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Inland Revenue

Tax Policy

PUBLISHED 8 April 2008

Child support shared care provisions under review

The government is looking at ways of improving the child support scheme to make it more responsive to factors such as the complexities of shared care, the income levels of both parents and the costs of raising children. For more information see the media statement.

Hon Peter Dunne
MP for Ohariu Belmont
Minister of Revenue
Associate Minister of Health


Govt seeks to improve child support provisions

The government is looking at ways of improving the child support scheme to make it more responsive to factors such as the complexities of shared care, the income levels of both parents and the costs of raising children, Revenue Minister Peter Dunne said today.

"These are the most commonly identified areas of concern of the many people who write to me and to other MPs about their child support problems," Mr Dunne said.

"The standard formula for assessing the amount of child support to be paid by a liable parent is straightforward, easy to understand and in most cases provides certainty for both parents.

"However, it is solely based on the economic circumstances of the liable parent and his or her ability to provide financial support for the child involved. It does not take into account the income of the principal carer of the child.

"Nor does the formula take into account all the parental circumstances surrounding the shared care of children and the associated costs of raising them, and at different ages.

"It is timely to reassess the formula, to ensure that it is flexible enough to reflect the complexities of raising children when the parents are separated and both parents contribute to the care of their children.

"Since the current child support scheme came into being in 1992, there have been many changes in New Zealand society that make it timely to reconsider aspects of child support law.

"For example, family law now places far greater emphasis on both parents being actively involved in their children's lives and sharing responsibility for their welfare.

"Moreover, more women are now in the workforce, which has undoubtedly led to the more active involvement of fathers than occurred in the past.

"Many liable parents consider the current assessment of child support liability to be unfair.

"In trying to retain a significant role in their children's upbringing they incur considerable costs in providing for them during what are often significant periods of contact, although those costs are not recognised under the standard child support formula.

"Some say those costs affect their ability to make the child support payments required of them, placing strain on other financial commitments.

"Ultimately, however, both parents are responsible for supporting their children, and it is the child's interests that must predominate.

"I have asked my policy officials to examine a number of options for updating the child support system to deal with these and related concerns.

"One option is to make relatively minor changes to the existing definition of when the care of a child is shared – at present, to share care ‘substantially equally' a liable parent must care for the child or children for at least 40 percent of nights – or if less, prove that he or she meets the shared care test in specified other ways. This is one of the most contentious features of the child support scheme.

"To make things easier, the wording of the definition could be amended to extend the specified circumstances in which liable parents who do not meet the 40-percent-of-nights test but who do undertake significant care of their children on a daily basis can have the associated costs recognised.

"A second option is to reduce the shared care threshold from 40 percent of nights, which would allow a greater number of liable parents to benefit from the shared care provisions and pay less in child support.

"A third and more fundamental option than changing the shared care provisions is to adopt an approach that takes account of both parents' income as well as the costs of raising children. Such an approach has recently been adopted in Australia and is in use in Norway and part of the United States.

"The third option is a more complex way of assessing child support liability because it involves taking into account the costs of raising children as a percentage of parents' combined income.

"Both lowering the 40-percent-of-nights shared care threshold and adopting an approach based on joint parental income and the cost of raising children would require a great deal of information, much of which is very hard to come by.

"It is expected that some of the necessary information will result from the current Families Commission survey of 10,000 people – a sample of recipients of Working for Families, recipients of child support, and payers of child support. The survey is looking at patterns of post-separation care of children and the costs of raising children.

"Initial research results are expected in June and should help in the consideration of the options for ensuring a more flexible approach to recognising separated parents' contributions to the care of their children.

"I hope that by next year the government will be in a position to present for consideration some soundly based proposals for improving the system.

"All decisions on child support liability are a question of finding a balance between competing interests. For every liable parent who pays less in child support there is a custodial parent who will receive less in child support payments.

"Although it is impossible to come up with child support rules that will satisfy all separated parents, the government wants to devise rules that will meet the concerns of a greater number of separated parents than the current rules do," Mr Dunne said.

Contact: Rachel Baxter, Revenue Advisor, 04 471 9728