OUTPUT CLASS 4 MANAGEMENT OF DEBT AND OUTSTANDING RETURNS OUTPUT DELIVERY TARGETS

OUTPUT CLASS 4 MANAGEMENT OF DEBT AND OUTSTANDING RETURNS OUTPUT DELIVERY TARGETS Performance Delivery and Measurement Document 2010/11 Page 1 of 30

Output Delivery Targets Output 4.0 All Management of Debt and Outstanding Returns Performance Measures Quantity 4.0.0 We will spend at least 500,000 hours proactively working with customers to file and pay post due date. Quality 4.0.1 We will ensure that at least 95% of all work is actioned in a correct, complete, clear, timely and appropriately referenced manner that also shows an understanding of the environment. Performance Delivery and Measurement Document 2010/11 Page 2 of 30

Output Delivery Targets Output 4.1 Outstanding Returns Performance Measures Quantity 4.1.1 We will ensure that at least 1.45 million outstanding returns are filed or brought to completion by year-end. Quality 4.1.2 We will ensure that less than 33% of outstanding returns are over two years old. Timeliness 4.1.3 We will ensure that of all returns that were not filed by the due date: 60% are filed or finalised within three months 75% are filed or finalised within six months 80% are filed or finalised within 12 months. Performance Delivery and Measurement Document 2010/11 Page 3 of 30

Output Delivery Targets Output 4.2 Overdue Debt Performance Measures Quantity 4.2.1 We will resolve at least 505,000 debt cases by year-end. Quality 4.2.2 We will ensure that less than 33% of the collectable debt value is over two years old. Timeliness 4.2.3 We will resolve: 66% of new debt cases within three months 85% of new debt cases within 12 months of the due date for payment. 4.2.4 We will resolve by 30 June 2011 at least 65% of the debt value that becomes outstanding in the year, for those customers who did not have an outstanding debt at 1 July 2010. Cost 4.2.5 We will collect a minimum of $50.00 overdue cash for every debt output dollar spent. Performance Delivery and Measurement Document 2010/11 Page 4 of 30

Output Delivery Targets Output 4.3 Child Support Debt Management Performance Measures Quantity 4.3.1 We will resolve at least 70,000 Child Support debt cases by year-end. Quality 4.3.2 We will collect at least 84% of the value of all Child Support assessments due over the last five years (excluding cases we manage on behalf of overseas agencies and uncollectible debt cases). 4.3.3 We will limit the growth in Child Support debt between 30 June 2010 and 30 June 2011 to less than 11.5% (excluding penalties, debt we manage on behalf of overseas agencies and uncollectible debt). Performance Delivery and Measurement Document 2010/11 Page 5 of 30

Output Delivery Targets OUTPUT CLASS 4 MANAGEMENT OF DEBT AND OUTSTANDING RETURNS MEASUREMENT METHODOLOGY Performance Delivery and Measurement Document 2010/11 Page 6 of 30

Output 4.0 All Management of Debt and Outstanding Returns Quantity 4.0.0 We will spend at least 500,000 hours proactively working with customers to file and pay post due date. Purpose This measure shows the time spent on proactively working with customers to file returns and pay post due date tax assessments. Link to Our Impacts Engaging early and responding promptly to customers who need guidance to file and pay post due date reduces the chance of them becoming disengaged or overwhelmed by the perceived size of their problem. This proactive, supportive approach improves the filing and paying behaviour of non-compliant customers. When customers receive advice and support about the filing and paying obligations they have missed, they are aware of their obligations and find it easier to comply, improving the levels of voluntary compliance. Definitions Due date Each return relates to an assessment for a specified period of time and legislation prescribes the due date being the date when the return is due to be filed to Inland Revenue and the date when the assessed debt is due to be paid to Inland Revenue. The due date for the return takes into account an extension of time granted and backdated registrations. Return filing action will occur after the due date for the return and debt clearance action will occur after the due date for the debt. Proactive hours The time spent selecting non compliant customers for targeted action and the time spent working with those customers. Performance Delivery and Measurement Document 2010/11 Page 7 of 30

