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Adjusted taxable income
Taxable income for the relevant tax year used to assess your child support.
A process that considers whether a determination can be made to depart from some or all of the provisions relating to a formula assessment if certain grounds for departure are satisfied. This is a free service we provide.
Child support formula
A formula set out in the Child Support Act 1991 to calculate the amount of child support payable.
Child support group
Qualifying children of a parent who share the same other parent, and for who they have been/are being assessed for child support.
Commissioner initiated review
A process used to determine whether the formula assessed amount accurately reflects the ability of a parent to provide financial support for their children. The first step of this process is an investigation by us into the parent's income, earning capacity, property and financial resources.
A child in a parent's care and for who the parent doesn't pay or receive child support for.
A dependent child must be:
- a child of whom you're the parent
- under 18 years of age or 18 years of age and enrolled at and attending a registered New Zealand school or an overseas school
- not financially independent and in your care at least 28% of the time
- not living with another person in a marriage, civil union or de facto relationship, and
- not assessed for child support in New Zealand or overseas.
Dependent child allowance
An amount deducted from a parents income to recognise the costs of their dependent children.
Estimate of income
When you want to use the income you expect to earn for the current year in the formula assessment, rather than your income from a previous year.
Stopping a child support or domestic maintenance liability while a person is a long-term prison inmate, hospital patient, or under 16 years of age. Certain conditions must be met to qualify.
Stopping child support liability for victims of sexual offences in certain circumstances.
Certain criteria must be met to qualify.
A process where a receiving carer can ask for a liable parent's exemption to be looked at and possibly overturned.
The calculation we use to work out a person's formula assessment.
A parent of a qualifying child who is normally required to pay child support.
A set amount deducted from a parent's income for their own living costs to recognise that they need to financially support themselves.
An amount deducted from a parent's income to recognise the costs of the children the parent has in other child support groups.
The purpose of the multi-group cap is to ensure liable parents don't pay more in child support than they would pay if all the children they are liable for were living together.
A person who is caring for a child they are not the legal parent of. They are entitled to receive child support if they care for the child for 35% or more of the time.
Not financially independent
A child who isn't:
- working more than 30 hours a week on average
- receiving a benefit of their own, or
- receiving a student allowance.
Notice of assessment
A letter sent to the liable parent showing who they're paying child support for and how much they have to pay.
Notice of entitlement
A letter sent to the receiving carer showing who they receive child support for and how much they can expect to receive each year.
When you advise us in writing that you disagree with a decision or an assessment we've made.
Having a permanent place of residence in New Zealand, or living in New Zealand, for over 183 days in any 12 months.
For child support purposes a person who:
- is named on the child's birth certificate as a parent, or
- has acknowledged in writing, in a court, or before an overseas public authority that they are the parent of a child, or
- was legally married at the time the child was conceived by or born to the person, or the other party to the marriage, or has adopted the child and the adoption order hasn't been discharged, or
- is found to be a parent of the child by the Court or public authority and that finding hasn't been cancelled or set aside, or
- has been granted a paternity order against the person in respect of the child, or
- is the natural mother of the child, or
- the Court has declared to be the step-parent of the child, or
- a Court has appointed or declared the person as a guardian of the child because he is the child's father.
Parenting agreement/care agreement
An agreement between parents or carers that records a child's care arrangements.
A non-parent carer who doesn't receive a sole parent or unsupported child's benefit from Work and Income can choose not to receive child support payments from one of the parents.
An agreement about the financial support for the child (or children) made between the parents or carers without involving us.
Protected net earnings
The 60% of net earnings (after tax) that a person must be allowed to keep from their pay after child support has been deducted.
A child who is:
- under 18 years of age or 18 years of age and enrolled at and attending a registered New Zealand or an overseas school
- a New Zealand citizen or ordinarily resident in New Zealand
- not married or living with another person in a civil union or de facto relationship
- not financially independent (not working more than 30 hours a week on average), or receiving a benefit or student allowance.
A parent or non-parent carer of a qualifying child, normally entitled to receive child support from a liable parent. They must have at least 35% care to receive child support.
The amount of care a parent provides their child that is taken into account in the formula assessment (must be for at least 28% of the time).
Sole parent benefit
This is one of the following benefits from Work and Income:
- sole parent support (excluding jobseeker support student hardship)
- supported living payment (on the grounds of sickness, injury, disability or total blindness)
- jobseeker support with children included
- young parent payment.
When you've estimated your income this is the process for working out how much child support should have been paid based on the parent's actual income for the period they estimated for (the election period).
An agreement to pay child support or domestic maintenance where both parties agree on the amount to be paid. It's registered with us and we collect and pay out the child support or domestic maintenance.
When a person applies for child support we use the formula set out in the Child Support Act 1991 to work out the annual amount of child support that's payable. We call this an assessment.
