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Administrative Review – Grounds 8 Capacity to Earn

Filed under: General — @@@ @ 8:20 pm Thu 16th June 2016

We have an administrative review next week and I was looking for some information/case file evidence if anyone can help? The review is under Ground 8 and based on “Capacity to Earn” instead of true financial earnings. Has anyone had any experience with this in the past and would you mind sharing the situation and outcome? The more prepared we are before we go in the better I feel! I really don’t trust admin reviews and have had them turn ugly in the past. Any support, guidance or past experience would be greatly appreciated. Thanks!

25 Responses to “Administrative Review – Grounds 8 Capacity to Earn”

  1. Allan Harvey says:

    The problem most have with Administrative Reviews is they apply first and state their position badly to IRD so the review officer applies the principles as determined by Court precedents and most get turned down.
    A much smarter approach is to ask for help and advice first. Draft your application to the principles and precedents that support your position and submit that to IRD for the of their review officer.
    About 75% of those who ask me for advice have already shot their own case in the foot with information they have provided to IRD.
    It may be sensible to withdraw your application and rethink what you apply for at a later date. IRD allow one review a year on each ground. Do you really want to waste your opourtunity with a half baked application?
    To be successful under ground 8 you need to show that the other party has a higher capacity to earn and document evidence for that claim. Many assume they can use it to justify a lower income figure for themselves due to changed circumstances. That is better done by an estimation of income and the fall in income needs to be greater than 15% which is quite a significant change in both income and lifestyle.

  2. Man X Norton says:

    Allan, I suspect @@@ @ is on the respondent end of this application under ground 8. Ground 8 must be the most widely abused one by both applicants and review officers. Ground 8 allows the IRD to decide that a father (almost always a father) could be earning more than he actually does so his so-called ‘child support’ is ramped up accordingly. It would be interesting to know about successful strategies for ‘liable’ parents to shut down applications under ground 8.

  3. A dad says:

    From my experiences (I’ve won 2 admin reviews under ground 8), the evidence must be provided at the time of the application. The reviewer will ask questions based on the evidence you’ve given and of course what they have obtained from your tax records. However? Im not sure if that is all your tax records or just your child support.
    You have to remove all emotion from your case as to what is fair. They are looking at your case purely on the interpretation of the law. So if you can argue that you work the hours that you do because of family commitments for example then they may take that into consideration. The same applies for the other party. In my 1st review the reviewer agreed that my ex could work more hours than she was but decided not to allow fully time work, just somewhere nearer. Perhaps it was better to soften the blow to my ex.

  4. Working mum says:

    My ex has not worked for over 2 years, does not declare an income or is paid a benefit. He has taken “time out” to do other things and I expect living off the settlement for the house I paid. Because he has no income and the assessment is on income I end up paying despite having our daughter 50/50. I don’t get it. He is more than capable of working and just because he chooses not to shouldn’t mean I foot the bill. I have sought a review so not sure what to expect.

  5. too tired says:

    to Working Mum,

    My ex hasn’t worked in seven years so does that mean I can stop paying child support? The system doesn’t work for you, it’s against you! You will never change the rules to suit your situation, they don’t care!.

    like all men everywhere you have to suck it up.

  6. Voices back from the bush says:

    The united nations delegate for gender equality- wonder woman, has been fired this month after 2 months in the role.
    What will we do for equality now, Robin?

  7. A dad says:

    Working mum.
    You can apply for an admin review on grounds of the other parents ability to work. Eg, they may not be working but have the ability and choose not to. My ex did exactly this and then worked part time. I didnt know aboit the admin reviews until she tried some really nasty stuff and then i had to study the law and find out what i was able to do.
    Lawyes are useless. They dont know much about child support and are obly thinking about their hourly rate when it comes to family court and the childrens best interests. For IRD admon reviews just check the IRD website.
    However, and this is the moral ground. Do you think that as you both have 50% of your childs time you both shouldnt NEED to pay any child support to each other? You’ve split the relationship property and now you can work to make life for you and your daughter easier. If you can both agree to share the school/after school costs then that would be the most fair. solution. Child support in its current form just pisses everyone off as it isnt a fair system.