Process Outbound calling campaigns are conducted targeting customers who represent a high risk of non compliance. Returns The Return Management System identifies when an expected return has not been received by the due date. This identification process occurs on the policing date that is set by the policing calendar within the Return Management System for each specific return type. The system then creates a policing profile for each return where the due date has passed. The policing records are passed to the Data Warehouse and recorded as the number of returns policed. Policing records can also be added manually to the Return Management System at any stage. When a return is received or the policing profile cleared, the Return Management System is updated to reflect this. Debt The Client and Revenue Accounting System identifies when an expected amount has not been received by the due date for payment and is therefore overdue. This automatically creates an overdue debt case in the Debt Management System, or adds a debt element to an existing case. Transactions relating to debt elements are automatically updated nightly in the Debt Management System allowing changes in the value of debt to be traced. It is these debt elements that are passed to the Data Warehouse and recorded as overdue debts. Cases are assigned to case officers via a number of mechanisms, including the top 1,000 fixed list, the top 2,000 returns customers, audit assessed debt referrals and internal work allocation processes. Cases are also identified by strategic compliance risk and allocated to specific teams for campaign management (outbound calling) initiatives. Every case officer who undertakes work on a debt case records time against it. This information is transferred to the SAP System daily. Time spent on an outbound calling campaigns will be identified by staff on their time sheets using the appropriate business process code. This measure is reported monthly/quarterly to management and to the public in the Annual Report. Performance Delivery and Measurement Document 2010/11 Page 8 of 30

Quality 4.0.1 We will ensure that at least 95% of all work is actioned in a correct, complete, clear, timely and appropriately referenced manner that also shows an understanding of the environment. This measure excludes Child Support. Purpose This measure ensures correct decision-making on actioning and resolving outstanding debt cases and return policing profiles. Link to Our Impacts Customers have certainty and are dealt with in a timely way when Inland Revenue meets its quality standards. Non compliant customers paying and filing behaviour is improved when Inland Revenue makes appropriate decisions to resolve debt and outstanding returns, and uses interventions appropriate to the customers level of noncompliance. Definitions Actioned Appropriate steps are being taken to clear the debt or finalise the return. Correct A correct interpretation of the law. Complete A fully considered reactive or proactive response or intervention that supports case resolution and recognises all relevant aspects of the case or query. Clear Communicated in a way that the customer can understand. Timely Reactive responses or proactive interventions are completed promptly. Referenced Referenced to the appropriate sections of the Acts or authorities when required. Performance Delivery and Measurement Document 2010/11 Page 9 of 30

Environment The specific circumstances relevant to the customer at the time of resolving the noncompliance. Process Each month a random selection of debt cases or return policing profiles is reviewed to establish whether the cases have been actioned and/or resolved in accordance with Inland Revenue s Return and Debt Collection policies. Quality is measured under the five components: Customer contact Technical Systems integrity Legal Management. A weighted scoring system based on these quality components is used to measure the quality of each case. The monthly selection and review process is as follows: The Quality Management Database (QMD), using a Data Warehouse query, selects cases that meet the work type criteria specified for the month and then extracts a random sample selection of 375 cases for checking. This set monthly volume gives a statistically relevant sample based on the following quality assumptions: The total population of work selected that meets the required criteria for the quality check, from which the samples are randomly selected each month, is between 2,000 and 100,000 cases The proportion of correct cases available for selection is conservatively estimated to be at least 60% of the cases that meet the specific selection criteria. The margin of error is assumed at 5% and the confidence probability is 95%. The QMD sorts the samples into area (by user id) and each area is issued with work samples that relate to another area to ensure independence of checking. Quality checking teams in each area will undertake a detailed check of the sample group by measuring each case against the five quality components for debt and outstanding returns (customer contact, technical, systems integrity, legal and management) and answering the on-line questions contained in the QMD under each quality component. The result (R%) for the month for each case is then calculated as: Quality component % weighting x ( Yes answers / total questions) = r% The sum of the r% results for each of the five quality components = R% Results are compiled in the QMD. This measure is reported monthly/quarterly to management and to the public in the Annual Report. Performance Delivery and Measurement Document 2010/11 Page 10 of 30

