Major overhaul for IRD social policy payments

The Government is planning major changes to how IRD pays social support so that people can know better what their entitlements are and be sure of receiving the right amount, Finance Minister Steven Joyce and Revenue Minister Judith Collins say.

“The Working for Families system is very complex and has been since it was introduced,” Mr Joyce says. “More than 40 per cent of people receiving Working for Families are underpaid, while a quarter of all people get paid too much and end up owing money to Inland Revenue.”

“The old IRD system wasn’t designed to handle income support payments like Working for Families,” Ms Collins says. “Our new system will allow us to base payments on better information and allow IRD to be much more accurate and adaptable to families’ changing circumstances and incomes.”

The Government has released a new consultation document, Better administration of social policy, which goes through the proposed changes and how they will affect families.

“As well as lifting family incomes, this year’s Budget began the process of simplifying people’s taxes and entitlements so they can easily see what they should be receiving. These proposals are the next step in creating a more straightforward tax and transfer system which responds quickly and simply as people’s circumstances change,” Mr Joyce says. “It will provide a better system for hundreds of thousands of New Zealand families.”

Along with Working for Families changes, the Better administration of social policy consultation document also contains proposals for improving processes for child support and student loans.

“Child support payments will be automatically deducted from the wages or salary of all liable parents, and more comprehensive information about both parents’ incomes taken into account, including income from trusts. And if the receiving parent wishes, Child support payments could be passed on to them as soon as Inland Revenue had processed the payment,” Ms Collins says.

“We’re also proposing that a wider range of employment income would have student loan repayments deducted from New Zealand-based borrowers, reducing the chance of large end-of-year bills.”

Full details of the proposals are in the discussion document Better administration of social policy available at www.makingtaxsimpler.ird.govt.nz. Submissions close on 15 September 2017.