Child support is the financial support paid by one parent to the other to help with the costs of a child aged under 18 years of age.
The amount of child support to be paid is usually calculated based on how much time the child spends with each parent. However, even parents who spend no time with their child are obliged to pay child support.
Child Support can be obtained through an assessment from the Child Support Agency, through an informal agreement between parents, through a Binding Child Support Agreement or through a Limited Child Support Agreement.
Informal agreement between parties
After separation parents can agree between themselves as to how much they will each contribute to the children’s expenses. This informal approach can work for parents who have had an amicable separation. However, in most cases the parties cannot reach agreement and where agreement on a payment figure is reached it is common that either the receiving or paying party will try to renegotiate monetary figures in the future. This ad hoc method requires a lot of trust between parties. As the agreement is not legally enforceable, the parties are essentially relying on each other to ‘stick to their word’ and follow the agreement.
Assessment from the Child Support Agency
The Child Support Agency will consider the following factors when making an assessment:
- The age of the child/children;
- The number of children;
- Both parents taxable incomes;
- Both parents expenses and their ability to pay for their own expenses;
- The percentage of care each parent provides to the children.
There is a calculator found on the Child Support Agency’s website at https://processing.csa.gov.au/estimator/About.aspx which can provide an estimate of the child support you are obliged to pay or entitled to receive.
It is important to note that Child Support is determined using someone’s taxable income and the paying party can apply for a reassessment in the event that their income decreases. You can also report to the agency concerns about mis-reporting or under-reporting of income. Likewise, if expenses for the children or special needs of the children increase the receiving party can apply for an increase.
Often parents apply to Centrelink for child support as an interim arrangement for financial assistance whilst they are considering whether they want to proceed with either of the below more ‘locked in’ child support options.
Binding Child Support Agreement
A Binding Child Support Agreement is a legally binding private agreement between parents that is unable to be changed in the absence of further agreement. This type of agreement is enforceable and involves periodic payments usually enforced by the Child Support Registrar and other types of payments (such as school fees) that are enforceable by the Court.
Binding Child Support Agreements often provide for the following (but the list is not limited):
- An ongoing payment to the primary caregiver of the children (called ‘periodic payments’);
- Provisions addressing the payment of school fees; school uniforms; textbooks and other books; iPad and Computers as required by the school; school camps and school excursions;
- Payment for a specific amount of extra-curricular activities, for example that the children could each attend two extra-curricular activities and, in the event, that additional activities are requested prior approval must be received by both parents, before the parents are each liable to contribute to the costs of these activities;
- Private health insurance and costs of out of pocket medical and dental expenses, including but not limited to braces; or,
- Childcare fees.
Additional irregular items are referred to as ‘non-periodic payments’.
A Binding Child Support Agreement can be set aside by consent, or if certain conditions and legal hurdles are met. Setting the agreement aside is both expensive and not guaranteed (i.e. it is a matter of discretion for the Court) so a Binding Child Support Agreement is the most secure way of permanently “locking” child support arrangements in place.
This type of formal agreement will provide both parents with greater certainty as to the amount of funds to be contributed and the correct application of these funds to the child’s expenses.
A disadvantage of a Binding Child Support Agreement is that it does not make any allowance for foreseeable circumstances like a parent’s time with the child increasing or a parent’s income increasing or decreasing significantly over time.
Limited Child Support Agreement
A limited Child Support Agreement is basically like a Binding Child Support Agreement, but as the name suggests it is limited. A Limited Child Support Agreement lasts for three (3) years only and is registered with the Child Support Agency. You do not have to have a Lawyer sign a certificate for this Agreement, but it is recommended that both parties obtain legal advice before entering into that type of Agreement. The cost is very similar to a Binding Child Support Agreement.
If you would like some further information and advice about Child Support options please contact our experienced Family Law Team on (03) 9614 7111.