As we approach the end of 2024, it's important for parents and caregivers to stay informed about the latest updates in child support calculations. Inland Revenue (IRD) has made several adjustments to ensure that child support payments remain fair and reflective of current economic conditions.
Here’s what you need to know:
Key Updates for 2024
- Living allowance adjustments: The living allowance, which is deducted from a parent's income before calculating child support, has been updated to reflect changes in living costs. For the period from 1 April 2024 to 31 March 2025, the living allowance is set at $28,612.00. For those receiving supported living payments, the allowance is $32,066.00.
- Minimum rate of child support: The minimum rate of child support has also been adjusted. For the 2024-2025 period, the minimum annual rate is $1,150.00. This ensures that even parents with lower incomes contribute a fair amount towards their child's upbringing.
- Inflation factor: To account for inflation, the IRD has applied an inflation factor of 4.7% for the 2024-2025 period. This adjustment helps ensure that child support payments keep pace with the rising cost of living.
How Child Support is Calculated
Child support is calculated using a formula assessment that considers both parents' taxable incomes. The formula deducts a living allowance, any dependent child allowance, and any multi-group allowance for parents supporting children from other relationships. It also takes into account the care each parent provides and the costs of raising the child, as outlined in the child support expenditure tables.
Important Considerations
- Shared care: If parents share care of their child, the amount of child support payable may be adjusted based on the number of nights the child spends with each parent. This ensures that the financial responsibility is fairly distributed according to the level of care provided.
- Payment and compliance: Parents are encouraged to use the IRD's online tools to calculate their child support liability or entitlement. Staying compliant with child support payments is crucial to avoid penalties and ensure that children receive the financial support they need.
- Seeking professional advice: Navigating child support calculations can be complex, especially with the annual updates. Parents are advised to seek professional advice from a tax advisor or accountant to understand their obligations and explore any potential tax-saving opportunities.
Staying informed about the latest updates in child support calculations is essential for parents and caregivers. The adjustments for 2024 aim to ensure that child support payments remain fair and reflective of current economic conditions. By understanding these changes and seeking professional advice, parents can ensure they meet their obligations and provide the necessary support for their children.
Remember, we’re here to help provide guidance and support for you. Reach out to our team if you would like to know more about this subject.