  8. Marcell says:

    Hi Alan,
    You’ve given me advice in the past that was so insightful and absolutely spot on – thank you!

    Like others, I am considering ground 8 – where ex has (stated in writing) has limited hours and type of work from previously professional to gardening/cleaning.

    Is it worth applying in your view?


  9. allan harvey says:

    Kia ora Marcell. It all depends on the situation.
    Whether it is worth applying depends on the facts of the case and the situation for the child(ren) and what is best for them.
    Some parents need to reduce stress levels etc for the sake of their health. What review officers and the Court say is that you need to demonstrate on balance of probability that this change has been made with the intent of reducing Child Support.

  10. Downunder says:

    Allan, what happens when one parent reduces child support in order to ensure it is actually spent on the child, especially in the case of addiction?

  11. allan harvey says:

    Kia ora Downunder,
    If Child Support is happening via IRD the “reducing” CS below the assessed amount means 10% penalty on the default portion (in 2 stages) and then 2% penalty interest per month (compounding). Works out like loaning money from the mafia (except they probably charge less). IRD interest rate for default works out to be about 38% in the first year and 27% subsequent years.
    If it is a private arrangement and one parent reduces without agreement from the other it probably just signals the start of a Child Support application via IRD being made.
    IRD are not concerned how much of the CS transferred by the paying parent to the receiving parent is invested in meth, pissed against a wall (can women do that?), turns into ash, supports the local brothel or contributes to pokey machine “profits” and props up Kidz Need Dadz in a strange round about route.

  12. Ministry of Men's Affairs says:

    Good answer Allan, which makes it clear that our so-called ‘child support’ system lacks any real basis concerning the interests or welfare of children. Introducing ‘the best interests of children’ as a primary principle on which CS decisions are made may be worth agitating for, as long as that principle is defined sufficiently to avoid the corruption of it we have seen in the FC.

  13. allan harvey says:

    Child Support Act says nothing about best interests of children. It is a revenue act for tax collection and ensuring compliance. IRD would throw up their hands in horror at the needs to think or make decisions based outside formulas. They are not good at focusing on real issues.

  14. mumofone says:

    Hi I’m wondering if you can give any advice (even though I’m a woman)

    I just had a phone call from IRD saying that my daughter’s father has applied for an admin review under grounds 3 and 8, they asked if I wanted to take part in the review.

    I said no. My situation is still exactly the same, I’m still working at the same job, same hours (full-time) as I always have. And to be honest I just can’t be bothered with the paperwork. Have I just shot myself in the foot though?

    TBH I don’t know why he is bothering, she turns 18 in less than 3 months so I thought child support stops then anyway?

    The lady from IRD said that he was trying to argue that he has less income because he’s working fewer hours now? But would this even be a valid argument as it’s his choice to reduce his hours?

  15. allan harvey says:

    Kia ora Mumofone,

    Even though I am a man I don’t mind sharing information.
    As you say Child Support ends at the end of the year when a child turns 18 or they start full time work earlier.
    Ground 3 is about supporting the CS payer themselves.
    Ground 8 is about his, your or the child’s income & resources.

    If someone’s income falls to 85%, or less than, the assessment income they can apply for an estimation of full year income. That is the normal way to deal with a reduction in income.

    I do suggest that you ask to see his application for admin review so there are no surprises for you. The Admin Review team can be contacted on 0800 221 221.
    Ring them and ask to be sent the information from the CS payer.

    You are correct that a taxpayer can’t just reduce their income/hours of work and expect an automatic reduction in CS. However you do make yourself vulnerable by not knowing what case he/she is putting to the review officer. Once a review is decided it stands as equivalent to a court decision and is not easy to appeal/challenge.

    If for example he/she was having an operation and would need some recuperation time and his/her income fell by just 10% a review officer would be pretty sensible to consider something like that under ground 3 & 8.

    There are some pretty active Facebook discussion groups for both receiving parents and paying parents if you seek further advice.

    Congratulations to you both for having a daughter turning 18 and finally through the CS system without acting on the feeling that murder is appropriate for either parent or IRD CS officers.

