Proposed changes to Working for Families, Student Loans and Child Support Payments
Last night the government announced some new proposals which will affect the way in which you receive working for families payments, pay off student loans or make child support payments.
These proposals are possible as the IRD is changing the way it can monitor your income and assess your income on an ongoing basis. Previously it would look at your last tax return so calculations were always, effectively, out of date. So people were consistently either underpaid their working for families or, in a quarter of cases, overpaid and had to pay money back to the IRD.
Similarly, taxpayers often underpaid their child support and there were delays in transferring the money from the payer to the recipient.
Student loan repayments from self employed people were often an annual afterthought rather than a phased planned process.
So what has changed?
The IRD can now look at your income from wages and salaries on an ongoing basis and calculate accurately your ongoing working for families payments, which can then move up and down with your income through the year. This will mean that you should not be underpaid or overpaid. Self employed people can also take advantage of this, although details of this are not yet disclosed.
Similarly self employed people can have their student loan payments deducted throughout the year and make the correct child support payments.
The IRD will also deduct child support payments from wages and salaries and pass it on much more quickly. This should simplify and make fairer the child support system and prevent the large tail of arrears
One change which will potentially affect business people is that it will be possible for contractors to have their student loan payments deducted from contract income, not only through wages and salaries. This adds a layer of administration to businesses who use contractors as opposed to employees.
These changes will speed up, and make more accurate, payments through these important tax and social payment systems.
These proposals are outlined in more detail at https://socialpolicy.makingtaxsimpler.ird.govt.nz/ and you can also provide feedback on them. These are proposals only at this stage.
If you have any questions or concerns about how these proposed changes might affect you, please contact email@example.com.