When parents separate, child support becomes a significant issue that needs to be addressed. This insight explains how the Inland Revenue Department (IRD) determines child support obligations between separated parents in New Zealand. It covers key topics, including child support agreements, formula assessments, and the enforcement of child support.
Which children are covered under the Child Support Act?
The Child Support Act governs child support in New Zealand. A child support obligation applies to children under the age of 18 and those who are 18 but still attending school full-time. To qualify for child support, the following conditions must be met:
- The child must be a New Zealand citizen or a resident.
- The child must not be financially independent (i.e. they cannot be employed full-time).
- The child must not be living with a partner in a marriage, civil union, or de facto relationship.
Which parents are covered under the Child Support Act?
For the purposes of child support in New Zealand, a “parent” is defined as:
- A biological or legally adoptive parent.
- Someone married to the child’s mother at the time of conception or birth.
- A person who has formally acknowledged their parenthood in writing or in court.
- A legal step-parent, as declared by the Family Court.
- Someone with a paternity order against them for the child.
For a parent to be required to pay child support, they must also be:
- A New Zealand citizen or ordinarily living in New Zealand; or
- Residing in a country that has a reciprocal enforcement agreement with New Zealand, so that child support payments are collected and enforced internationally.
Provided that the parents meet this criteria, one of them may be liable for child support as the “liable parent”.
Which parent will be liable to pay child support?
The parent responsible for paying child support is known as the “liable parent.” The IRD uses a detailed formula to determine which parent will be the liable parent and assess their exact child support obligation, as explained later in this guide. Here are some common scenarios that illustrate how the liable parent is determined, depending on the care arrangements and income levels:
1. Higher-income parent with fewer overnight care nights: Generally, the liable parent is the one with the higher income, particularly if they also have fewer overnight care nights with the children compared to the other parent.
2. Higher-income parent with significant overnight care: If the higher-income parent has significant overnight care (e.g., the children stay with them for 4.5 nights or more per week), the IRD may adjust or even discharge their child support obligation. In this case, the IRD may decide that no child support is needed from either parent, or it may direct the other parent to pay, even if they have a lower income.
3. Shared care arrangement (equal care by both parents): In a shared care situation, where both parents have equal care of the child, the IRD may determine that neither parent is liable to pay child support, especially if the parent’s incomes are the same.
What is the difference between the “liable parent” and the “receiving parent”?
The liable parent is the parent who is responsible for paying child support. The receiving parent is the one who receives the child support payments.
Can a parent be exempt from paying child support?
Yes, there are certain circumstances where a parent may not be required to pay child support. Situations that may exempt a parent from paying include:
- Incarceration.
- Long-term hospitalization or incapacity.
Additionally, while not technically an exemption, a parent may apply for a departure order to reduce the amount of child support they are required to pay. Departure orders can be granted in limited situations, which are outlined in more detail in another insight available on our website.
Can child support be arranged by agreement?
Yes, parents can agree on child support payments without going through the IRD. There are two main types of agreements:
1. Private Agreement: Parents may negotiate the amount of child support without formal documentation. However, either parent can apply for a formula assessment from the IRD at any time.
2. Voluntary Agreement: A more formal arrangement, which involves a written agreement specifying who pays and how much. The minimum amount for a voluntary agreement is $10 per week. This agreement is documented with the IRD, allowing them to manage payments. The receiving parent can cancel the agreement at any time.
How can parents figure out who should pay and what they should pay, if arranging child support by agreement?
If parents are arranging child support by agreement, the first step is to determine who should pay and how much. The IRD’s child support calculation tool on their website can be a useful resource for this. The tool helps identify who is likely to be the liable parent and provides an estimate of their child support liability based on the family’s specific circumstances. This estimate uses the same formula applied in formal child support assessments.
While the tool may not always be 100% accurate when compared to the outcome of a formal assessment (discrepancies may arise, especially if a partner’s income is unclear, such as in the case of self-employed individuals), it still provides a reliable baseline figure. In the absence of an agreement, this estimated amount — or something very close to it — is likely to be the amount the IRD will set as payable if a formal formula assessment is requested.
What if parents cannot agree on the amount of child support?
If parents cannot agree on the amount of child support, the IRD can intervene and determine the payment amount through a formal formula assessment. This process involves a specific formula that calculates the child support amount based on each parent’s income, care arrangements, and other considerations.
How can parents apply for a formula assessment?
To initiate a formula assessment, either parent can apply by completing the IRD’s approved application form, which requires supporting documents, such as proof of identity and parentage (e.g. a passport and the child’s birth certificate), along with the child’s IRD number. Once the IRD receives the application, they will notify both parties and request any additional necessary information to conduct the formula assessment.
How does the formula assessment work?
IRD defines a child support year as running from 1 April to 31 March. Child support payments are usually based on each parent’s income from the most recent full child support year (i.e. the most recent complete 1 April to 31 March period). Child support payments are re-assessed frequently, meaning payments may vary from child support year to child support year.
The basic formula for calculating child support is:
Child Support = (i%−c%) × p
Where:
- i% = Income percentage of the liable parent.
- c% = Care cost percentage of the liable parent.
- p = Child expenditure amount for the qualifying child
What does “income percentage” mean?
