One common stressor for parents following separation is understanding how the children will be financially supported.
Prior to separating, it is common for one parent to be engaged in more flexible employment such that they can be available to care for the children, meaning they are not on as high an income as the other parent who has continued to work uninterrupted and remained the primary income earner.
Child Support Assessment – Minimum amount
The Department of Human Services (commonly referred to as ‘the Child Support Agency’), governs the amount of financial support that the primary income earner is obligated to pay to the primary caregiver of the children to provide some security that the child’s basic living expenses can still be met following separation. This calculation is formalised as a child support assessment (‘the Assessment’).
The Assessment undertaken by the Child Support Agency is the minimum amount of child support that the ‘liable’ parent is to pay to the ‘eligible’ parent. The ‘liable’ parent is the parent who is assessed to pay child support, and the ‘eligible’ parent is the parent who is assessed to receive child support.
The child support formula assesses each parent’s income, and their level of care of the children to determine which parent is obligated to pay the other child support. Child support is assessed by the ‘Child Support Agency’ to be paid monthly. Once the child support has been paid from the liable parent to the eligible parent, the liable parent has no further legal obligation to meet any costs for the children and the responsibility to meet any gaps in the children’s expenses usually falls on the eligible parent.
The Assessment changes as each parent’s circumstances change, so if one parents’ income increases or decreases, or the number of nights that the children live with or spend time with the other parent, the Assessment will change to reflect this.
The child support formula is based on general living expenses for children but does not consider any additional expenses. Additional expenses may include agreed private schooling, extra-curricular activities, medical expenses, or general expenses to support the standard of living that the parents and children were accustomed prior to separation.
This can result in situations where the liable parent is paying the assessment amount, however this does not actually cover the full cost of raising the children in the manner that the parents had agreed to before separation.
The liable parent has no further responsibility to meet any of these additional costs after the assessment amount is paid. Some exceptions apply so please contact us to discuss if there are any exceptions that are applicable to your circumstances.
Can we agree to do something different?
Many parents can reach an agreement that the assessment amount is not enough to ensure that children are properly supported. They will then consider entering into Child Support Agreement as part of an overall property settlement which can provide for the liable parent to pay a greater amount of child support than ‘the Assessment’.
Parents can agree to any child support arrangements they desire, including but not limited to:
- The assessment amount or other agreed amount being paid on a monthly basis, or not making any monthly payments at all;
- The liable parent making a lump sum one off payment of child support as opposed to ongoing monthly payments and ceasing any ongoing obligation to pay child support;
- That the parents equally share costs such as school fees, extra-curricular activities or medical costs. Or, that one parent takes full responsibility for these costs.
- What is the best option for me and my children?
The financial support agreed to be paid between parents is highly variable between families and there is no one size fits all.
A private Child Support Agreement can frequently be a better alternative for families as it will often consider the circumstances of each child, whereas the Assessment is standardised and is not tailored to the specific needs of each child.
Complications arise when getting parents to formalise an agreement as the amount of financial support must be agreed upon and both parents must voluntarily and willingly enter into the Agreement after receiving legal advice as to the advantages and disadvantages of the Agreement. If the parents are not able to reach an agreement, then the amount of financial support the eligible parent will receive reverts to the Assessment amount.
Formalising our agreement
There are two different types of Child Support Agreements available to parents.
Binding Child Support Agreements commence operating from when the Agreement is signed until the last child of the relationship attain the age of 18 years or finishes school, or by a further written agreement or termination agreement has been entered into between the parents.
Limited Child Support Agreements commence operating from when the Agreement is signed but only operate only for a period of 3 years. At the expiration of this period, the parents either need to enter into a new Child Support Agreement or terminate the agreement. If the agreement is terminated, and no other agreement is reached between the parents, the assessment amount will be implemented.
There are very specific requirements required for both types of agreements, one of which is receiving legal advice prior to signing the Binding Child Support Agreement. If you are considering entering into a Child Support Agreement, contact us today to ensure that the Agreement satisfies all legal requirements, reflects your agreement and you understands your rights and obligations prior to signing it.
We have signed an Agreement: now what?
A Child Support Agreement must be registered with the Child Support Agency to ensure that it is binding and enforceable.
You can register your Child Support Agreement by contacting the Child Support Agency and providing them with a certified copy of the Agreement. If your Child Support Agreement contains any ‘non-periodic payment’ such as the payment of school fees, medical expenses, extra-curricular expenses or lump sum payments, then your Child Support Agreement may also need to be registered with the Family Court of Australia to ensure that it is enforceable if one parent defaults on the Agreement.
If you think that your Agreement contains non-periodic payments, then you should contact us today on 03 8393 0144 to confirm whether your Agreement should be registered with the Family Court of Australia.
If you have any questions – do not hesitate to get in contact with us to discuss a strategy and discover the child support options available to you.
We are always willing and able to talk things through with you so that you can obtain clarity and structure as you navigate separation. Get in contact with us today (tel: (03) 8393 0144)