Government to overhaul IRD social policy payments to create 'more straightforward' tax system

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1 NEWS

There are major changes in store for how IRD pays social support, so people are able to be more informed of their entitlements.

Political reporter Katie Bradford takes a closer look at the details.
Source: 1 NEWS

In a statement today Finance Minister Steven Joyce said more than 40 per cent of people who received Working for Families were underpaid, "while a quarter get paid too much and end up owing money to Inland Revenue". 

"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."

"It will provide a better system for hundreds of thousands of New Zealand families."

Revenue Minister Judith Collins said the old IRD system was not designed to handle income support payments like Working for Families. 

"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."

As well as changes to Working for Families, there are proposals to improve child support and student loan processes.

"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," Ms Collins said. 

"And if the receiving parent wishes, Child support payments could be passed on to them as soon as Inland Revenue had processed the payment."

"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," she said. 

The main proposals:

- Working for Families payments based on recent actual income instead of a yearly estimate. 

- Child support payments based on more recent information of both parents' income, with payments deduced automatically from salary or wages. 

- Extend the requirement for employers to deduct Student Loan repayments, meaning contract and casual agricultural workers would have repayments deducted from their wages, and also self-employed workers would be required to make regular payments throughout the year. 

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