12 Oct 2023

Questions over effectiveness of child support system

From Nine To Noon, 9:05 am on 12 October 2023
Mental health support for child.

Photo: 123RF

Close to half of what New Zealanders owe in child support is made up of late payment penalties, prompting questions from tax and budgeting experts over its effectiveness for both halves of the family it serves.

Inland Revenue, which acts as an intermediary collection if no private agreement can be reached, says as of the end of August outstanding debt amounted to $1.079 billion dollars.

About half of that - $488 million - was made up of penalties incurred from not paying on time.

In 2021, the IRD wrote off close to $1 billion dollars in debt, and readjusted incremental penalties to an initial fine of 2 percent, and another 8 percent after 28 days.

However tax expert Terry Baucher says on a monthly payment, this can mount up incredibly quickly - adding the sheer amount owing shows the system needs a rethink.

Tauranga's Bay Financial Mentors manager Shirley McCombe deals both with clients who become snowed under mounting penalties, and those awaiting the payments to support their children.