Stuff co.nz 12 March 2020
Changes planned for the child support scheme should mean fewer parents fall behind in their obligations, the Government says.
The Child Support Amendment Bill has been introduced to Parliament.
The changes in the bill do not fundamentally alter the formula used to determine how much support should be paid.
But it proposes changes that are intended to make it easier for parents to comply.
They include “fairer and more effective” penalty rules and a grace period for people who are new to the scheme. The second phase of penalty, in which charges increase, will not be applied to debt until 28 days after it was due.
The bill also proposes automatic deductions of child support for newly liable parents from their pay, a four-year time bar for reassessing child support and a wider definition of income for child support purposes.
All references to “taxable income” in the law will be replaced with “income”. This will include investment income such as money earned from dividends and interest.
Revenue Minister Stuart Nash said that should give a better picture of a person’s ability to support their children.
He said Government wanted to do what was best for the children involved.
“We want to help liable parents get it right from the start and encourage them to meet their obligations. The proposed law change would remove obstacles to compliance and make it simpler to comply,” he said.
“For example, it proposes a penalty grace period for people new to the scheme. During the 60-day grace period, penalties would not be charged and Inland Revenue would work with people to help them get on track.
“Overly punitive penalties can cause liable parents to disengage with the scheme, which defeats the purpose of having rules in the first place. The proposed changes balance the need to incentivise timely payment, with the desire to support liable parents who are trying to stay on track with their payments.”
In the year to June 2019, there was $2.209 billion in outstanding child support debt, of which $1.6b was due to penalties.
Inland Revenue wrote off $244 million in that financial year and said it expected that amount to increase in coming years.
“The proposed grace period targets newly liable parents who may not yet fully understand their obligation. It would allow Inland Revenue to contact them to explain the consequences of failing to comply,” Nash said.
Inland Revenue will also be given the discretion to adjust child expenditure calculations in situations where complex care arrangements for children in the same calculation are not adequately accounted for.