Remedial matters raised in submissions received
Issue: Definition of “care order or agreement” in clause 5(2)
Submission
(New Zealand Law Society)
The definition of “care order or agreement” in clause 5(2) of the bill, which contains definitions of relevant terminology, should be amended by replacing the word “proportion” with “division”.
Comment
Officials agree that using the word division better reflects common usage, and that it should be used in the bill when considering care.
Recommendation
That the submission be accepted.
Issue: Proposed section 33(5)(b) should be amended to indicate in more detail the “particulars” to be taken into account by the Commissioner
Submission
(New Zealand Law Society)
Proposed section 33(5)(b) should indicate in more detail the “particulars” to be taken into account by the Commissioner of Inland Revenue when determining a person’s taxable income when that income has not yet been assessed.
Comment
Officials do not consider that it is appropriate to limit the use of any particulars that the Commissioner of Inland Revenue may (or may not) hold about a person in such circumstances, when trying to assess a person’s likely taxable income.
There are many and varied reasons why a person’s adjusted taxable income may not be known at the time an assessment is required to be made. Although most are likely to be cases where a return of income is overdue, there will be others where a person is not required to file an income tax return or request an income statement and so will not be required to have their income “assessed” as such.
It is considered appropriate that the Commissioner of Inland Revenue be able to gather whatever information may be available (for example, returns from associated entities that will contribute towards the parent’s income adjustments, historical income assessment information adjusted to account for the time elapsed, or a declaration that no income was earned).
The potential range of reasons for adjusted taxable income figures not being available at the required time and the variety of appropriate sources of information detailing the “particulars” may unduly limit the factors the Commissioner of Inland Revenue may take into account in determining the appropriate level of income to use in an assessment. This may lead to an inferior assessment, to the detriment of the parent.
Further, if a parent or receiving carer disagrees with the amount used, remedies are available to them under the Child Support Act – ranging from filing the required income returns or providing evidence to support a proposed alternative, formal objection and/or administrative review.
Recommendation
That the submission be declined.
Issue: Ability of a liable parent to apply for a formula assessment
Submission
(New Zealand Law Society)
New section 8 in clause 9 of the bill should be amended to make it clear that a liable parent can apply for a formula assessment.
Comment
Officials agree with this submission. Any parent and/or other carer should be able to apply for an assessment.
Recommendation
That the submission be accepted.
Issue: Number of parents of child
Submission
(New Zealand Law Society)
It is not clear from clause 9 of the bill, which inserts new section 7B, what the rationale is for assuming that a qualifying child has two parents. The section should be amended to provide that one or both parents are carers or, alternatively, the section should be removed from the bill.
Clarification should also be given as to what modifications the Commissioner of Inland Revenue can make when this assumption is shown to be incorrect.
Comment
The bill is broadly written based on the assumption of two parents, otherwise the legislation would be necessarily convoluted. However, cases arise when there are more than two parents. Proposed new section 7B allows flexibility in the bill to accommodate situations when a child has more than two parents (for example, when a person is declared a step-parent). There is the potential for this to become more common over time as the variety of parenting relationships change (for example, through surrogacy or same-sex couples). Section 7B gives the Commissioner of Inland Revenue the discretion to modify the way the formula is applied to take more parents into account.
The modifications required would be to adjust relevant formulas to ensure that any change in parenting circumstances would not negate an assessment in relation to other parents and receiving carers. Any adjustments would be expected to maintain a fair assessment of liability and entitlement, and would be open to the usual remedies (objection or administrative review).
Recommendation
That the submission be declined.
Issue: Deemed application by beneficiary
Submission
(New Zealand Law Society)
New section 12 should be amended to make it clear whether a social security beneficiary must apply for a formula assessment or whether they are simply deemed to have applied (new section 9).
Comment
Consistent with the current law, a social security beneficiary must apply for a formula assessment (under new section 9). New section 12 states that “the Commissioner is deemed to have received from the beneficiary a properly completed application for a formula assessment for child support, as required by section 9 ….”. Section 12 is concerned with timing, ensuring that any liability under a formula assessment arises immediately after the liability under a voluntary agreement ceases.