Output 4.1 Outstanding Returns Quantity 4.1.1 We will ensure that at least 1.45 million outstanding returns are filed or brought to completion by year-end. Purpose The purpose of this measure is to ensure that an appropriate focus is maintained on managing outstanding returns by utilising a range of interventions to follow up on customers who do not file on time. This supports Inland Revenue s aim to maximise voluntary compliance by following up non-compliance in a timely manner. Link to Our Impacts Non-compliant customers filing behaviour will improve if Inland Revenue maintains an appropriate focus on customers with outstanding returns and uses interventions appropriate to the customers level of non- compliance. Definitions Outstanding A return that is not lodged or finalised in the Return Management System by the due date that it is required to be filed is deemed to be outstanding. Filed or brought to completion When a return is received or finalised the Return Management System is updated to reflect this. This includes returns that are no longer required to be filed and includes all finalisation codes e.g. NR (return not required). Year-end 30 June 2011. Process The Return Management System identifies when an expected return has not been received by the due date. This identification process occurs on the policing date that is set by the policing calendar within the Return Management System for each specific return type. The system then creates a policing profile for each return where the due date has passed. The policing records are passed to the Data Warehouse and recorded as the number of returns policed. Policing records can also be added manually to the Return Management System at any stage. When a return is received or the policing profile cleared, the Return Management System is updated to reflect this. Performance Delivery and Measurement Document 2010/11 Page 11 of 30

A Data Warehouse query is run every month to identify outstanding returns. This measure is reported monthly/quarterly to management and to the public in the Annual Report. Performance Delivery and Measurement Document 2010/11 Page 12 of 30

Output 4.1 Outstanding Returns Quality 4.1.2 We will ensure that less than 33% of outstanding returns are over two years old. Purpose The purpose of this measure is to ensure Inland Revenue s focus on clearing aging returns is maintained. Link to Our Impacts A balanced approach to manage outstanding returns is important to ensure that all ranges of compliance behaviour are addressed. Aging returns generally belong to customers who don t want to comply or have decided not to comply. By managing this group of customers in a persistent manner, ensuring they are aware of the consequences of their actions, Inland Revenue will improve the filing behaviour of these non-compliant customers. Definitions Outstanding A return that is not lodged or finalised in the Return Management System by the due date that it is required to be filed is deemed to be outstanding. Process The Return Management System identifies when an expected return has not been received by the due date. This identification process occurs on the policing date that is set by the policing calendar within the Return Management System for each specific return type. The system then creates a policing profile for each return where the due date has passed. The policing records are passed to the Data Warehouse and recorded as the number of returns policed. Policing records can also be added manually to the Return Management System at any stage. When a return is received or the policing profile cleared, the Return Management System is updated to reflect this. A Data Warehouse query is run every month to identify outstanding returns over two years old. This measure is reported monthly/quarterly to management and to the public in the Annual Report. Performance Delivery and Measurement Document 2010/11 Page 13 of 30

Output 4.1 Outstanding Returns Timeliness 4.1.3 We will ensure that of all returns that were not filed by the due date: 60% are filed or finalised within three months 75% are filed or finalised within six months 80% are filed or finalised within 12 months. Purpose The purpose of this measure is to ensure that timely interventions are taken on current returns that are overdue and that Inland Revenue utilises a range of interventions to follow up on those who do not file on time. Link to Our Impacts Engaging with customers early to resolve their outstanding returns provides certainty and reduces the chance of them becoming disengaged or overwhelmed. Non-compliant customers who are supported and encouraged to meet their obligations early on will be more motivated to voluntarily comply. This supports Inland Revenue s aim to maximise voluntary compliance by following up non-compliance in a timely manner. Definitions Due date Each return relates to an assessment for a specified period of time and legislation prescribes the due date being the date when the return is due to be filed to Inland Revenue. The due date takes into account an extensions of time granted and backdated registrations. Filed or finalised When a return is received or finalised the Return Management System is updated to reflect this. This includes returns that are no longer required to be filed. Process The Return Management System identifies when an expected return has not been received by the due date. This identification process occurs on the policing date that is set by the policing calendar within the Return Management System for each specific return type. The system then creates a policing profile for each return where the due date has passed. The policing records are passed to the Data Warehouse and recorded as the number of returns policed. Policing records can also be added manually to the Return Management System at any stage. Performance Delivery and Measurement Document 2010/11 Page 14 of 30

When a return is received or the policing profile cleared, the Return Management System is updated to reflect this. A Data Warehouse query is run every month to identify the age profile of outstanding returns. This measure is reported monthly/quarterly to management and to the public in the Annual Report. Performance Delivery and Measurement Document 2010/11 Page 15 of 30

