Child support is ongoing financial support made by one parent to the other to contribute to the ongoing costs associated with raising the parties’ child or children.
CSA Administrative Assessment
For most separated couples, the amount of child support payable will be calculated through a nominal assessment by the Child Support Agency (CSA).
To determine the amount payable, the CSA will take into consideration factors such as the individual income of each parent and the percentage of time the child is in each parties’ care.
It is important to note that there is no obligation on separated parents to have a formal assessment of child support. Parents are entitled to reach a private agreement that suits their individual circumstances and in fact, many parents choose this option.
A private agreement reached between separated parents can be formalised through the creating of either a Binding Child Support Agreement or a Limited Child Support Agreement.
Binding Child Support Agreement
A Binding Child Support Agreement is a contract between parents that specifies the amount of child support payable and the time frame in which such payments are to be made. Once signed by both parties this document becomes legally binding and enforceable.
Binding Child Support Agreements are unique in that they allow the parties to determine the amount to be paid and whether or not that amount is to be paid by weekly instalments, lump sums on other non-cash payments.
Binding Child Support Agreement’s will often stipulate that in lieu of cash payments to the other parent, the agreed sum might be paid directly towards child related expenses such as school fees, health insurance or extracurricular activities.
For a Binding Child Support Agreement to be binding, Section 80C of the Child Support (Assessment) Act (1989) provides that both parties must receive independent legal advice prior to entering into the Agreement. By obtaining legal advice each party is given notice of the legal effect of that agreement and any implications there might be for them if their financial position were to change in the future.
Once created, Binding Child Support Agreements must be registered with Centrelink (The Department of Human Services-DHS) for Family Tax Benefit purposes. It is important to note however that before such an agreement will be accepted by Centrelink the parties must have first sought a nominal assessment by the Child Support Agency. Notwithstanding the fact that the parties may have agreed on an amount that is greater or lesser than the CSA’s nominal assessment, for the purpose of Family Tax Benefit payments, Centrelink will use the assessed rate when calculating each parties’ eligibility for Family Tax Benefit payments.
Limited Child Support Agreement
The Limited Child Support Agreement is less formal in nature than the Binding Support Agreement.
- This type of agreement does not require the parties to obtain independent legal advice;
- it will not take effect unless it is registered by the Registrar of the Child Support Agency; and
- the amount payable must equal to or greater than the CSA administrative assessment.
Unlike the Binding Financial Agreement, a Limited Child Support Agreement only has a lifespan of three (3) years. This means that after that time the parties must renegotiate the terms of their agreement.
If you have a Binding child support agreement made before 1 July 2008 where one of the parents didn’t receive legal advice at the time of making the agreement, a court can end the agreement if it would be unfair not to.
If you require a child support agreement or are concerned about the validity of your existing child support agreement call and speak to one of our experienced family lawyers today.
At Williams Barristers and Solicitors our family lawyers can provide you with the right advice to help you choose a child support agreement that is suitable for you and your family.
Call us on 84519040