Child Support Agreements - Limited vs Binding

The Child Support (Assessment) Act 1989 (Cth) governs the payment of child support in Australia. It allows for parties to voluntarily enter into two types of Child Support Agreements. Entering into either of these agreements allows parties to opt out of an Assessment from the Child Support Agency (CSA).

Limited Child Support Agreement

A limited child support agreement is an agreement that can be in place with respect to child support payments for a period of up to three years. The agreement can be extended by the parties and can be terminated if there is an unexpected change in circumstances. A limited child support agreement provides certainty for the paying parent and also certainty for the parent receiving funds, as well as assuring parties that the agreement will be terminated if there is an unexpected change of circumstances. Such circumstances include the paying parent unexpectedly becoming unemployed or bankrupt.

Once a limited agreement is terminated, the parties can enter into a further agreement or obtain a Child Support Assessment conducted by the agency.

A limited agreement requires parties to have a Child Support Assessment in place. The agreement must provide for an equal or greater amount of child support to be paid than the amount that has been assessed. The agreement does not require independent legal advice to have been provided to each party prior to entering into the agreement

Binding Child Support Agreement

A Binding Child Support Agreement is much harder to terminate and it is intended to provide certainty and finality on the issue of Child Support. This agreement will continue to be binding despite a change in income, loss of employment, bankruptcy, or change in income-earning capacity. Given the serious binding nature of the agreements, each party is required to seek independent legal advice and should carefully consider whether it is appropriate to enter into such an agreement as the agreement will continue to be in place and binding until a terminating event occurs under the agreement, such as a child turning 18 or completing secondary school.

A Binding Child Support Agreement may deal with issues such as ongoing periodic payments and also non-periodic payments such as the payment of health insurance and school fees.

Changing The Agreement

A binding child support agreement is difficult to change in the absence of an agreement with the other party to enter into a further Binding Agreement to either terminate the previous Agreement or to vary it. Given the agreement is binding, each party is required to obtain their own independent legal advice prior to entering into the agreement. The lawyers will advise parties on the advantages and disadvantages of entering into a binding agreement. Each party’s lawyer is then required to execute a certificate to this effect which is to be attached to the agreement and provided to the client prior to them signing the agreement.

What If There Is No Formalised Agreement?

In the absence of a formalised agreement or private agreement for child support, either party may seek a Child Support Assessment through the CSA. An assessment will consider each party’s income, the level of care they give to the children, the children’s ages, and each party’s s cost percentage for each child. A Child Support Assessment may be varied, by way of a Change of Assessment Application, for a number of prescribed reasons as set out in the legislation and these changes to the assessment can be managed and applied via the CSA.

Reaching Agreement

A Child Support Agreement may be one of many agreements reached between parties when resolving parenting and property matters following the breakdown of a relationship. Careful consideration should be given prior to entering into such an agreement t noting that in each case, there will be advantages and disadvantages of entering into such an Agreement.

Changing An Agreement

Once an administrative assessment of child support has been completed, either parent may make a “Change of Assessment” Application to depart from the administrative assessment because of special circumstances (section 117).

In order for the application to be considered, a parent must apply under one of the 10 reasons allowed for change of assessment. Those reasons include:

• that there are significantly high costs involved in spending time with the children;
• that a child or children has special needs;
• that the child/ren are attending private school and this was agreed by the parents;
• that the assessment is unfair because of the earning capacity, property or financial resources of the child;
• that the assessment is unfair because of the earning capacity, property or financial resources of one of the parents.

Either parent can apply for a change of assessment. Decisions to change the assessment cannot go back more than 18 months prior to the date of the application and the assessment cannot be reduced to below the minimum rate of child support. All documents lodged by a party in support of an application or response will be provided to the other party.

Parents are also able to seek a change of the child support assessment by:

• entering into a child support agreement with the other parent;
• making an application to the court;
• lodging an objection to the decision based on the level of care that either parent has; or
• seeking a re-assessment based on a change of one parent’s income or a change to the care arrangements.

If you would like advice in any legal matter contact Armstrong Legal on 1300 038 223 or send us an email.