Output 4.2 Overdue Debt Quantity 4.2.1 We will resolve 505,000 debt cases by year end. This measure excludes Child Support. Purpose The purpose of this measure is to show the number of debt cases resolved in the year. Link to Our Impacts Customers level of non-compliance will improve when Inland Revenue maintains an appropriate focus on customers with debt and uses interventions that reflect the paying behaviour of these non-compliant customers. Inland Revenue s aim is to maximise voluntary compliance by following up non-compliance in a timely manner. This will contribute directly to Inland Revenue s primary outcome of Improving the economic and social wellbeing of New Zealanders. Definitions Resolve Each case must be closed in the Debt Management System. This means that every element must be paid in full or a decision made under delegated authority not to collect the debt. Debt case A unique combination of Inland Revenue, case and location number as defined in the Debt Management System in the FIRST System. Year end 30 June 2011. Process The Client and Revenue Accounting System identifies when an expected amount has not been received by the due date for payment and is therefore overdue. This automatically creates an overdue debt case in the Debt Management System, or adds a debt element to an existing case. Transactions relating to debt elements are automatically updated nightly in the Debt Management System allowing changes in the value of debt to be traced. It is these debt elements that are passed to the Data Warehouse and recorded as overdue debts. Performance Delivery and Measurement Document 2010/11 Page 16 of 30

Debt cases that have closed within 5 days of the case opening are excluded, to account for those cases where payments are delayed in the system. A Data Warehouse query is run every month on or about the seventh day after the end of the month to ensure that cases closed within five days of the case opening are able to be identified. The query runs year to date to avoid the number of cases in the previous month changing once the new month s data is added. This measure is reported monthly/quarterly to management and to the public in the Annual Report. Performance Delivery and Measurement Document 2010/11 Page 17 of 30

Output 4.2 Overdue Debt Quality 4.2.2 We will ensure that less than 33% of the collectable debt value is over two years old. Purpose The purpose of this measure is to ensure a continued focus on managing ageing debt. Link to Our Impacts A balanced approach to manage debt is important to ensure that all ranges of compliance behaviour are addressed. Aging debt generally belong to customers who don t want to comply or have decided not to comply. Inland Revenue will improve the paying behaviour of non-compliant customers by managing them in a persistent manner and ensuring they are aware of the consequences of their actions. Definitions Collectable debt value A collectable debt is one in which is not: Under investigation or objection Deferred Insolvent Pending write-off. Process A Data Warehouse query is used to apply a case weighted age to all debt cases that are classified as collectable for the relevant tax year. The case weighted ages are grouped into age bands with the proportion of cases 2 years of age or greater expressed as a percentage against the total collectable debt value. The result is expressed as a percentage. This measure is reported monthly/quarterly to management and to the public in the Annual Report. Performance Delivery and Measurement Document 2010/11 Page 18 of 30

Output 4.2 Overdue Debt Timeliness 4.2.3 We will resolve 66% of new debt cases within three months 85% of new debt cases within 12 months of the due date for payment. Purpose The purpose of this measure is to ensure that timely interventions are taken on new debt cases. Inland Revenue s aim is to maximise voluntary compliance by following up non-compliance in a timely manner. This will contribute directly to Inland Revenue s primary outcome of Improving the economic and social wellbeing of New Zealanders. Link to Our Impacts Engaging with customers early to resolve their debt provides certainty and reduces the chance of them becoming disengaged or overwhelmed. Non-compliant customers who are supported and encouraged to meet their obligations early on will be more motivated to voluntarily comply. This will result in improved paying behaviour of these noncompliant customers. Definitions Resolve Each case must be closed in the Debt Management System. This means that every debt element must be paid in full or a decision made under the delegated authority not to collect the debt. Debt case A unique combination of Inland Revenue number, case and location as defined in the Debt Management System. Within three months 3 months from the month of the case creation date in the Debt Management System. Within 12 months 12 months from the month of the case creation date in the Debt Management System. Performance Delivery and Measurement Document 2010/11 Page 19 of 30

