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Child support Turuki Tamariki

End-of-year square up on income estimates

After the end of the child support year we compare what your actual earnings were with your estimate (unless you have cancelled it) and reassess you for the period your estimate was in place (the election period). This process is called the "square up".

This page explains:

The income we use for the square up 

To square up your child support assessment, we use income information from:

  • your tax return for the child support year you estimated for
  • your confirmed personal tax summary (PTS)
  • salary and wage information from your employer.

You must give us details of all income you earned including any income from overseas. If you have earned overseas income this will need to be converted to New Zealand dollars before your estimation is squared up.

If you have estimated before the start of the child support year we'll use the total actual income you earned during the child support year.

Example

Chris estimated her taxable income for the full child support year at $35,000. After the end of the child support year Chris tells us that her actual taxable income for 1 April to 31 March was $40,000.

She will be squared up on her actual taxable income of $40,000.

If you have estimated during the child support year, we need to work out the actual taxable income you earned in the election period you estimated for. To do this we use your total actual income and subtract any year-to-date income you earned.

Once we have worked out the income you earned during the election period we then need to annualise this before we do the square-up. We annualise your actual income earned for the election period by using an annualisation formula just as we did when you estimated your income, but using your actual income instead of your estimated income.

The annualisation formula

a ÷ b x 365 = annualised actual taxable income

a is the actual income earned in the election period
b is the number of days in the election period
365 is the number of days in a year

We use the lesser of the following income in your square up assessment:

  • your actual taxable income earned in the election period which has been annualised and includes any relevant adjustments, or
  • the amount you were originally assessed on.

We won't reassess you on an income higher than what we originally assessed you on.

Example

Chris told us in October that her year-to-date income for 1 April to 30 September was $35,000. She estimated that she would earn $26,500 from 1 October to 31 March (election period of 182 days).

We annualised her estimated taxable income as $26,500 ÷ 182 x 365 = $53,145.60.

Her child support was reassessed from 1 October using the annualised estimated taxable income of $53,145.60.

At the end of the child support year Chris told us that she earned $50,000 for the whole year. To work out the income she earned in the election period (1 October to 31 March), we take her actual income of $50,000 and subtract her year-to-date earnings of $35,000 = $15,000.

We then annualise the income earned in the election period using the annualisation formula, $15,000 ÷ 182 x 365 = $30,082.42.

She will be squared up on her annualised income and her child support will be reassessed from 1 October using the annualised income of $30,082.42.


 

Note

If you have to file a tax return and don't file it by the due date, we'll square up your assessment on the taxable income we originally used in your assessment.

Not all customers need to contact us to provide income information. For customers where we hold enough information we will do the square up automatically.

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When you'll receive your square up assessment 

A square up assessment will be sent to all parties after the end of the child support year:

  • once you've confirmed your personal tax summary (PTS), or
  • if you haven't been sent a PTS and you weren't required to file a tax return, or
  • after you've filed your tax return for the year, or confirmed your overseas income.
Note

If both parents have estimated, the square up will only be done when both parent's income details are finalised.

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What happens if you've overpaid child support 

If the square up shows that you have paid more child support during the election period than required you receive a credit. We use this credit to reduce the child support you have to pay in the following year. However in some cases you can ask for the credit to be refunded.

What happens if you've underpaid child support 

If the square up shows that you paid less child support during the election period than required you will be given 30 days to pay the difference.

What happens if you've received too much child support 

If the square up shows you received more child support than you should have we may need to collect it back from you.

What happens if you haven't received enough child support 

If the square up shows you should have received more child support during the year we'll pay it to you once we collect it from the liable parent.