You can estimate your income for child support when you expect it to drop by at least 15% from the income used in your assessment.
For a paying (liable) parent, this may mean you pay less child support. For a receiving carer, this may mean you get more child support.
If the child lives with each parent some of the time, estimating can even change who pays child support.
Who can estimate
Both the paying parent and receiving carer can estimate their income. Non-parent carers cannot estimate their income because it is not used in the child support formula.
When you can estimate
You can estimate during the current tax year (1 April to 31 March), or for the upcoming tax year, if you already have your child support assessment or entitlement notice.
For us to accept your estimation, you also need to meet all the following requirements.
- You expect your total income for the year to be at least 15% lower than the amount on your assessment notice - this means your year-to-date income plus your estimated income for the rest of the year.
- Child support is still going, or it ended in the current month. For example, if it ended on 10 May, you can estimate up till 31 May.
- If you were to earn the income you have estimated for a whole year, the year's income would be lower than the amount used on your notice. This is called annualised income. It makes sure that you’ll be better off if we accept your estimation.
- Your income or the payment amount has not been set by court order or child support review – in these cases, you need to go back to court or apply for a new review.
- You do not have any overdue income tax returns (IR3s) for previous years you estimated in.
- No receiving order has been made for your child support debt (this is a special type of court order).
Overseas income
If you earn income overseas in a country that has a different tax year, you still need to estimate your income for the New Zealand tax year – 1 April to 31 March.
Providing proof
You may need to send us proof of your estimated income. For example, if your estimation includes income from self-employment or overseas income.
We’ll only ask you for proof if we need it. Otherwise, you do not need to provide it along with your estimation.
Start and finish dates
Your estimation starts on 1 April if you estimate:
- before the tax year begins on 1 April
- during the month of April.
If you estimate during the year (from 1 May onwards), your estimation starts from the 1st of the month you estimated in.
New to child support
Your estimation starts on the same date as your child support if both of the following apply.
- You're new or returning to child support.
- You estimate within 28 days of the date on your assessment letter.
This may be in a previous month or year.
For example, we send you a child support assessment letter in late December, showing your child support starts on 20 December. You estimate your income on 16 January, and we accept it. Your estimation starts from 20 December.
Finish date
All estimations finish at the end of the tax year (31 March) unless you cancel them.
If your income changes again
If your income changes after you’ve estimated, you can estimate again, as long as you still meet the requirements. If you estimated less than 3 months ago, your annualised estimated income must have changed by at least $500 before we can accept a new estimation.
If your income goes up after you estimated and you no longer meet the requirements, call us. You may need to cancel your estimation. For example, if your total income has dropped by less than 15%. Otherwise, you may end up with a bill once your child support is squared up.
If you cancel your estimation partway through the year, you may have a bill to pay. Call us to talk about your situation and work out what’s best for you.
At the end of the year
After the tax year ends on 31 March, we’ll square up your estimation to see if you paid or received the right amount of child support.
We use whichever of these 2 options is the lower amount.
- The actual income you earned in the period you estimated.
- The original income we used to work out your child support.
If your income was higher than what you estimated, you may have a bill to pay. You’ll have 30 days to pay any extra child support you owe.
If your estimation includes overseas income, you'll need to send us proof of this income after the year ends on 31 March, in the currency you earned it. We will convert it into New Zealand dollars.
Trisha’s child support is worked out based on her last year’s income of $63,800. In August she gets a new job with less hours, so she estimates her income.
She tells us that:
- she’s earned $15,102 so far – this is her year-to-date income for her old job
- she expects to earn about $28,000 for the rest of the year until 31 March – this is her estimated income.
Trisha’s total estimated income is $43,102. We accept her estimation because it has dropped by at least 15% from the original amount of $63,800, and because she meets the other requirements. We send her and the other parent notices showing their updated child support amounts. These amounts apply from the start of August, which is the month she sent us her estimate.
After the end of the tax year 31 March, we square up Trisha’s estimation based on the income she actually earned - $45,563. Since this is more than her estimated income of $43,102, she has a small bill to pay.
Jordan owns a business, and his child support is worked out on his income of $95,000. In October, he loses a major contract, so he estimates his income.
He tells us that:
- he’s earned $35,145 so far – this is his year-to-date income
- he expects to earn about $18,000 for the rest of the year until 31 March – this is his estimated income.
Jordan’s total estimated income is $53,145. We accept his estimation because it has dropped by at least 15% from the original amount of $95,000, and because he meets the other requirements.
Then, in December Jordan gets a new contract, which means his income will go up.
He tells us that:
- he's earned $43,000 so far – this is his year-to-date income from 1 April to 30 November
- he expects to earn $20,000 from 1 December to 31 March (121 days).
The total income is $63,000, which is still more than 15% below his original income.
Jordan’s annualised income is:
($20,000 ÷ 121) × 365 = $60,330.58
The annualised estimated income of $60,330.58 is less than the original income of $95,000. His income has still dropped enough for him to re-estimate, so we accept his 2nd estimation.
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