  16. mumofone says:

    Thanks Allan Harvey 🙂

    Yeah – I decided to ring IRD back and ask for a copy of his application, at least then I also can have a better idea whether it’s likely to change anything – plus like you say, if there’s a genuine reason then it’s a bit easier to have a bit of sympathy and not resent whatever decision is arrived at.

    LOL I haven’t ever considered murder, just wished he would’ve been a better dad and spent more time with his daughter.

  17. Nicky says:

    Hi Alan

    I am a women that works full time and I have 50/50 shared care with my ex husband. Firstly I would like to say that I am very grateful that I have an ex that is a very good Dad and that my two girls love very much.

    At the moment I pay a monthly amount of CS to my ex husband. I work full-time and get a salary and he has his own business which he has been running for 14 years. For two years now I have had to do an Admin Review under Grounds 8 as he does not declare all of his income by doing a lot of cash work which he does not put through the business and of course when you have a business you can write off a lot with expenses therefore reducing his income to a very low amount. His business is one that can make very good money and because it is a service he can make big cash, he should not struggle financially and he has a good name in the industry. The first review for the 2014/2015 year I won and he had to pay me a small monthly amount which amounted to around $1200 for the year. This was because they looked at all his personal drawings and they based his income on that. Till this day has never paid it so I would hate to see his penalty costs.

    Prior to all this I had suggested to him that we sign a form that gets rid of the IRD’s involvement and we just go 50/50 with all the costs. He said yes with conditions 1. that i sign divorce papers, I said happy to, 2. that I pay half of some stuff he bought for the children for school, I said yes OK and 3. to pay back CS he had to pay while I was on the benefit for 4-6 weeks when we split $400 or so dollars I said no all came to a grinding halt. In hind site I probably should have paid the $400 but I didn’t in principle, silly me.

    So admin review which I won I said do you want to get rid of IRD now and this will all go away. No still didn’t want to sign. So second review they based it on the first review as his tax had not been done at the time and I had to pay as I got a new job and a pay increase and because that exceeded the IRd drawings based income I had to pay him,so ineffectively the more money I make my ex also gets a pay increase.

    So now I am heading into my third review. Just asked my ex again if he wanted to sign the papers to get rid of IRD and still a resounding no.

    I feel with this review he will be more savvy and this one will really affect me as he expects to be paid the CS plus I still pay half of everything. I dont and say the CS I pay to him is part payment for stuff for the children and I make up the difference. Says that CS has nothing to do with it.

    Anyway to get to my point how do I prove that my ex is not putting money through the business and seriously reducing his income. Other than the children saying he always has a lot of cash and him going on holidays, having horses, fencing for his lifestyle property etc.. Do the IRD actually investigate this sort of thing because to me it is so blatantly obvious. Also I believe this year he will say that it was a bad year and he couldn’t get workers and possibly other reasons.

    How do I fight this with the IRd.

  18. DJ Ward says:

    Sadly your situation of meaningless conflict is what the CS system relies on. It is absurd to me why people in 50/50 care arrangements should be calculating CS anyway. While in your care, you support the kids. While in his care he supports the kids.
    Hiding income is a completely normal and common response to taxation and CS.
    Reducing income, not taking on overtime etc is also very common in response to the CS system. It is a cold, hard reality that increasing income under the system exposes you to more liability. Actual contributions towards the children’s needs are irrelevant to the system.
    It seems some level of vindictiveness also exists in your relationship with your EX. This is probably the underlying issue that is preventing resolution of these issues.
    It will be very difficult to prove he is working under the table. However you could get a friend to get work done, pay as a cash job then expose in the review that he is in fact not declaring income.
    This however would throw both fuel and a match on a simmering mess. As you said in regard too the $400 sometimes it’s better to turn a blind eye to minor wrongs so that more significant progress can be made.
    You haven’t mentioned the age of the children but if they are older the CS issues are somewhat temporary and instead of conflict, counting down the years left may be easier.
    Keep reminding yourself the children are watching. That my two girls love very much is actually, that our two girls love very much.

