Child Support is assessed using annual income information from the previous calendar year or two tax years ago. This means that parents and carers know what payments they will have to make or what they might receive.
However there are some issues. Payments based on old income information may not reflect the current ability of each parent to contribute to the cost of raising a child, and some types of income are not included in the calculations. Also, once a payment is made by the liable parent, it can take a while to get to the receiving parent or carer.
The proposals aim to ensure payments reflect parents’ income, make it easier for liable parents to pay, and allow Inland Revenue to pass payments on sooner. For all parents or carers, the changes are designed to make it easier for them to work with Inland Revenue to make or access the payments.
Proposals to improve how Child Support works have three objectives. They aim to give customers:
- certainty – so the person paying Child Support and the person receiving it know that what they pay or receive is correct
- timeliness – so the payments adjust quickly when parents have changes in income
- consistency – so payments are predictable and both parents or carers can budget and make informed choices.
These objectives can conflict. For example, some people will prefer to pay or receive the same amount every time, even if the payments do not always reflect their current situation. Other people may prefer payments that quickly adjust whenever their circumstances change.