Recommendation
That the submission be declined.
Issue: Backdating of assessment commencement dates
Submission
(New Zealand Law Society)
New sections 13 or 19 should be amended to enable the Commissioner of Inland Revenue to backdate the liability to pay child support to the date of the filing of an application, whether that application is properly completed or not. Concerns have been raised that parents may face a delay in their entitlement if, for example, they cannot obtain information relating to third parties.
Comment
The effect of new section 13 is merely to ensure that the Commissioner of Inland Revenue must notify all parents of the receipt of an application for child support that affects them.
New section 19, on the other hand, establishes when the liability to pay child support begins. It states that the liability starts from the day on which the properly completed application is received by the Commissioner of Inland Revenue. The application will only require information that is available to the applicant, therefore no unnecessary delays will arise.
An existing rule, whereby the start date can be backdated when a paternity order is made after the properly completed application is received, will remain.
Recommendation
That the submission be declined.
Issue: How the Commissioner establishes proportions of care
Submission
(New Zealand Law Society)
New section 15(1) should be amended to state that the Commissioner of Inland Revenue “must”, rather than “may” rely on the contents of the care order or agreement when establishing the proportion of on-going daily care that a carer provides to the child. Further, new section 15(3) should also be amended to ensure that a parent, as well as a carer, can rebut this presumption in new section 15(1).
Comment
Officials agree that the changes should be made, to address inconsistencies in the new section and provide further clarification.
Recommendation
That the submission be accepted.
Issue: Identification of liable parents and receiving carers
Submission
(New Zealand Law Society)
New section 17 should be amended to provide that both parents may be identifiable as liable parents and receiving carers, depending on their cost/care percentage.
Comment
Parents’ incomes and care levels are taken into account in the proposed formula assessment, and in identifying who liable parents and receiving carers are in proposed new section 17.
The current ability to cross-apply in a shared-care situation (whereby liabilities are netted off) effectively applies automatically under the new formula.
Recommendation
That the submission be declined.
Issue: Effect of being a liable parent or receiving carer
Submission
(New Zealand Law Society)
New section 18, which describes the effect of being a liable parent and a receiving carer, should be amended to address a situation when a liable person may only be a carer rather than a parent.
Comment
Although it is possible for a non-parent carer to be a receiving carer, it is not possible for them to be a “liable parent” under new section 17. This reflects the fact that non-parents do not have a responsibility for the financial upkeep of a child they care for.
Recommendation
That the submission be declined.
Issue: Child expenditure tables
Submission
(New Zealand Law Society)
New section 36D should be amended to provide that the child expenditure table for the current and previous child support year (if applicable) is available not only on an internet site maintained by or on behalf of Inland Revenue, but also in a hard copy form if requested.
Comment
Officials agree that hard copies should also be available on request.
Recommendation
That the submission be accepted.
Issue: Definition of “access”
Submission
(New Zealand Law Society)
The word “access” should be changed to “contact” in amended section 105(2)(b)(i) and (3) to reflect the more up-to-date terminology used in the Care of Children Act. Further, the phrase “access [contact] (of any kind and for any purpose)” should be amended to clarify that it includes all contact, including where care levels are less than 28 percent.
Comment
Officials agree that the recommended changes would better reflect terminology used in the Care of Children Act.
Recommendation
That the submission be accepted.
Issue: Automatic deduction
Submission
(New Zealand Law Society)
New section 129(1) should be amended to give guidance on when it would be considered “inappropriate” for financial support not to be paid by automatic deduction.
Further, the phrase “automatic deduction person” in new section 129(2) should be amended so it is a less cumbersome phrase, and subsections (2) and (3) of section 130 should be moved to section 131.
Comment
As noted in the comments on the main submissions on automatic deductions, it is recommended that the Commissioner of Inland Revenue be given a specific discretion, when there is legitimate privacy, cultural or other concerns, and alternative payment options have been provided, not to automatically deduct child support payments from salary and wages.
In the context of new section 129(1), on the other hand, it is anticipated that “inappropriate” refers to situations when it is administratively inappropriate to deduct child support at source.
Recommendation
That the submission be declined.