Child Support Reassessments
Dont forget to send your submission to the inquiry into the Child Support Act 1991
This is a question from Star taken from that thread. Its a common problem with Child Tax so I thought I would offer some obsevations.
Have got 3 letters from IRD each stating the information on my salary has been provided by my employer.. fine that’s not a problem.. the error though is the quoted amount on each of the letters. They differ vastly with a difference of $15g’s between them and non of them are anywhere near my true salary. These letters are each dated within 2 weeks from each other Does this require a review?.. or some control here.. it appears the IRD/ CSA are playing games or just plain incompetent.
Starr I think what you have recivied is a reassessment.
A few years ago the politicians, after recommendation from IRD and above protests from reformers and anyone who could add, made a fundamental change to the Child Support Act in the way the child support income for the year was calculated.
The old way of doing things was to base your CS Income for this year on your taxable income from two years ago. (Note 2yrs still applies for most self employed people) Now they use your taxable income from last year. This is a nightmare for both paying and receiving parents.
The problem is that Child support assessments have to be out before final income figures are in. In December the IRD takes your income for year to date, divides by the number of months and based on this extrapolates what it thinks your income for the year is.
That’s Ok if you don’t work overtime, receive a shift allowance, get a bonus from your employer, end up on ACC. Put simply if your income figures are consistent each month its not a problem, if your income fluctuates its a problem.
It’s a problem for you if your income in Dec, Jan, Feb, Mar is greater than their guesstimate. Come July you will get a reassessment. July is the time it takes for IRD obtain the data for the whole tax year.
In this situation you will be reassessed, have to pay more and likely end up in debt.
The other possible problem is for the receiving parent. The guesstimate can be too high, say you were laid off at Christmas, had a salary drop, didn’t work overtime as there was none, in which case the paying parent will be entitled to a “refund”. Conversely the receiving parent will have been overpaid and have to pay the money back. They can end up in debt also.
Starr it’s a mess!
MP’s were told this would happen. Reformers were told not to worry as it would only affect a small number of payying parents. My understanding is that this change impacts about 55-60,000 parents and their kids each year.
This change was all about trying to collect more money for benefit recovery and nothing about supporting kids. The changes they are currently making will result in even more of a mess!
Now what can you do?
(Assuming that no departure order is in place)
If you believe that the income figure is incorrect you must bring it to IRDs attention without delay. Keep notes of any conversation.
NOTE : Income is not limited to salary and wages but can include such things as interest, dividends on shares, money made by trading on trademe……
Go to your employer and ask them for a certificate that shows what you earned, what tax you paid, and what ACC levies where
Likely your conversations with IRD will fail to get an easy resolution and you will need to lodge an objection to the Assessment. Go to www.ird.gont.nz and download IR119.
You must lodge an objection within 28 days of the date of the reassessment notice. An objection can only be lodged out of time at IRDs discretion.
Back up your objection with proof of income.
If your objection is declined the next step is the Family Court.
NOTE : What course of action you take is your choice. This is how I would approach the matter.