The Child Support (Assessment) Act 1989 provides that every parent has a primary duty to maintain their child.
Parents often pay or receive child support payments in accordance with an assessment made by the Child Support Agency at the Department of Human Services. The amount of child support payable is calculated using a formula, which accounts for, amongst other factors, the parents’ respective incomes and the time a child spends with each parent. Parents can apply to the Child Support Agency to administer and enforce child support payments on their behalf.
Some parents find that child support payments do not cover the full range of expenses associated with raising their children. For example, if their child is attending private school or requires significant and ongoing medical care, child support payments may not suffice. Parents in these circumstances might seek to depart from the child support assessment made by the Child Support Agency and instead enter into a Child Support Agreement.
Child Support Agreements
A Child Support Agreement allows parents to make their own private arrangements for the provision of financial support for their children under the age of 18 years (or children over the age of 18 years who are completing their secondary education).
Under a Child Support Agreement, parents can agree to pay over and above the child support assessed by the Child Support Agency and contribute to expenses not otherwise covered by a child support assessment, such as:
- School tuition fees and levies;
- Associated school expenses including uniform, books, stationary, computers, camps and excursions;
- Expenses for extra-curricular activities for the children;
- Private health insurance levies and gap medical, allied health and dental expenses;
- Childcare fees for the children.
There are two kinds of Child Support Agreement:
- Limited Child Support Agreements; and
- Binding Child Support Agreements.
Limited Child Support Agreements
A Limited Child Support Agreement is an agreement between parents or carers that child support be paid equal to or greater than the amount assessed by the Child Support Agency. The parties do not need to obtain legal advice, however, in order to ensure that the agreement is fair and equitable, an assessment by the Child Support Agency must already exist and the Agreement must be registered with the Child Support Registrar. A Limited Child Support Agreement can be terminated by either parent 3 years after it is made.
Binding Child Support Agreements
A Binding Child Support Agreement can only be made after both parties have obtained independent legal advice. The Agreement can provide for payment of an amount of child support higher or lower than the amount assessed by the Child Support Agency. The Agreement remains in force until such time as each child reaches the age of 18.
The differences between Binding and Limited Child Support Agreements
BINDING CHILD SUPPORT AGREEMENT
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LIMITED CHILD SUPPORT AGREEMENT
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Each party must have received independent legal advice and the Agreement must contain a certificate under Section 80C of the Child Support (Assessment) Act 1989 signed by each parent’s legal practitioner stating that the parent has been provided with independent legal advice as to:
- The effect of the Agreement on the rights of the party; and
- The advantages and disadvantages, at the time that the advice was provided, to the party of making the Agreement.
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The agreement can be made without obtaining legal advice.
The terms do not take effect unless and until it is registered by the Registrar of the Child Support Agency (‘CSA’).
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| The Agreement must be in writing and signed by both parents. |
The Agreement must be in writing and signed by both parents. |
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The amount payable can be higher or lower than the amount payable under the Child Support Assessment.
The Agreement can provide for the payment of lump sum and/ or periodic Child Support.
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The annual rate of child support payable must be equal to or more than the annual rate of the child support assessment.
There must be a child support assessment already in place.
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| Both parents must disclose their financial circumstances before entering the Agreement. |
The CSA will make a notional assessment of how much child support would be payable without having regard to the terms of the Agreement. |
| Once in place, the terms of the agreement cannot be varied. The agreement will finalise child support issues until such time as each child turns 18 years of age or completes his or her secondary schooling, whichever is the later. |
After 3 years from the date of entering the Agreement either parent may unilaterally terminate it. |
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The Agreement can only be set aside by a Termination Agreement, a new Binding Child Support Agreement or by an Order of the Court.
The circumstances in which a court may set aside a binding child support agreement include fraud, non-disclosure and conduct by one party to the other which would make it unjust not to set it aside, such as undue influence, duress or unconscionable conduct.
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The Agreement cannot be varied but can be terminated by the parties in the following manner:
- If they enter into a new Child Support Agreement;
- If they enter into a written Agreement stating that the Child Support Agreement is terminated;
- If a party or parties obtain a Court Order setting aside the Agreement;
- If a party requests a notional Assessment and the notional Assessment varies by greater than 15%, either party can terminate the Agreement.
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Advantages and Disadvantages of entering into a Binding Child Support Agreement
By entering into a Binding Child Support Agreement parties can enjoy certainty and finality in relation to the amount of child support payable until their children reach the age of 18. This allows parents to make financial plans for their children’s future and their own.
Precisely because they provide parents certainty, the terms of a Binding Child Support Agreement are final and difficult to vary. Parents will need to be careful to formulate the agreement to account for any foreseeable changes in their financial circumstances until their children reach the age of 18.
How Farrell Family Lawyers can help
Our team of experienced family lawyers are available to discuss Child Support Agreements with you and to advise whether a Limited or Binding Child Support Agreement might best suit your particular circumstances. Contact us today to find out which option is right for you.
Call us today on +61 3 7020 6542 for a discussion about your Child Support Agreement matter.