11 March 2020
Fairer administration of child support scheme
A proposed law change will improve the administration of the child support scheme to ensure greater fairness for children and their families.
The Child Support Amendment Bill introduced today follows a public consultation exercise in 2017 and subsequent discussions with the Privacy Commissioner and others.
“The proposals in the Bill are aimed at improving the administration of the child support scheme, and do not fundamentally change the child support formula,” said Revenue Minister Stuart Nash.
“The child support scheme affects approximately 135,000 carers, 166,000 liable parents and 185,000 qualifying children.
The main proposals in the Bill would enable:
- fairer and more effective penalty rules,
- a grace period for penalties for people new to the scheme,
- employer deductions of child support for newly liable persons,
- a four year time bar for reassessing child support, and
- a wider definition of “income” for child support purposes.
“The Coalition Government wants to do what’s best for the children in scheme.
“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.
“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.
“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.
“The Bill also proposes that a person’s investment income be automatically taken into account to get a better picture of their ability to support their children.
“The Bill also contains a number of technical amendments to assist the administration of the scheme, including proposals to make the scheme work better with people with unique circumstances.
“We can offer a better, more efficient service. And we can offer a service that delivers better outcomes for children. That’s what this Bill is all about,” says Mr Nash.