  19. Downunder says:

    You have the patience of a saint D.J.

    I read that and thought I can’t be bothered.

    I’ve seen too many businesses go under because of child support. It was a horrendous problem during the last Labour Govt. During the early stages of the child support agency if you were trading as, they took money from the trading account. You could write a story about that alone.

    So, naturally accountants devised ways to protect business and it became a battle between agencies and particular individuals were targeted for precedent cases. You could write a book about that.

    If you’ve got one person who doesn’t understand business they will imagine, make up, grasp at any piece of information to justify a you owe me.

    While any unequal situation creates problems and requires a different set of solutions this equalization of the parents’ financial positions is an industry killer as well as a contributor to suicides.

    And ever ounce of that gets squashed by the media because the big girl’s want the big payday from the success of the ex. As many of us know, the road to success really came when you’ve finally had enough and left.

  20. Nicky says:

    For me it was about us totally sharing the costs and not involving the IRD at all this way I would not care one iota if he hid money, got paid cash put it in some overseas bank in Switzerland or the Caymans(good luck to him if he was making that sort of money), it only affects me because he insists the IRD are involved to annually review our incomes when we could sign a form and IRD are no longer part of the equation when it comes to CS. As far as his business going under how does that get affected if the IRD are not involved and we are both paying half of everything we both work and can support the children equally.

    Anyway thanks for your patience and your saintly status and my countdown is a total of 5 years.

  21. DJ Ward says:

    If I was advising your EX I would tell him to sign the papers, stop being difficult, and get on with life. If you fell on bad times, got made redundant, got sick etc etc and your income fell dramatically, he would be knocking on your door begging for you to sign those papers. If he gets a great “on the books contract” he could find himself having a big CS bill.

    Downunder talked about CS ruining buisinesses in the context of the enormous amount of men that have to make 100% payments, often to support a female on the benifit, or otherwise excluding the children from his life. IRD in those cases seek to extract maximum payments as IRD gets the money for itself. In those cases assesments not commensurate with the actual earnings are made and the business cannot support itself, the IRD, and the father at the same time. It could be concluded that as salaried men are easily measured and automatically taxed that they prefer males in these situations.

  22. Downunder says:

    If I was his accountant I’d be saying look after the business it’s your life and it looks after you and your children.

    Run it through the IRD for your own protection, with minimum child support.

    I’d be telling her. Help him minimize the IRD interaction so it doesn’t interfere with his business.

    Agree on what you will pay together for the children, if you can, what agreed share of those accounts and arrange your own balance of payments, otherwise expenses lie where they fall.

    In my own situation the ex descended into a Helen Clark minded totally useless bitch, and I wouldn’t give her any money to help her feed her other addiction.

    In order to protect the children’s supply line of income, she had to send me any invoices for the children, which always got paid.

    This is why the child support system will fail in so many cases because any formula doesn’t account for the reality behind the pen.

  23. Evan Myers says:

    The reality is in the first line that Nicky wrote in #17

    I have 50/50 shared care.

    The question is, how the individual interprets that?

    To put it bluntly it’s no different to being married except two heads are living in two separate houses because they can longer tolerate each other. Chances are they have two different views on what that means.

    This situation existed in the old divorce courts, where a husband or wife could for satisfactory reasons obtain an order to live separately but remain married.

    I’m not totally familiar with the cases but would assume the order took in to account the management of any children.

  24. Downunder says:

    I’ve met guys in NZ who have high flying female exs.

    These guys sit quietly in the woodwork, paid to stay at home in a house she pays for, along with all the expenses, and pretty much only one condition – I’ll see the children when I can and when I want to.

    That is still shared care, but they’re not fighting over the money.

  25. Downunder says:

    #21 DJ

    There’s an unwelcome element of qualifying what I said and telling other people how it was because that’s what you think.

    IMO it’s better to block quote any comment and give your opinion.

    Essentially that pattern of debate dictates that the other voice is wrong or in the worst case shouldn’t be trusted.

    There was no one else in UOF who walked through the business world to the extent that I did. While that evidence may be anecdotal it’s very real, and it’s effects are rarely if ever examined.

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