Child Support Agreements Explained

Child Support Agreements Explained

The law relating to child support was put into place to ensure that children are adequately supported by both parents and recognises they have an obligation to financially support their children. For most parents, child support will be determined for them in a child support assessment, issued by the Commonwealth Department of Human Services. However, if parents come to their own arrangements for child support outside of an administrative assessment, they can be formalised through a child support agreement.

There are two types, namely, ‘limited’ and ‘binding’. These agreements give parents the freedom to arrange child support in a way that works for them and their children.

Limited Child Support Agreements

As the name suggests, a limited child support agreement is one that parents can enter into for a limited period of time up to three years. The agreement should provide for the amount of child support and how it will be paid and may specify the payment of cash and non-cash items like school fees or private health cover.

Before you can enter into a limited child support agreement you must first obtain a child support assessment from the Department of Human Services. A child support assessment is calculated using a complicated formula which takes into account the combined incomes of the parents, the care arrangements for the child, whether the parents have the care of other children and their respective ages as well as their standard costs of living.

All separated parents (and some carers) of children are able to apply for a child support assessment through the Department of Human Services, which then issues you an assessment. A limited child support agreement must make provision for child support equal to or greater than the amount in that assessment.

There are several ways to end a limited child support agreement, including:

  • Applying to the court to set it aside
  • If both parties agree in writing to end it
  • Entering into a new agreement (limited or binding)
  • If it has been more than three years since the agreement was made, a parent can make a request in writing to the Department of Human Services to end the agreement
  • If the notional assessment (read on for more information on the notional assessment) varies by more than 15% from the previous assessment due to a change in circumstances, a parent can request in writing to end an agreement

Binding Child Support Agreements

A binding child support agreement, much like a limited child support agreement, can be entered into by separated parents who want to make their own arrangements for child support. The agreement can provide for the payment of cash and non-cash items and indeed some binding child support agreements might state that neither party is to pay any child support. A binding child support agreement may also provide for lump sum payments or the transfer of property in lieu of cash payments. Unlike limited child support agreements, binding child support agreements do not need to be equal to or greater than an administrative assessment and you do not need to obtain one, unless you agree to a lump sum payment in the binding child support agreement.

A binding child support agreement should be drafted by an experienced Family Lawyer and both parties must obtain independent legal advice before signing the agreement. When registered with the Department of Human Services, the agreement must include a certificate to verify each parent obtained such legal advice.

One of the key differences is that binding child support agreements are harder to terminate without the agreement of the other parent. One option is to enter into a new binding agreement to replace the old one. Alternatively, the parties can enter into a ‘termination agreement’ defaulting to a new administrative assessment. It may also be possible, in limited circumstances, to ask the court to set aside a binding child support agreement.

Notional Assessment and Family Tax Benefit

Following the submission of either a limited or binding child support agreement, the Department of Human Services issues a notional assessment. A notional assessment determines what the child support would have been if the agreement was not in place.

The notional assessment informs eligibility for Family Tax Benefit (‘FTB’) and the amount that is received through FTB, noting child support payments influence how much FTB a person receives.

Making a Child Support Agreement

Whether you choose a limited or binding child support agreement, it is always advisable to seek independent legal advice. While you are not required to obtain legal advice before entering into a limited child support agreement, legal advice is mandatory for binding child support agreements.

If you want to enter into a child support agreement, a family law expert can help you through the process, ensuring the agreement is binding and enforceable. An experienced Family Lawyer may also be able to help you negotiate an agreement that takes into account your unique circumstances and those of your child.

Taylor & Scott Lawyers have years of experience assisting parents with their child support concerns. To arrange an appointment simply fill out a contact form on our website or call 1800 600 664.

At Taylor & Scott “We Care For You”.