If you're receiving a benefit
- sole parent benefit, or
- unsupported child's benefit
from Work and Income, you must apply for a child support formula assessment at the same time as applying for your benefit.
The parts of the child support formula assessment
Find out about the parts of the formula assessment:
Both parents taxable income is included in the formula assessment calculation. Including both parents' income means that the assessment is balanced as the costs of the child (or children) are shared between both parents.
If you're a non-parent carer (this means you're looking after a child that you're not the legal parent of), your income is not used in the formula assessment calculation.
We'll use your taxable income from either:
- the previous calendar year (1 January to 31 December) if you are a salary or wage earner, or
- two tax years ago (1 April to 31 March) if you file an IR3 return or earn overseas income. We'll also add an inflation factor.
Estimating your income
If you believe that your income will be lower than the amount you've been assessed on you may be able to estimate your income for child support. If the estimate is accepted your child support will be reassessed.
You can estimate your income for the whole child support year or at any time during the child support year. We call this an election period.
You can estimate your income if:
- your year-to-date income plus estimated taxable income has reduced by 15% or more from the original taxable income used in the assessment, and
- you estimated during the child support year and your "annualised estimated taxable income" is less than the original taxable income used in your assessment.
Allowances are deducted from a parent's adjusted taxable income before a child support assessment is worked out.
A living allowance is a set amount deducted from a parent's adjusted taxable income to recognise that they need to financially support themselves.
Dependent child allowance
An amount for your dependent child's (or children's) support will be deducted from your adjusted taxable income when working out your child support.
The amount deducted is called the "dependent child allowance". It uses the same child expenditure table as your child support child (or children). This means that all your children are treated the same.
Your dependent child allowance is worked out using only your adjusted taxable income. Because parents' incomes are treated equally under the formula, either parent can have their children recognised in this way.
The multi-group allowance recognises your responsibility for supporting your child (or children) in other child support groups.
We work out the multi-group cost for each child according to their age and how much it would cost if the children were living with you.
We only use the adjusted taxable income of the parent who is entitled to the allowance to work out the multi-group allowance:
|Step 1:||Take that parent's adjusted taxable income.|
|Step 2:||Deduct their living allowance.|
|Step 3:||Deduct any dependent child allowance(s)|
|Result:||The income used to calculate the multi-group allowance.|
The multi-group allowance for each child is the cost of raising that child. This is worked out using the child expenditure table and the parent's child support income amount (as shown in Steps 1-3 above) and the relevant age bracket.
The formula uses each carer's care cost percentage which is determined on the basis of the amount of ongoing daily care provided for your child.
|If the amount of care is ...||then the child support care cost percentage is ...|
|0 to 27%||nil|
|28 to 34%||24%|
|35 to 47%||25% plus 2% for every care % point over 35% of care|
|48 to 52%||50%|
|53 to 65%||51% plus 2% for every care % point over 53% of care|
|66 to 72%||76%|
|73 to 100%||100%|
John provides 30% care to his son Jack. John's "care cost percentage" will be 24%. John's share of the costs when Jack is in his care is 24%. This is taken into account in the formula assessment calculation.
A "child expenditure table" is used to work out the:
- dependent child allowance
- multi-group allowance, and
- child expenditure amount which is used in the formula assessment.
The table represents the average costs of raising a child and is based on information provided by Statistics New Zealand. It is split into three groups to accommodate the costs of children aged 12 and under, 13 and over and children in both age groups.
The child expenditure table calculates for one, two and three or more children. Research found that net costs did not increase significantly after three children.
Working out child support
This example of the formula applies to parents:
- with one child support group, ie, qualifying children who have the same parents
- without other children.
There are eight steps in the basic formula. We work through these eight steps for each child.
|1||We calculate each parent's child support income, ie, a parent's taxable income minus a living allowance for their self-support.
This step relates to income.
|2||We add both parents' child support incomes together to get a combined child support income.
This step relates to income.
|3||We divide each parent's individual child support income by the combined child support income to get an income percentage.
This step relates to income.
|4||We work out each parent's care percentage of the child (see the "Care cost table").
This step relates to care.
|5||We work out the equivalent cost percentage of the child (see the "Care cost table").
This step relates to care.
|6||We subtract the cost percentage from the income percentage for each parent. The result is called the "CS percentage".
For results b and c we go on to steps 7 and 8 using only the positive child support percentage.
If you have different care arrangements for various children you might have different child support percentages for each of them.
This step relates to child support percentage.
|7||We work out the costs for each child based on the parents' combined child support income using the "Child expenditure table".
This step relates to cost of children.
|8||We get the child support payable by multiplying the positive child support percentage by the costs of the child. This figure is the final child support amount the paying parent needs to pay, unless the minimum applies or there is some unrecognised care.
This step relates to child support payable.
You can work through the child support formula for your own circumstances using the liability/entitlement calculator.