Child support is ongoing financial support made by one parent to the other to contribute to the ongoing costs associated with raising the parties’ child or children.
CSA Administrative Assessment
For most separated couples, the amount of child support payable will be calculated through a nominal assessment by the Child Support Agency (CSA).
To determine the amount payable, the CSA will take into consideration factors such as the individual income of each parent and the percentage of time the child is in each parties’ care.
It is important to note that there is no obligation on separated parents to have a formal assessment of child support. Parents are entitled to reach a private agreement that suits their individual circumstances and in fact, many parents choose this option.
A private agreement reached between separated parents can be formalised through the creating of either a Binding Child Support Agreement or a Limited Child Support Agreement.
Binding Child Support Agreement
A Binding Child Support Agreement is a contract between parents that specifies the amount of child support payable and the time frame in which such payments are to be made. Once signed by both parties this document becomes legally binding and enforceable.
Binding Child Support Agreements are unique in that they allow the parties to determine the amount to be paid and whether or not that amount is to be paid by weekly instalments, lump sums on other non-cash payments.
These agreement’s will often stipulate that in lieu of cash payments to the other parent, the agreed sum might be paid directly towards child related expenses such as school fees, health insurance or extracurricular activities.
For a Binding Child Support Agreement to be binding, Section 80C of the Child Support (Assessment) Act (1989) provides that both parties must receive independent legal advice prior to entering into the Agreement. By obtaining legal advice each party is given notice of the legal effect of that agreement and any implications there might be for them if their financial position were to change in the future.
Once created, Binding Child Support Agreements must be registered with Centrelink (The Department of Human Services-DHS) for Family Tax Benefit purposes. It is important to note however that before such an agreement will be accepted by Centrelink the parties must have first sought a nominal assessment by the Child Support Agency. Notwithstanding the fact that the parties may have agreed on an amount that is greater or lesser than the CSA’s nominal assessment, for the purpose of Family Tax Benefit payments, Centrelink will use the assessed rate when calculating each parties’ eligibility for Family Tax Benefit payments.
