Binding Child Support Agreements
Child support is a payment made by a parent who does not live with their children to assist with the expenses of caring for the children. It is usually paid up until a child turns 18, but in some cases may be payable for longer. Child support can be obtained in two ways: by application to a Child Support Agency for an administrative assessment or by a Binding Child Support Agreement. This article deals with Binding Child Support Agreements.
What is a Binding Child Support Agreement?
A binding child support agreement is a private financial agreement between parties. It does not require an application to have been made to the Child Support Agency nor an administrative assessment to have been carried out prior to entering into the agreement. Rather, a binding child support agreement is more flexible and allows parents to make their own decisions about the amount to be paid and how it is paid. However, parents do not have totally free reign and must comply with certain requirements. For example, if a lump sum payment is to be paid then it will become a requirement that an administrative assessment must be conducted.
To assist parents, the Child Support Agency website has a useful child support estimator that parties can use anonymously, to estimate what child support payments they or the other party should be paying in accordance with the Agency’s formula.
Making a binding child support agreement
Parents and eligible non-parent carers can enter into a binding child support agreement. Parties must have received independent legal advice before entering such an agreement and before terminating the agreement. The legal advice can only be given by a practising lawyer who holds a current practising certificate. The advice must include advice about the advantages and disadvantages of entering into a binding child support agreement.
Section 80C of the Child Support (Assessment) Act 1989 sets out the formal requirements that must be complied with for a binding child support agreement to be valid.
Provisions of a binding child support agreement
The provisions that may be included in a child support agreement are listed in Section 84 of the Child Support (Assessment) Act. The agreement may include more than one kind of provision in relation to different parts of a child support period and different child support periods. If the agreement also includes provisions of a kind not referred to above, those provisions do not have effect for the purposes of the Act.
Once parties have entered into a binding agreement, the agreement is lodged with the Child Support Agency. A Registrar of the Child Support Agency will consider firstly whether or not the parties are eligible parents or non-parent carers and can enter into an agreement. In this regard, the Registrar may require further information about parentage.
Once an agreement is formalised and becomes binding, the agreement cannot be varied or changed. If parties wish to enter into a different agreement, the initial agreement will need to be terminated and a fresh agreement entered into.
Applications to the Child Support Agency
If a parent, or an eligible non-parent carer, makes an application to the Child Support Agency, an administrative assessment is conducted. The Agency will estimate and conclude what payments are made by one or both parties.
Generally, the Agency will calculate each parent’s child support income by using a specific formula by adding their taxable income and dividing it by the percentage of care and cost of each child to meet each parent’s share of the costs for each child.
If you require legal advice or representation in any legal matter, please contact Armstrong Legal.