Child Support Agreements

Child Support Agreements

Child support is ongoing financial support made by one parent to the other to contribute to the costs associated with raising the child or children of the relationship.

When it comes to determining how much child support should be paid, most of the time parties rely on the assessed rate provided by the Child Support Agency. In determining the exact sum payable, the Child Support Agency takes into consideration factors such as the individual income of each party as well as the percentage of care each party has of the child/ren.

Most separated parents will be content to make payments in accordance with this assessed rate. However, some parents prefer to make their own private arrangements with respect to the financial support they provide for their children. This type of agreement can be achieved through either a Limited Child Support Agreement or a Binding Child Support Agreement. The type of agreement that is chosen will largely be dependent on the personal circumstances of each of the parents and the means by which they want to provide the support.

What is a Binding Child Support Agreement

A Binding Child Support Agreement is a contract between parents that stipulates the amount of child support to be paid for a specified period of time and the way in which that support might be paid. As evidenced by the name, this type of agreement is legally binding on the parties.

Payments made under a Binding Child Support Agreement can be either higher or lower than the Child Support Agency’s assessed rate. This type of agreement is also flexible and allows support to be paid in a variety of ways such as, by weekly instalments, lump sum payments or other non-cash payments such as the provision of goods and services.

For some parents, it is preferable to have the non-resident parent assume the responsibility for paying the childcare or school fees in lieu of regular monetary payments. Entering into a Binding Child Support Agreement enables the parties the flexibility to make this type of agreement.

The binding nature of these types of agreements means that the agreement can only be terminated by the creation of a new Binding Child Support Agreement, a terminating agreement or by Court Order.

The Agreement can otherwise be terminated if provision is made with a specific clause included in the agreement as to terminating events, such as if the child turns 18 or other terminating events pursuant to section 12 of the Child Support (Assessment) Act 1989.

A Termination Agreement is effectively an agreement entered into by both parties for the intended purpose of terminating the existing Binding Child Support Agreement.

Limited Child Support Agreement

Unlike the Binding Child Support Agreement, the Limited Child Support Agreement is a lot less formal in nature in that:

  • It can be made without the parties needing to obtain independent legal advice;
  • It must be equal to or more than the annual rate of the child support assessment;
  • It will not take effect unless it is registered by the Registrar of the Child Support Agency; and
  • It can be terminated by either party to the agreement after a period of three years.

Important Considerations

Before a Binding Child Support Agreement will be accepted by Centrelink (The Department of Human Services-DHS) the parties must have sought a child support assessment by the Child Support Agency (this is called a nominal assessment). Although the parties can agree on an amount that may be less than the assessed amount, for the purpose of Family Tax Benefit payments, Centrelink will use the assessed rate when calculating your eligibility for Family Tax Benefit payments.

For a Binding Child Support Agreement to be binding, Section 80C of the Child Support (Assessment) Act 1989 stipulates that both parties must receive independent legal advice before entering into a Binding Child Support Agreement. This ensures that each party has received advice as to the effect that the agreement will have on their rights as well as the advantages and disadvantages, at the time the advice was provided to the party making the agreement. Each legal practitioner is then required to sign a Certificate of Independent Legal Advice and annex this to the Agreement.

At Adelaide Family Lawyers our dedicated team of Family Law specialists have a wealth of knowledge and experience when it comes to drafting Child Support Agreements. If you and your former spouse are considering entering into a Child Support Agreement whether Binding or Limited, call and ask to speak to one of our family law specialists today.