Child Support – I have lost my job – Do I still have to pay child support – What do I do?

25/05/2020

If you have been assessed for payment of child support you will have been assessed for payment of child support on the basis of your income.  Australia now has nearly 1,000,000 unemployed where they have an obligation to pay child support pursuant to an assessment by the Child Support Agency or pursuant to a Binding Child Support Agreement.

When you lose your job the legal obligation to pay child support does not stop – it will not “go away”.  If there are arrears of payment of child support the amount of the arrears is not waived.  Becoming a bankrupt does not extinguish the arrears – the debt survives the bankruptcy. 

Whether child support payments can be suspended, varied or need to be continued to be paid will vary depending on whether there is a Child Support Assessment (Administrative Assessment) or a Binding Child Support Agreement.

Binding Child Support Agreement

The obligation to pay child support imposed by a Binding Child Support Agreement will continue and child support will still need to be paid notwithstanding the financial circumstances of the person who is required to pay the child support may have changed significantly including unemployment.

A Binding Child Support Agreement can only be terminated by:

• A current Binding Child Support Agreement may be terminated by the parties entering into a new Binding Child Support Agreement to the effect that the previous Agreement is terminated.  The new Agreement could vary the payment amount; or
• The Family Court of Australia or Federal Circuit Court setting aside the Binding Child Support Agreement under the Child Support Legislation.  There are only limited circumstances in which the Family Court or Federal Circuit Court can set aside the Agreement. 

Administrative Assessments – Child Support Assessment Act 1989 

The Child Support Agency assesses a parent for payment of child support pursuant to the child support formula.  The basic formula involves a consideration of:

• A calculation of each parents’ child support income which is the parents’ adjusted taxable income minus a self-support amount.
• Add both parents’ child support incomes together to get a combined child support income amount.
• Divide each parent’s individual child support income by the combined child support income to get an income percentage for each parent.
• Work out each parents’ care percentage of the child using the care and cost table.
• Work out each parents’ cost care percentage using the care and cost table.
• Subtract the cost percentage from the income percentage of each parent.

How Do I Vary a Child Support Assessment?

An Application to change your Assessment in special circumstances must be made to the Australian Government Department of Human Resources (Child Support Agency).  The parent paying child support or the parent receiving child support can apply to the Registrar (s98B).  The Registrar must find that the person seeking a determination (variation) has established that there is a valid reason for a departure from the Administrative Assessment (s98c). 

The Child Support Assessment is unfair because of the income, earning capacity, property or financial resources of one or both parents. 

What is a Ground for Departure from Assessment? 

Section 117(2) of the Child Support Assessment Act sets out the grounds for departure and these are:

There are 10 reasons for a change of assessment (section 117(2)).

• Reason 1 - The costs of maintaining a child are significantly affected by high costs of enabling a parent to spend time with, or communicate with, the child
• Reason 2 - The costs of maintaining a child are significantly affected by high costs associated with the child's special needs
• Reason 3 - The costs of maintaining a child are significantly affected by high costs of caring for, educating or training the child in the way both parents intended
• Reason 4 - The child support assessment is unfair because of the child's income, earning capacity, property or financial resources
• Reason 5 - The child support assessment is unfair because the payer has paid or transferred money, goods or property to the child, the payee, or a third party for the benefit of the child
• Reason 6 - The costs of maintaining a child are significantly affected by the high child care costs for the child (and the child is under 12 years of age)
• Reason 7 - The parent's necessary expenses significantly affect their capacity to support the child
• Reason 8 - The child support assessment is unfair because of the income, earning capacity, property or financial resources of one or both parents
• Reason 9 - The parent's capacity to support the child is significantly affected by:
  • their duty to maintain another child or person,
  • their necessary expenses in supporting another child or person they have a duty to maintain,
  • their high costs of enabling them to spend time with or communicate with, another child or person they have a duty to maintain
• Reason 10 - The parent's responsibility to maintain a resident child significantly reduces their capacity to support the child support child

If you have any queries or concerns regarding child support whether pursuant to a Child Support Assessment or Binding Child Support Agreement or are proposing to seek child support from the other party and are unsure how to navigate this process, at Watson & Watson our Senior Family Law Lawyers can assist you.  Please contact Richard Watson Senior Family Law Solicitors or his Personal Assistant Shereen Da Gloria to discuss your concerns and seek appropriate advice.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011.