Child Support
Under the Child Support (Assessment) Act, the primary carer of the child or children can make a claim for child support from the other parent.
The Child Support Agency is responsible for administering your child support arrangements, and assessing the amount of support which should be provided.
The decision is based on each parent's income, the number of children and their living arrangements.
The different categories of child support
There are three different categories of child support payments:
- Periodic payment - payments of a regular amount on a recurring or cyclical basis.
- Non-periodic payments - Where the court or agreement makes an order for non-periodic payments (eg payment of school fees to third parties), it must state whether or not these will reduce the annual rate of child support payable (s. 125).
- Lump sum provision - a payment made to the other parent as a "credit balance" to be used to meet ongoing liabilities (s. 69A). The Court or the agreement must specify the percentage of these liabilities to be met by drawing on the lump sum.
There are also non-agency payments, being:
- a payment made directly to a payee (s .71);
- a payment to a third party in discharge of a debt owed by the payee, the payer, or both (s. 71A); or
- a non-cash transaction such as a transfer of property or the provision of services (s. 71B).
The CSA does not have power to enforce child support payments against third parties.
Since 1 July 2008, child support is determined on the basis of the cost of care of children, the adjusted income of both parties and the level of care provided by the parents (s. 35A) and (s. 35).
There are 8 steps to this process being:-
Step 1. Work out each parent's child support income for the child for the day (s. 41).
Step 2. Work out the parents' combined child support income for the child for the day (s. 42).
Step 3. Work out each parent's income percentage for the child for the day (s. 55B).
Step 4. Work out each parent's percentage of care for the child for the day (s. 48).
Step 5. Work out each parent's cost percentage for the child for the day (s. 55C).
Step 6. Work out each parent's child support percentage for the child for the day (s. 55D).
Step 7. Work out the costs of the child for the day under (s. 55G) and (s. 55H).
Step 8. If a parent has a positive child support percentage under step 6, the annual rate of child support payable by the parent for the child for the day is worked out using the formula:
(Parent's child support percentage for the child for the day) X (costs for the child for the day)
Binding child support agreements:
- Are formal agreements, in writing and signed by both parents.
- Can only be entered into on legal advice and must include a statement to the effect that each party has received independent legal advice as to the effect and advantages and/or disadvantages of the agreement, before it was signed.
- Must include an annexure, for each of the parties to the agreement, signed by the person who provided the legal advice, which certifies that the advice was provided (section 80C).
- Can be made for any amount that both parents agree is appropriate. When calculating the amount of any Family Tax Benefits or other payments to be made to parents, Centrelink will base payments on the notional assessments of child support, not the agreed amount.
- The Binding Agreement cannot be varied and can only be terminated. The grounds for terminating a Binding Agreement are limited (s.136) and when drafting a Binding Agreement you need to "think ahead" to provide for various contingencies, such as changes in the financial circumstances of the parties, unemployment or change in care arrangements.
Limited child support agreements:
- Do not require legal advice.
- Must be an administrative assessment in place at the time that the agreement is entered into and the agreement must not provide for payment of periodic child support which is less than the assessment.
- Cannot be varied but can be ended by a new limited or binding agreement or a court order.
- Must be lodged for acceptance with the CSA and accepted by the CSA before the agreement will have any effect.
- One party can give notice to the Registrar after three years to terminate the agreement.
- A party can at any time obtain a notional assessment of child support and if the notional assessment changes by more than 15% from the provision of periodic child support in the agreement, then the agreement can be unilaterally terminated.