Child Support Agreements

What are Child Support Agreements?

There are myriad ways that families financially support their children. Every family has a different idea of what a fair amount of child support looks like.

There are many reasons that parents might consider entering into a child support agreement, this could include where they want to:

1. Decide themselves what a fair amount of child support is;
2. Provide for the payment of specific fees and expenses for their children, including private health insurance and private school fees.
3. Receive child support as a lump sum or in some other way, including by transferring property;
4. Structure how child support is paid to their children or provide for their children’s future; or
5. Avoid paying child support altogether and/or completely opt out of the government assessed child support system.

At ALA Law we can help parents negotiate and draft a child support agreement to meet their family’s special circumstances. There can be many pitfalls to consider before embarking on a child support agreement and our experienced team of lawyers is able to guide you through this legal minefield, to ensure your agreement will not only work, but last.

What are the different types of child support agreements?

There are two main types of child support agreements recognized by Services Australia: Child Support (CSA):

1. a limited child support agreement; and
2. a binding child support agreement.

Only once one of these recognized agreements is registered and accepted by CSA does the agreement override any child support assessment in place.

If you do not provide your agreement to the CSA or if CSA does not accept your agreement because it does not meet the basic legal requirements, they will continue to make child support assessments as if there was no agreement in place at all.

Once the agreement is registered and accepted, the CSA will issue what is called a “notional child support assessment”. This is a child support assessment that indicates the amount of child support that would be payable, but for the child support agreement. Parents can and should update CSA so the correct income and care information is used in their notional child support assessment.

A notional assessment is used to calculate the amount of Centrelink Family Tax Benefit A payments that a parent receives. They are also used to decide when a limited child support agreement can come to an end.

A notional assessment is automatically generated every three years for binding and limited agreements. A new notional assessment will also issue if the amount of child support payable under an agreement change by more than 15%. A parent can also request the issue of a new notional assessment at any time if they have a limited agreement.

What is a Limited Child Support Agreement?

A limited agreement is a type of child support agreement where parents need to agree to pay more child support than the annual rate assessed by CSA. A simple example of what this might look like, is an agreement where the paying parent agrees to pay the assessed child support amount and also to pay 50% of the children’s school fees or private health insurance.

For the agreement to be accepted, it has:

1. To be in writing, signed and dated by both parents;
2. You need to already have a child support assessment in place;
3. You do not need a lawyer to sign a certificate saying you have received any independent advice.

A parenting plan can contain clauses about child support and can be recognized as a limited agreement.

The important difference between a limited and binding agreement, is that either parent can contact CSA and elect to end a limited agreement in the following circumstances

1. After the agreement has been in place for three years; and
2. Where the amount of child support payable under the current notional assessment varies by more than 15% from the previous notional assessment.

What is a Binding Child Support Agreement?

A binding child support agreement is more difficult to enter into than a limited agreement. However, the agreement offers parents a great deal of flexibility to make whatever child support arrangements they think are best for their family.

A binding agreement can also be used to opt out of paying any child support whatsoever.

The agreement needs:

1. To be in writing and signed by both parents;
2. Both parents need to get independent legal advice from an Australian lawyer about the advantages and disadvantages of entering into the agreement at the time it is entered into;
3. Each independent lawyer for each parent also needs to sign and annex to the agreement a certificate confirming they have provided their client with the required independent advice.

You do not need to have a child support assessment in place to enter into a binding child support agreement. However, if you do not register a binding child support agreement then it will not prevent one of the parents from applying for an assessment.

A binding agreement must be drafted with great care and skill, as it can last for a very long time, potentially from separation until all your children turn 18. It is also very hard to end a binding agreement and normally the only way to do so is to apply to court.

A binding agreement can only be terminated by:

1. A new binding agreement, including a provision that the old agreement is terminated;
2. By parents entering into a written agreement to terminate the binding child support agreement; or
3. By a court order, but only if certain circumstances are met.

The agreement can also specify particular changes in circumstances, which bring the agreement to an end or that vary the rate of child support payable under an agreement.