Child Support

Following separation, there are several ways that parties can arrange child support payments between them.

Informal Agreement

You may agree to an arrangement between you and your ex-partner and never formalise this arrangement (“an informal agreement”). You may agree on the amount to be paid based on the child support estimator, or you may simply agree on an arbitrary figure. Under this arrangement, neither party is bound to the agreement and at any time a parent can change the agreement reached. You should seek independent legal advice before considering this option as you may still have legal obligations to pay child support over and above the amount specified in your informal agreement. The Child Support Agency (‘CSA’) may not consider your informal agreement when making a child support assessment.

Administrative Assessment under the Child Support (Assessment) Act 1989

A parent’s legal obligation to pay child support is governed by the Child Support (Assessment) Act 1989 (“the Act”). Either parent can apply for an administrative assessment under the Act.

The department of Health and Human Services (DHHS) administratively assesses the amount of child support payable based on a formula set out in the legislation, including considering both parents’ taxable incomes, the age of the children, and the level of care that each parent has of the children.

CSA provides an online calculator where you can get estimates of potential child support payable.

Limited Child Support Agreements

A limited child support agreement is governed by Part 6 of the Act and in particular Subdivision B (sections 80E to sections 80G). This agreement must be in writing and signed by both parties. This agreement can be used to document the agreement between the parties and avoid an administrative assessment by the child support agency. However, this agreement cannot be accepted by the Child Support Agency unless there is an administrative assessment in place.

A limited child support agreement can provide more flexibility for parents to determine their own child support, however, compared to a Binding Child Support Agreement, there are more circumstances in which they can be terminated.

Binding Child Support Agreement

Unlike a limited child support agreement:

• A Binding Child Support Agreement cannot be terminated by either party after 3 years. Usually, Binding Child Support Agree are in place until the children are 18 years of age or completed Year 12.

• A Binding Child Support Agreement does not terminate if a party’s income varies or care changes unless the Agreement is drafted to contemplate for these scenarios.

• A Binding Child Support Agreement can provide for any amount of child support to be paid, even if it is less than the administrative assessment.

It is also important to note that child support and Limited and Binding Child Support Agreements can impact on government benefits, including family tax benefits. It is essential to seek accounting/financial advice prior to signing any agreement to ensure that you understand any impact the agreement may have on you from a taxation and government entitlement perspective.