Q: I have an 11-year-old daughter whose care I share with her mother 50/50. When her mother and I separated, we agreed that she would pay me child support as she runs a successful business and I earn a more modest income. Our daughter is busy with a lot of after-school activities including horse-riding. We have always talked about sending her to a private high school. Child support payments have been sporadic recently. Her mother is threatening to reduce payments or to change our care arrangement so she doesn't have to pay. What can I do?
Agreeing on child support can be difficult after a separation. If you and the other parent have significantly different incomes you may struggle to keep up with the costs of supporting your child to the same level as before.
Options to determine child support
In New Zealand, there are three ways that child support can be set up. These three ways are:
• Private agreement
• Voluntary agreement
• Formula assessment
Private agreements are agreements between parties that do not involve Inland Revenue (IRD). You and your child's mother organise who will pay, how much and how often. You then manage those payments yourselves. Private agreements work well when the parties can agree on what should be paid and can rely on each other to continue paying what was agreed. You may also seek to gain reimbursements for one-off costs such as dental treatment or school camps.
If you can agree on how much child support should be paid, you can register your agreement with IRD who will then manage the payments. This is a good option for parents who can agree on how much should be paid but one party is unreliable in sending payment. IRD will deduct the child support payments from the liable parent's income and send it to the receiving parent.
If you cannot agree on how much child support should be paid you can apply to the IRD who will decide the amount based on their formula. IRD will determine the amount and manage the payments. If one carer is on a benefit, the formula will need to be used.
The IRD's formula assessment looks at the taxable income of both parents and subtracts standard amounts for personal living costs. It then compares the income with the quantity of care each parent provides, based on the number of nights the child is in each person's care per year. The formula will also make adjustments to account for any other children or dependents in either parents' care.
You can use the calculator on IRD's website to determine your child support entitlement according to the formula here
What should you do?
The option that you select will depend on your individual circumstances and how well you get on with your child's mother. It is often best for receiving carers to make a private or voluntary agreement. If you can agree on the amount but are concerned about her threats to stop or reduce payments a voluntary agreement may be preferable.
If she does not agree to a voluntary agreement you can apply to the IRD for a formula assessment. The formula assessment is typically lower than the amount parents agree to privately. This is especially true when children have expensive sports or hobbies, such as horse-riding. Parents with children at private schools will usually seek to have those fees covered in a private agreement as it is unlikely that the formula assessment will be sufficient.
Challenging the formula assessment
If you are not happy with the outcome of the child support formula assessment you can apply for an administrative review. There are twelve possible grounds for a review. These grounds are:
1. You have a duty to maintain another child or person
2. It costs you extra to cover the special needs of another child or person you have a duty to maintain
3. You have necessary expenses in supporting yourself
4. You have necessary expenses in supporting another child or person you have a duty to maintain
5. Your contact costs are more than 5% of your adjusted taxable income
6. It costs you extra to cover the child's special needs
7. It costs you extra to care for, educate or train the child in the way that was expected by either parent
8. The child support assessment does not consider the income, earning capacity, property and financial resources of either parent or child
9. The child support assessment does not consider that you have previously made payments, transfers or property settlements for the benefit of the child
10. You still have a financial interest in a property that the other person is entitled to live in
11. The child support assessment includes extra income earned from additional work to cover costs of re-establishment after separation
12. You would like your child support liability to offset against child support owed to you
For additional details about whether you meet any of these grounds, you can read more on the IRD website here
If the application is accepted IRD will arrange an informal, usually half-hour hearing. The other parent will have the option to respond to your application. The IRD will then issue a notice of determination which is the outcome of the administrative review.
If you are still unhappy after an administrative review has been completed, you can apply to the Family Court for a Departure Order. A Departure Order is a written decision from the Court which tells IRD to assess the child support obligation in a different way.
A Departure Order can only be granted if one or more of the grounds for departure have been met and departing from the formula assessment would be "just and equitable" for child and both parents and would be "otherwise proper".
You can find more information about Departure Order here – https://www.justice.govt.nz/family/care-of-children/child-support/appeal-an-inland-revenue-decision/
When does child support end?
Usually, child support no longer has to be paid once the child turns 18 years old. It may be earlier than 18 if your child stops living with you, begins working more than 30 hours, gets married or receives a student allowance or benefit.
When the cost of raising your daughter is higher because of horse-riding or an expectation that she will attend a private school, a private child support agreement will probably be the best option for you. Applying for an IRD formula would provide certainty, but is unlikely to be sufficient to cover her expenses. If you believe the assessment is unfair you can apply to depart from that assessment and have other factors considered such as the cost of private schooling.
Try to negotiate a private agreement with your daughter's mother and have the agreement registered with IRD to provide greater certainty. If you are struggling to reach an agreement there are alternative dispute resolutions available to you. For example, you could attend a Family Dispute Resolution mediation which is often fully or partially funded by the Government.
• Jeremy Sutton is a senior family lawyer, specialising in divorce cases where there are significant assets, including family trusts and complex business structures.