As 2024 draws to a close, it’s crucial for parents and caregivers to stay updated on the latest changes to child support calculations in New Zealand. The Inland Revenue (IRD) has introduced several adjustments to ensure that child support payments remain fair and aligned with current economic conditions.

Here’s a breakdown of what you need to know about the changes for 2024-2025.

Key Updates for 2024

1. Living Allowance Adjustments:
   • The living allowance, which is deducted from a parent’s income before child support is calculated, has been updated to account for rising living costs.
   • For the period 1 April 2024 to 31 March 2025, the living allowance is set at $28,612.00.
   • For parents receiving supported living payments, the allowance is set at $32,066.00.
2. Minimum Rate of Child Support:
   • The minimum annual rate of child support for 2024-2025 has increased to $1,150.00. This ensures even parents with lower incomes contribute meaningfully towards their child’s upbringing.
3. Inflation Factor:
   • An inflation factor of 4.7% has been applied to the 2024-2025 period. This adjustment ensures child support payments keep pace with the rising cost of living.

How Child Support is Calculated

Child support calculations use a formula assessment based on both parents’ taxable incomes. Key deductions include:

• A living allowance for each parent.
• Any dependent child allowance (for children living with the parent).
• A multi-group allowance for parents supporting children from multiple relationships.

The formula also considers:

• The level of care provided by each parent.
• The costs of raising the child, as determined by child support expenditure tables.

Important Considerations

1. Shared Care Adjustments:
   If care is shared, child support amounts may be adjusted based on the number of nights the child spends with each parent. This ensures financial responsibility aligns with caregiving arrangements.
2. Payment Compliance:
   The IRD offers online tools to help parents calculate their liability or entitlement. Staying compliant is essential to avoid penalties and ensure children receive the financial support they need.
3. Seeking Professional Advice:
   Child support calculations can be complex. Annual updates, combined with unique family circumstances, often require expert advice. Consulting a tax advisor or legal professional can help parents navigate their obligations effectively.

Conclusion

The updates to child support calculations for 2024 aim to ensure fairness and reflect the current economic landscape. By staying informed and seeking professional guidance, parents can better understand their obligations and provide essential support for their children.

At Core Legal Wellington, we’re here to help. If you have questions about child support or need advice tailored to your circumstances, don’t hesitate to reach out to our team. Let us help you navigate these changes with confidence.