Process The Client and Revenue Accounting System identifies when an expected amount has not been received by the due date for payment and is therefore overdue. This automatically creates an overdue debt case in the Debt Management System, or adds a debt element to an existing case. Transactions relating to debt elements are automatically updated nightly from the FIRST System to the case in the Debt Management System allowing changes in the value of debt to be traced. It is these debt elements that are passed to the Data Warehouse and recorded as overdue debts. Debt cases that have closed within 5 days of the case opening are excluded to account for those cases where payments are delayed in the system. A Data Warehouse query is run on or about the seventh day after the end of the month to ensure that cases closed within five days of the case opening are able to be identified. This measure is reported monthly/quarterly to management and to the public in the Annual Report. Performance Delivery and Measurement Document 2010/11 Page 20 of 30

Output 4.2 Overdue Debt Timeliness 4.2.4 We will resolve by 30 June 2011 at least 65% of the debt value that becomes outstanding in the year, for those customers who did not have an outstanding debt at 1 July 2010. Purpose The purpose of this measure is to ensure new debt is proactively managed. The percentage debt resolved is an indicator of Inland Revenue s early intervention strategy in targeting customers with newly acquired debt. Resolving this type of debt sooner will help to prevent customers entering an ongoing debt situation where a relatively small starting debt can lead to a larger debt due to the accumulation of penalties and interest. Link to Our Impacts Engaging with first time debt customers early to resolve their debt reduces the chance of them becoming disengaged or overwhelmed. Customers who are supported and encouraged to meet their obligations early on will be more motivated to voluntarily comply. This will result in improved paying behaviour of these non-compliant customers. This will contribute directly to Inland Revenue s primary outcome of Improving the economic and social wellbeing of New Zealanders. Definitions Debt value The dollar value of the debt taking the maximum reported balance per debt element during the financial year. Debt element A record created in the Debt Management System for an amount outstanding for a return period not paid by its due date. Resolve Each case must be closed in the Debt Management System. This means that every debt element must be paid in full or a decision made under the delegated authority not to collect the debt. Overdue debt When an expected amount has not been paid by the due date, after this a debt element is created in the debt management system and penalties and interest can be applied to the debt element. Performance Delivery and Measurement Document 2010/11 Page 21 of 30

Process The Client and Revenue Accounting System identifies when an expected amount has not been received by the due date for payment and is therefore overdue. This automatically creates an overdue debt case in the Debt Management System or adds a debt element to an existing case. Transactions relating to debt elements are automatically updated nightly from the FIRST Systems to the case in the Debt Management System allowing changes in the value of debt to be traced. It is these debt elements that are passed to the Data Warehouse and recorded as overdue debts. When sufficient funds have been paid against the debt to resolve the debt in full or when a decision is made under delegated authority to close the debt without full collection of monies owed, the balance is reduced to zero and the element is closed in the Debt Management System. When a debt element has been opened and closed within 5 days, this debt is excluded from the measure. The purpose of this step is to exclude those elements that are opened while Inland Revenue is processing any payments and the elements are only temporarily in debt. On a month to month basis adjustments for debt element outliers greater than $50m will occur in the following instances: Where there is a greater than $50m material difference between the debt value and assessment value To correct debt processing/keying errors. A Data Warehouse query is run on or about the seventh day after the end of the month to ensure that cases closed within five days of the case opening are able to be identified. This measure is reported monthly/quarterly to management and to the public in the Annual Report. Performance Delivery and Measurement Document 2010/11 Page 22 of 30

Output 4.2 Overdue Debt Cost 4.2.5 We will collect a minimum of $50.00 1 overdue cash for each output dollar spent. Purpose The purpose of this measure is to ensure a high rate of return for each output dollar spent thereby demonstrating good value for money. This provides a measurement of Inland Revenue s effectiveness and efficiency for collecting outstanding debt. This will contribute directly to the department s primary outcome of improving the economic and social wellbeing of New Zealanders. Link to Our Impacts Value for money is made up of three core components; economy (minimising inputs or resource costs used), efficiency (doing more for less), and effectiveness (doing the right things to achieve our desired outcomes). Efficiency measures the relationship between outputs and inputs. Measuring and monitoring the unit costs of collecting overdue cash provides the opportunity improve the efficiency of this activity. Definitions Collect and Cash A payment that is received and recorded against an overdue debt. This also includes cash collected through tax pooling Tax pooling Tax pooling occurs where customers make deposits via intermediaries' accounts with Inland Revenue. These deposits are held in trust until the taxpayers request that the deposits be transferred to their tax accounts with the Commissioner. Each output dollar spent An output dollar is inclusive of all direct and national overhead allocated costs. 1 The target for this measure is being reviewed and will be updated in the next quarterly report. Performance Delivery and Measurement Document 2010/11 Page 23 of 30