Income percentage refers to each parent’s share of their combined total income, used to calculate how much they should contribute to child support. Here’s how the IRD calculates income percentage:
1. Determine Taxable Income: The IRD calculates each parent’s taxable income from the most recent child support year.
2. Apply Deductions: Deductions, such as living allowances, dependent child allowances, or multi-group allowances, are applied to each parent’s income. The resulting figure is referred to as the “child support income amount.” The Child Support Act details which deductions apply and when.
3. Combine Incomes: The IRD combines the child support income amounts of both parents to determine their total combined child support income amount.
4. Calculate the Percentage: The IRD calculates each parent’s share of the total combined child support income amount. For example, if Parent A’s child support income amount is $40,000 and Parent B’s is $60,000, the total combined income amount would be $100,000. In this case, Parent A’s income percentage would be 40%, and Parent B’s would be 60%.
Note: If the liable parent is self-employed or has irregular income, the IRD will still apply the same formula but may need to make adjustments for the unpredictability of income. The IRD will request tax returns, bank statements, and other financial documents to estimate the parent’s income over the most recent child support year.
What does “care cost percentage” mean?
The care cost percentage is the share of childcare expenses each parent is responsible for, based on how many nights the child spends with them, as determined by IRD guidelines. The IRD calculates this percentage as follows:
1. Check Parenting Orders/Agreements: The IRD reviews any formal parenting orders or agreements to determine how many nights the child spends with each parent.
2. Request Additional Information: If no formal order exists, the IRD may ask parents to provide details about the care arrangements.
3. Count Nights: The IRD calculates the number of nights the child spends with each parent over the course of a year.
4. Use the Care Cost Percentage Table: The IRD uses the Child Support Act’s Care Cost Percentage Table to assign a care cost percentage based on the number of nights spent with the child. For example, if a parent has the child 28% to 34% of the time (around 2-3 nights per week), the care cost percentage will be 24%.
What is the “child expenditure amount”?
The child expenditure amount is a complex calculation designed to estimate the baseline cost of raising a child. To arrive at this estimate, the calculation considers the number of children, their ages, and the combined income of both parents, up to an annual income cap set by the IRD. Here’s a simplified breakdown of the key factors involved:
- Formula and table: The calculation uses a formula from section 30(2) of the Child Support Act and the Child Expenditure Table in Schedule 3, which considers the number of children and their ages.
- Parent’s combined child support income: The calculation factors in the combined child support income amount of both parents. We’ve explained how this is calculated above.
- Income cap: The total combined child support income amount considered for the calculation is capped; for 2025, the income cap is set at $195,296. Any income over this income cap is not included in calculating the child expenditure amount.
- Review of income cap each year: The income cap is recalculated each year, based on 2.5 times the average weekly earnings across all New Zealand industries.
What happens after the formula assessment is completed?
Once the formula assessment is completed, the IRD will send a written notification to both parents outlining the outcome and explaining how the child support payment amount was determined. This notification will detail the child support liability for each parent, including the payment amount, the frequency of payments, and any relevant deductions or adjustments made during the assessment process.
What happens if a parent disagrees with the outcome of the formula assessment?
If you disagree with the IRD’s child support decision, you can challenge the outcome through an objection or apply for a departure order. These options are available in specific circumstances, which we discuss in detail in another insight on our website. When challenging the IRD’s decision, it’s crucial to work with a lawyer who specialises in family law to ensure your case is handled properly.
What happens if the liable parent refuses to pay child support?
If the parent liable for child support fails to make a payment, the IRD has the authority to take enforcement actions. This can include:
- Garnishing wages: The IRD can request that the liable parent’s employer deduct the child support payments directly from their wages or salary.
- Bank account deductions: The IRD may instruct a bank to deduct child support payments directly from the liable parent’s account.
- Property seizure: In extreme cases, the IRD may apply for a court order to seize assets or property to recover unpaid child support.
What happens if the liable parent moves overseas?
If the liable parent moves overseas, the IRD can work with authorities in countries that have a reciprocal enforcement agreement with New Zealand. These agreements allow the IRD to collect child support payments across borders, ensuring that the child support obligation is met even when the parent is living abroad.
However, it’s important to note that New Zealand does not have reciprocal enforcement agreements with every country. For example, there is no such agreement with India. In such cases, the child support debt will accumulate in New Zealand, but it may not be easily enforceable in countries without an agreement. In these situations, it may be necessary to explore local debt enforcement options in the country where the liable parent resides to see if their legal system can assist in collecting the payments.
Can a parent apply for a reassessment of the formula assessment?
Yes, either parent can apply for a reassessment of their child support at any time. If there has been a material change in circumstances — such as a change in income, job loss, or significant medical issues — this may make the reassessment more likely to be granted. The purpose of a reassessment is to ensure that child support accurately reflects the parent’s ability to pay based on their current financial situation. If a reassessment is requested, the IRD will review the case and may adjust the child support amount accordingly.
Can a non-parent caregiver receive child support?
Yes, a non-parent caregiver can receive child support. While this insight primarily focuses on child support between parents, it’s important to note that non-parent caregivers may also be eligible. A non-parent caregiver can receive child support if they care for the child for more than 35% of the time (equivalent to more than 2.5 nights per week). However, the assessment of child support differs when a non-parent caregiver is involved, and this different approach is not covered in this particular insight.
Final thoughts
Child support can be complex, but understanding your rights and obligations ensures that children’s financial needs are met. If you’re unsure about your situation, or need help navigating child support processes, Fixed Dispute Resolution is here to provide clear, expert guidance tailored to your needs.
Contact us today for personalised support with your child support queries.