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Impacts on people with fluctuating income

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The Government wants to improve Child Support by basing payments on more recent income.  Instead of using older annual income information and spreading payments evenly across the year, Child Support payments would adapt more quickly to changes in a parent’s circumstances.

If a parent’s income fluctuates a lot, the proposed changes mean that payments may be more or less than under the current system.  It will also depend on how the income of the other parent fluctuates.

A longer period of assessment means:

A shorter period of assessment means:

fluctuating income is less relevant, as highs and lows in weekly income are offset against each other, meaning payment amounts are more consistent

fluctuating income is more relevant, as high and low income periods will change  the amount of payment more frequently

This table shows the potential impact of looking back every month for a liable parent earning $62,000 a year supporting one young child, with income that varies month to month.

  Income Child Support now Child Support proposed
June $3836 $600 $415
July $8445 $600 $1000

The payments would more closely match variations in income, with less paid after periods of low income and more paid after high periods of income.

Whether the liable parent pays more or less depends on how often Inland Revenue looks back at actual income and the amount of income both parents received in that period.

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