The Inland Revenue Department (Inland Revenue) is responsible under the Child Support Act 1991 (the Act) for making sure that parents take financial responsibility for their children when a relationship ends and the parents are unable to come to a voluntary arrangement for child support payments. Inland Revenue's role includes collecting money that is paid to the parents with whom the children spend most of their time (custodians), and collecting money for the Crown to offset the cost of any benefits paid to custodians.
Child support money is paid as monthly child support payments, usually by the liable parent (that is, the non-custodial parent). Debt will start accumulating unless a liable parent pays the full amount they owe, on time, every month.
Custodians who are not on a benefit will not receive any child support payments if Inland Revenue cannot collect child support payments. Custodians on a benefit will continue to receive a benefit paid by the Crown, even if Inland Revenue is unable to collect child support payments.
The performance audit we carried out found that, overall, Inland Revenue is doing a good job monitoring, prioritising, and collecting child support debt. However, Inland Revenue needs to do more to prevent debt from occurring in the first place. In my view, Inland Revenue's debt strategy has not adequately focused on preventing debt; nor has it addressed the adverse effect the penalty regime is having on levels of debt.