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.
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?
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.
Partners of paying and receiving parents
Parents that should receive but don’t
Parents that should pay but don’t
(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:
Quit ones job and go on the dole
Go into business and cover up true income
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.
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.
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.
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.
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.
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?
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
..the desire to align the child support system with that of Australia – Hon Todd McClay
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
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?
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.
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.
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?
It is no wonder people are complaining! The living allowance given for a paying parent in Auckland is just over $17k a year, and IRD’s own study of general living costs (nothing fancy) is almost 40K a year.
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.
How exactly does it recognize the cost when IRD’s own guide states the cost is far, far more?
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.
Child support paying parents in Australia, the system that IRD is trying to align us with, get a 50.85 % higher living allowance.
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.
Please join us on our Facebook page and share this article with your friends and family.
As many of you may have read the 2010 Costs of Raising Children Study ( used as a guideline by IRD in the recently introduced child support formula ) has two approaches.
The first approach uses Statistics New Zealand’s Household Economic Survey (HES) data to estimate what parents actually spend on raising their children at different levels of household income.
The other approach is the basket of goods approach, the key part being..
..Using retail prices from the Consumers Price Index (CPD, a basket of goods and services considered appropriate for a given living standard is priced.
We wanted to find out what exactly was in the basket of goods, that was included as part of this study. This is important, because from what we have been lead to believe, this is related to the amount of child support parents pay.
Under the Official Information Act (1992) one of our community requested this information, initially from IRD.
IRD then directed the question to Statistics NZ.
A letter of reply has been received from Statistics NZ which states that the study selected approximately 500 goods from the larger list of goods that the Consumer Price Index is calculated from.
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.
Many of our community have struggled to understand the way the child support formula, implemented by the NZ government, values one child differently from another.
What do we mean by that? Let us show you some real life examples.
At a recent Q & A with IRD, held on our Facebook page a number of questions were raised in relation to the differing values of children.
Q: How is it worked out that a child living in the home that the child support is based is considered to have considerably less financial needs than the child now living in the ex partners home?
Lisa had this question:
Q: Why is one child worth more than another just because a parent earns more? All children should be the same whether a paying parent earns $20k or $200k. My three children receive $900 per month from there father and I still think this is too much. I am arranging a private arrangement or else their Dad will never be able to afford to his boys let alone have them every fortnight. But why should my partner who also has three children be paying $1700 per month. Why the difference? Why do some families only receive $75 when another receives $800 for the same amount of children. Are you trying to make paying families worse off and struggling to pay their bills?
Q: I would like to know why dependent children aren’t worked out the same as the non-dependent children and after tax is taken off dependent children receive less than the non- dependent children that you are meant to contribute to not 100% pay for? Bit strange that children that live in your care full time cost less than a child that is supported by two parents incomes receiving child support?
The answer from IRD, in relation to the above questions was:
The cost of raising a child for a parent will be different for each parent based on their circumstances.
Research in New Zealand and elsewhere found, that the cost of raising a child is based on the amount of income the parents earn; and it increases as parent’s income increases. These costs can be translated to a percentage of a parent’s income.
For example, the cost of raising one child under 13 for parents earning the average weekly wage was found to be about 15% of their income.
The child support formula therefore uses a percentage of income in different scenarios. This is set out in the child expenditure tables in the legislation and on IR’s website at www.ird.govt.nz/childsupport/assessment/assess/expenditure/
These percentages change as income changes, and depend on the number of children and whether they are under or over 13 years old.
The income we use in the expenditure tables is updated each year based on average weekly earnings from Statistics NZ. It provides a more accurate way to determine the cost of a child to a parent than under the old child support formula.
What they are saying appears to make sense on the face of it, but unfortunately what has happened is that children have ended up being valued differently.
Some parents only get the minimum child support amount of $74 a month, or even less.
Disturbingly, a number of parents get absolutely nothing at all.
Other parents receive (or pay) 20 times the minimum, or more, per child.
E.g Jonathan pays $1587 for one child per month:
You guy’s were surprised at the last total in the submission I put in. I received a letter the other day as my daughter is turning 13 this month… $1587/month now for one child. That is the better part of $400/week. In what world does it cost even close to $400/week to raise a child?
Apryl receives $62.80 a month:
Now its gone down by $11.. $62.80 a month- thats $753.60 yr. Isnt the minimum $892.I rang IRD this morning and they said ‘That is calculated on his income and we cant discuss this further’
Surely these are two extremes of absurdity?
Look, we all know that our kids are invaluable and money shouldn’t come into it.. but how can anyone seriously convince us of the fairness of a formula that determines that one child costs nearly $400 a week, yet another costs only $15 a week?
To sum it up a different way Jonathan pays more in one month, than Apryl receives in two years!
What Can Be Done About All This Nonsense?
Here at Child Support NZ we are proponents of a flat rate child support system, that does not discriminate between Apryl’s children or Jonathan’s.
Each child, we believe, could have a reasonable standard of living on a sensible set amount per month that was shared between both the parents.
If one parent can’t pay the calculated amount, due to minimal income (or other reasons), then the Government could help top it up as they do now.
The millions of dollars spent on admin reviews, ridiculous expenditure on systems that don’t work and paying staff to try to explain a system, that they probably find hard to believe in themselves would no longer be necessary.
Simplify, start with shared care and no child support, and move to a flat rate from there.
IRD don’t agree with us, and nor does the government.
And why would they? Agreeing with us would be admitting that mistakes have been made. Very costly mistakes.
Emmy – Tell us about what is going on with your situation?
We are paying parents living in Aus, paying directly to IRD NZ.
My husband has one child in NZ – South Island. We have a younger child together.
Before we planned our baby, we decided it was best to save for x amount until had enough saved to cover bills for a minimum of 1 year to take the pressure off hubby etc.
It has been life saver!
Husband has never been allowed to see his child, unless the money was paid directly too her, which is impossible due to her being linked with winz.
Husband works 60 plus hours and I stay at home with our young child.
My husband’s x is receiving a pension/single parent so money goes straight to govt, which is fine.
People assume that we make huge money in aus and drive 50k plus cars and have these expensive homes with pools.
We dont!!! the cost of living here is extremely high, despite what you have heard. Yes petrol is cheap but that’s about it.
His child support has increased steadly over the years, which was fine due to reflection of his income BUT when the new system came into place it jumped by $400 a month.
In the end it was either I go back to work, which I am not happy about as we saved for a very long time for me stay at home with the baby and being forced back into the work force makes me sad. or my husband is too go self employed, making as many tax deductions as possible to bring this income right down.
We are in the processes of my husband going out on his own. So sad that we felt this was the only way without struggling.
Him working 60 plus, plus me working 30 plus hours just didn’t make sense.
I really hope they re look at the system.
How much did you pay on the old formula?
On the NEW formula what will that amount be per month?
Are you happy with the new formula?
What are your main reasons for being not happy with it?
Massive increase without warning. IRD have told us that it will keep increasing even if he only earns an extra $500.
If child support was a set amount per child split between both parents for the basic necessities, what do you think is a fair amount per month per child?
What else would you like to say?
Husband did earn $1500 more last financial year, but the increase in child support is way too much for that amount.
Emmy – Thanks for sharing with us.
We want to hear your story!
If you would be happy to share your story with our community – we would love to hear it. Please fill out our Case Study submission.
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.