Process At the end of each month, the Data Warehouse produces a Debt Cash Collected Summary table which provides the national details of the amount cash collected each month. Cash reported as requiring no action and aged less than one month is deducted as it is assumed that payments made under one month are not related to a debt in the Debt Management System. In addition, cash collected through tax pooling (which is not currently recorded in the cash collections 7181 report) is added to the cash collections total. This information is obtained through a Data Warehouse query. At the end of each month, a year to date Output Class Cost Report is extracted from SAP. This report provides the total costs of debt collection inclusive of all direct and national overhead allocated costs. The actual overdue cash collected for each output dollar spent is calculated as follows: Debt cash collected + cash collected through tax pooling Total output class cost The result is reported as a dollar value. This measure is reported monthly/quarterly to management and to the public in the Report. Performance Delivery and Measurement Document 2010/11 Page 24 of 30

Output 4.3 Child Support Debt Management Quantity 4.3.1 We will resolve 70,000 debt cases by year-end. Purpose The purpose of this measure is to ensure new Child Support debt is proactively managed. Inland Revenue s aim is to maximise voluntary compliance by following up non-compliance in a timely manner. Link to Our Impacts The paying behaviour of non-compliant customers will improve when Inland Revenue maintains an appropriate focus on customers with Child Support debt, resolves cases and collects assessments by using interventions that reflect the customers level of noncompliance. Collecting overdue Child Support payments allows payments to be passed on to the child s custodian (if they are not on a benefit) therefore ensuring customers receive their correct entitlements. This will contribute directly to the department s primary outcome of Improving the economic and social well being of New Zealanders. Definitions Resolve Each case must be closed in the Debt Management System. This means that every debt element must be paid in full or a decision made under delegated authority not to collect the debt. Debt cases A unique combination of Inland Revenue, case and location number as defined in the Debt Management System in the FIRST System. Cases relating to international countries that we have a reciprocal agreement with under the Child Support Act 1991 are excluded. Debt element Tax period assessed. Year end 30 June 2011. Performance Delivery and Measurement Document 2010/11 Page 25 of 30

Process The Client and Revenue Accounting System identifies when an expected amount has not been received by the due date for payment and is therefore overdue. This automatically creates an overdue debt case in the Debt Management System or adds a debt element to an existing case. Transactions relating to debt elements are automatically updated nightly in the Debt Management System allowing changes in the value of debt to be traced. It is these debt elements that are passed to the Data Warehouse and recorded as overdue debts. Debt cases that have closed within 5 days of the case opening are excluded, to account for those cases where payments are delayed in the system. A Data Warehouse query is run automatically every month on or about the seventh day after the end of the month to ensure that cases closed within five days of the case opening are able to be identified. The query runs year to date to avoid the number of cases in the previous month changing once the new month s data is added. This measure is reported monthly/quarterly to management and to the public in the Annual Report. Performance Delivery and Measurement Document 2010/11 Page 26 of 30

Output 4.3 Child Support Debt Management Quality 4.3.2 We will collect at least 84% of the value of all Child Support assessments due over the last five years (excluding cases received from overseas agencies and uncollectable debt cases). Purpose The purpose of this measure is to ensure a high proportion of previous years assessments have been collected. This ensures that Inland Revenue focuses on: Reducing long-term debt Changing the behaviour of non-compliant customers Educating customers about the importance of voluntary compliance. Link to Our Impacts The paying behaviour of non-compliant customers will improve when Inland Revenue maintains an appropriate focus on customers with Child Support debt, resolves cases and collects assessments by using interventions that reflect the customers level of noncompliance. Collecting overdue Child Support payments allows payments to be passed on to the child s custodian (if they are not on a benefit) therefore ensuring customers receive their correct entitlements. This will contribute directly to the department s primary outcome of Improving the economic and social well being of New Zealanders. Definitions Collect Receive Child Support payments voluntarily or obtain by way of enforcement and allocate to assessments due. Last five years 1 April 2005 and 31 March 2010 inclusive. Value This is the gross value of assessments that have been updated to the paying parents accounts between 1 April 2005 and 31 March 2010 inclusive. The assessments take into Performance Delivery and Measurement Document 2010/11 Page 27 of 30

