Most parents find child support a source confusion. Commonly they ask us if they have to go through the department to human services, child support (CSA) or not? The first point is that parents are expected to support their children to the best of their ability. Here is an overview of some child support options for you to consider:
(1) Private arrangement
Here parents agree how the child’s care costs will be paid or shared in the future.
Some couples in their property settlement might agree to put money aside for certain expenses such as private school fees or they might set up a formal trust for example for the children’s education. Other couples might agree as to which parent will be responsible for paying certain expenses. An example might health insurance premiums and medical costs, extra curricular activities or the costs such as school uniforms, excursions etc.
(2) Child Support as Assessed
If parents cannot agree then a parent might apply for child support through the Child Support Agency who may issue a child support assessment. A parent who has applied for Centrelink or means tested benefits must have a child support assessment issued.
Child support as assessed takes into account each parent’s income and the number of nights that the child is in each parent’s care which is then included in the assessment formula used by CSA. Child support is generally insufficient for extracurricular activities, dental and medical treatments eg orthodontic treatment or private tuition/schools fees and the like. If the other parent will not pay more than child support as assessed then a change of assessment application can be made through the Child support agency.
To bring that application, the applicant needs to satisfy one or more of the 10 grounds for that change of assessment some of which include costs in spending time with a child; if the child support assessment is unfair because of the income, earning capacity, property or financial resources of the parent or the type of education or training that the parents agreed their child would receive such as private schooling.
If the application is successful then the child support agency can increase the assessable child support. That mean the parent receiving child support will receive more child support on account of the higher care costs. If the decision is disputed then it can be reviewed by the CSA Registrar. That decision can appealed to the Administrative Appeals Tribunal and/or an application made to the Federal Circuit Court of Australia for child support orders but within the specified time limit.
Sometimes a child support order might be appropriate especially if a paying parent resides overseas and in a country which does not have reciprocal child support arrangements in place.
Child support agreements
To give greater certainty and where child support as assessed will not be sufficient eg the child attends a private school or has higher health care costs, then a child support agreement might provide more certainty.
There are two types – Binding or Limited.
A binding child support agreement enables any amount to be paid. It can include lump sum child support in the form of property to be credited fully against any child support liability. Each parent must get independent legal advice before the agreement is signed. Each solicitor must sign that certificate of advice and it should be registered with CSA. A binding child support agreement is serious transaction and need careful drafting and consideration as to what events in the future might arise and should terminate it. It can only terminate by a new binding child support agreement which expressly terminates the former or court order. As the threshold findings to support such an order are high, they should not be rushed into.
They cannot be varied – to vary it the parties must enter into a new binding child support agreement to specifically terminate it and set out the newly agreed terms. They do offer clear advantages too – such as greater certainty in terms of obligations to pay and receive certain payments, can provide for any amount of child support and they do not require a child support assessment to be issued. They work well for many families.
A limited child support agreement offer more flexibility (but less certainty as a result). The parties do not require legal advice before entering into it. There must be a child support assessment issued for the registrar to accept it for registration.
It can end if both parties agree to end it in writing, after 3 years or more and a party request CSA end it and if the paying parent is paying 15% of more than the notional assessment and asks CSA to end it.