What is the extent of the problem?
- There is $3 billion owing and $2 billion overseas and $1 billion in NZ
- There are around 120,000 liable parents who owe money
- A recent Guardian article discussed the record numbers of parents prevented from travelling because of their Child Support debts.
Why is the problem so large?
Most of the debt is comprised of penalties. Penalties make up 80-90% of the amount owed and are charged at 2% per month for the first year and keep increasing.
How is child support calculated?
Child support is calculated by considering the number of children, the incomes of the parties and the nights per year they each have care of the children.
Who evades paying child support?
Child support is evaded by high and low-income earners. Generally, high income earners try to hide their income in trusts or companies.
How can we solve the issue?
The current law gives us the power to arrest people at the border under section 199 of the Child Support Act. The IRD can apply for an arrest warrant to stop liable parents from leaving New Zealand and evading their obligations.
One key step in solving the issue is to make it easier to pay child support both for domestic and overseas parents. Often dealing with the IRD can be challenging.
Other options include introducing an amnesty on all penalties.