account new and ceased liabilities but do not include the current Child Support year s assessment value or cases received from overseas agencies. Overseas agencies International countries that we have a reciprocal agreement with under the Child Support Act 1991. Uncollectable debt cases Cases registered in the Debt Management System as: Missing customer Reciprocal Country Non-Reciprocal Country. Process Paying parents are issued an annual assessment for Child Support. Payments are generally required to be paid monthly by a due date (usually by the 20th of the month for the previous month s assessment). When a full payment is not made by the due date then daily or periodic policing applies a penalty and passes the information to the Collections and Recoveries System. A new arrears case is created for a customer or an increase is made to the value of the customer s existing arrears case. Action is taken in accordance with the Child Support Act 1991 to recover the arrears owing. Cases are actioned periodically until all outstanding debt for the case is recovered. Transactions relating to an arrears case are automatically updated nightly from the Client and Revenue Accounting System to the Collections and Recoveries System allowing changes in the value of debt to be traced. A Data Warehouse query is run monthly once the Child Support Debt Summary Table is updated for the month. This table usually updates on the 3rd working day of the month. The pivot table from the query is saved to a spreadsheet where monthly and year to date measures are compared to actual performance standard. This measure is reported monthly/quarterly to management and to the public in the Annual Report. Performance Delivery and Measurement Document 2010/11 Page 28 of 30

Output 4.3 Child Support Debt Management Quality 4.3.3 We will limit the growth in Child Support debt between 30 June 2010 and 30 June 2011 to less than 11.5% (excluding penalties, debt we manage on behalf of overseas agencies and uncollectible debt). Purpose The purpose of this measure is to ensure overall Child Support debt is proactively managed. This ensures that we focus on changing behaviours of the wider community and highlight the importance of voluntary compliance. Link to Our Impacts The paying behaviour of non-compliant customers will improve when Inland Revenue maintains an appropriate focus on customers with Child Support debt, resolves cases and collects assessments by using interventions that reflect the customers level of noncompliance. Collecting overdue Child Support payments allows payments to be passed on to the child s custodian (if they are not on a benefit) therefore ensuring customers receive their correct entitlements. This will contribute directly to the department s primary outcome of Improving the economic and social well being of New Zealanders. Definitions Rate of growth The percentage increase between the total debt outstanding at 30 June 2010 and the total debt at 30 June 2011. This excludes cases received from overseas agencies and uncollectable debt cases. Total debt Total debt is defined as the assessed collectable debt. The amount of an employer s and a paying parent s liability (excluding penalties and use of money interest) which is in arrears (due, but not paid, and has been policed), together with the total amount of custodial parent overpayments. Overseas agencies International countries that we have a reciprocal agreement with under the Child Support Act 1991. Performance Delivery and Measurement Document 2010/11 Page 29 of 30

Uncollectable debt cases Cases registered in the Debt Management System as: Missing customer Reciprocal Country Non-Reciprocal Country. Process If a paying parent or an employer does not make a payment for the full amount of Child Support assessment by the due date then daily or periodic policing applies a penalty and passes the information to the Collections and Recoveries System. In instances where the custodial parent has been overpaid (usually due to a reduction in the liable person s liability), the overpayment is recorded on a Debt report. From this report, officers in the field verify if a true overpayment exists and manually load the debt into the Collections and Recoveries System. Action is taken in accordance with the Child Support Act 1991 or the Tax Administration Act 1994 to recover the arrears owing. Cases are actioned periodically until all outstanding debt for the case is recovered or written off. Transactions relating to an arrears case are automatically updated (generally nightly) from the Client and Revenue Accounting System to the Collections and Recoveries System, allowing changes in the value of debt to be traced. A Data Warehouse query is run monthly once the Child Support Debt Summary Table is updated for the month. This table usually updates on the 3rd working day of the month. The pivot table from the query is saved to a spreadsheet where monthly and year to date measures are compared to actual performance. The calculation (excluding penalties and interest) is: Total debt at 30 June 2011 less total at 30 June 2010 Total at 30 June 2010 The result is reported as a percentage. This measure is reported monthly/quarterly to management and to the public in the Annual Report. Performance Delivery and Measurement Document 2010/11 Page 30 of 30