The Government is planning major changes to the way IRD makes social support payments, and is proposing child support payments be deducted from the wages or salary of all liable parents.
Ministers say the tax credit scheme Working for Families is very complex and inefficient, and want to introduce the changes over the next two years.
Finance Minister Steven Joyce said he was surprised to discover more than 40 percent of people were underpaid while 25 percent were being paid too much and ended up owing money to IRD.
He expects the changes will be cash neutral - while IRD will save on administration costs, more people will receive their Working for Families entitlements.
Revenue Minister Judith Collins says under the proposed new system IRD will base its payments on better information, which means they will be more accurate payments.
"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," she said on Monday.
"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."
Along with Working for Families changes, the policy document that's just been released contains proposals for improving processes for child support and student loans.
It proposes child support payments be automatically deducted from the wages or salary of all liable parents.
Student loans changes are designed to avoid large end-of-year bills.
The ministers want feedback on the proposals by September and changes will be introduced over the next two years after legislation has been passed by Parliament.