeared” and therefore DOES NOT pay child support and there is no other assistance or benefit available.

3. Blended families where a biological parent is deceased and the family/other parent/children are not entitled to any benefit assistance.

4. Or any case where because of the legislative changes there is now no assistance for one or more children in a blended family unit.

NOTE: If your blended family unit is entitled to Working For Families Tax Credits or any other benefit or reduction then this request does not apply.

If any of these situations are similar to yours please help me give them the information they need to push our joint concerns.

Provide your name, phone number, email address and a brief description of what your situation is.

Your information will not be used for any purpose other than to convince the Citizens Advice Bureau that these situations are real.

They may want to contact you and you will have all rights to provide no further information or to alternatively help state your case.

Thank you all for reading this. I can’t believe I am the only person in New Zealand that has this situation.

Tracey Durham

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