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Child Support – Binding Child Support Agreement or Administrative Assessment by the Child Support Agency? – What is best for me?

04/01/2022

In Australia every parent of a child has a legal obligation to financially support their child or children. Some parents will be required to pay child support and other parents will be entitled to receive payments of child support.

How these obligations and entitlements are met is an area where Watson & Watson regularly advise as to what child support should be paid and how the legal obligation to pay is met and documented.

In the case of separated parents, issues will arise in relation to how the children are to be supported financially.  The usual situation will be that the child (or children) will be living with one parent in that parent’s home and spending time with the other parent in that other parent’s home.  The level of financial support required by each household will vary.

It is not unusual for there to be a disparity of income between households.  One parent may have an income which is much more than the other parent.  The parent with the lower income may feel that the child/children spend more time with them and that they are meeting the majority of the children’s expenses and that the other parent (with whom the children spends less time) is “getting off lightly”.

Different issues arise where a parent fails to pay child support at all and advice may be needed as to how the obligation to pay child support can be enforced.

Recent Case – Watson & Watson advised the father

As part of a divorce and property division between separated parents, Watson & Watson acted for and advised the father. The father wanted to ensure that the children were supported financially but was concerned that unless there was some proper (and enforceable agreement) he would receive regular requests for more money from the mother. He wanted certainty and security.

There were 3 children and the parents had agreed in relation to Parenting Orders which effectively, had the children living with each parent for half the time.  The father’s income was superior to that of the mother’s income but the children lived in both households.  The mother asserted that by reason of the father’s superior income, he should meet more than one-half of the children’s expenses even though the children lived with each party for an equal amount of time.

The father wished to support his children and to provide them with the best education and medical security that he could.  He acknowledged that in fairness and for the benefit of the children, he should pay more.  However an exact agreement as to who should pay what and how much, was not initially reached.

The mother’s expectation was that the father should pay her for the support of the children when they were in his household and that he should pay all other expenses including schooling, uniforms, medical insurance and travel expenses.  The father was concerned that it may be difficult for him to control how much was being spent on the children and he sought advice from Watson & Watson.

Watson & Watson’s advice in relation to options available:

Watson & Watson advised that in his situation the following options were available:

  1. A private agreement between the mother and the father as to what should be paid and that there not be any application to the Child Support Agency for an Administrative Assessment and that they not enter into a Binding Child Support Agreement; or
  2. Apply to the Child Support Agency for an Administrative Assessment of the fathers’ liability to pay child support and then pay to the mother the amount assessed as payable; or
  3. That the father and mother agree to enter a Binding Child Support Agreement.

Comments on the advantages and disadvantages of the options:

Private Agreement

It is possible for separated parents to enter into a private agreement which could be written or agreed orally as to what financial support each of the parents will provide for their children.  If each parent does what they agree to do, then the children will be financially supported and there need not be any application to the Child Support Agency for assessment of child support nor need there be, a Binding Child Support to regulate the payment of child support.  The difficult arises because people can change their minds and in circumstances where there is only a private agreement between the parents, either parent can change their mind as to whether to pay and/or what amount to pay. 

In other words, the private agreement is not enforceable and can only be an option in families where there is likely to be utmost co-operation between the parents.

Administrative Assessments – Child Support Assessment Act 1989 

The Child Support Assessment Act 1989 (Cth) established the Child Support Agency (CSA).  The CSA receives Applications for Assessment of parents for payment of child support.  There is a set procedure for the making of the Application which is made online and filed with the Department of Human Resources.  Once an Application is received, the Child Support Agency will assess the parents for payment of child support.

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

  • 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.

The Child Support Agency will make an assessment of the parents and determine

what amount of child support needs to be paid (to the other parent) by way of child support. Child support payments can be paid to the Child Support Agency or to the other parent directly. Sometimes the employer of the paying parent will make a deduction from their salary if the payer is employed to ensure that the child support is paid by the responsible parent.  A child support assessment may vary annually as income and expenses can also vary. There are a number of methods for challenging a child support assessment or varying the amount that has been assessed as payable but these methods are not discussed in this article but are discussed on the Watson & Watson website.

Binding Child Support Agreement

A Binding Child Support Agreement is an Agreement in writing signed by both the parents and supported by Certificates of Independent Advice from Legal Practitioners for both parties to the agreement.  The technical requirements regulating the requirements for there to be an effective and enforceable Binding Child Support Agreement are set in the Child Support Assessment Act.  The Agreement will only be binding if it complies with Section 80C of the Child Support Assessment Act.  Watson & Watson regularly draft Binding Child Support Agreements in child support matters or as part of an overall property division.

One of the benefits of entering into a Binding Child Support Agreement is that the payer (the person who pays the child support) and the payee (the person who receives the child support) will have complete certainty as to how much is to be paid and how much is to be received.  The Binding Financial Agreement governs the whole arrangement and this may lessen contentious arguments between the parties. It is possible to have within the Binding Financial Agreement, a mechanism to allow for increase in payment of child support over time so as to keep pace with inflation or to increase the payment of child support if some specific and anticipated event arises.  It can also be linked to a Child Support Assessment so that there is an adjustive mechanism within the Binding Child Support Agreement that is the amount assessed by the Child Support Agency, is paid and the payer agrees to pay certain specific additional expenses such as school fees or tuition fees.

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

A Binding Child Support Agreement can only be terminated by:

  • A new Binding Child Support Agreement 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
  • A Court setting aside the Binding Child Support Agreement under the Child Support Legislation.  There are only limited circumstances in which a Court can set aside the Agreement which we can discuss with you.

Advice and outcome

Watson & Watson advised their client (the father) that it was to his advantage to enter into a Binding Child Support Agreement so as to regulate what amounts he would pay and for what period the payments would continue.  The Agreement drafted by Watson & Watson and entered by the parents provided that the father would pay the amount assessed by the Child Support Agency from time to time for the financial support of the children.  The Binding Child Support Agreement incorporated the Assessment made by the Child Support Agency.  The Agreement then identified which additional expenses would be met by each parent and covered such matters as payment of school fees, medical insurance, travel and extra-curricular activities.

Included in the Binding Child Support Agreement, was a review mechanism which allowed the parties to the Agreement to review the terms of the Agreement 4 years after the date that it had been entered. 

If you have any issues pertaining to child support and are unsure of your obligations or are currently in a contentious debate with your estranged partner or spouse in relation to child support, at Watson & Watson Lawyers our highly experienced Senior Family Law Solicitors can assist you in this process to ensure fairness and equity when it comes to payment of child support.  Please contact Richard Watson Senior Family Law Solicitor or his Personal Assistant Shereen Da Gloria to discuss your matter and seek appropriate advice at the outset.

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

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