5 Things You Might Not Know About Child Support

When you’re separating from a partner you’ve had children with, there are a few extra considerations involved. One of these is how the children will be financially supported now that their parents have separated and no longer live together. 

Prior to separating, it is often the case that one party has taken time off work or ceased working entirely in order to be the children’s primary caregiver, while the other party has continued to be the primary income earner.

The Department of Human Services (‘the Child Support Agency’) governs the amount of child support that the primary income earner is obligated to pay to the primary caregiver of the children to provide some security that the children’s basic living expenses can still be met after separation.

To determine this amount, the Child Support Agency conducts an assessment, formally known as a child support assessment (‘the Assessment’).

You might think it ends there. But this isn’t exactly the case. 

Working out how to financially support your children to live the life you had wanted and still want for your children is a bit of a minefield.  There are still several additional factors to consider when talking about child support which many often don’t think about.

5 often overlooked aspects of child support

1. The Assessment undertaken by the Child Support Agency is the minimum amount of child support that the ‘liable’ party is to pay to the ‘eligible’ party.
   
   The child support formula assesses each party’s income and their level of care of the children to determine which parent is obligated to pay the other child support.
   
   The ‘liable’ parent is the parent who is assessed to pay child support, and the ‘eligible’ parent is the parent who is assessed to receive child support.
   
   Child support is assessed by the ‘Child Support Agency’ to be paid monthly. Once the child support has been paid from the liable parent to the eligible parent, the liable parent has no further legal obligation to meet any costs for the children and the responsibility technically falls on the eligible parent (with some exceptions).
   
   The Assessment changes as each party’s circumstances change, so if one party’s income increases or decreases, the Assessment will change to reflect this.
2. The child support formula is based on general living expenses for a child, but does not take into account any additional expenses.
   
   Additional expenses may include agreed private schooling, extra-curricular activities, medical expenses, or general expenses to support the standard of living that the parties and children were used to prior to separation.
   
   This can result in situations where the liable parent is paying the assessed amount of child support, however this does not actually cover the full cost of raising the children in the manner that the parties had agreed to before separation.
   
   The liable parent has no further responsibility to meet any of these additional costs after the child support amount is paid. (Please note that there are some exceptions to this, for example if the liable parent has already signed a school enrolment form or a payment form, then their obligation to pay school fees may continue.)
3. Many parties feel that this governed and more formal ‘Assessment’ is not enough to ensure that children are properly supported.
   
   They therefore enter into a Child Support Agreement as part of their property settlement which provides for the liable parent to pay a greater amount of child support than ‘the Assessment’. Parties can agree to whatever child support arrangement they would like, including:
   • That the assessed amount of child support continues, or that these payments increase or decrease as agreed.
   • That the liable parent instead pays the other a ‘lump sum’ of child support on one occasion and then has no further liability for child support going forward.
   • That the parties equally share costs such as school fees, extra-curricular activities or medical costs. Or, that one party takes full responsibility for these costs.
   • Or any combination of the above.

What is agreed between the parties in terms of child support varies from family to family, and depends on their individual circumstances, including what income each party is earning, what level of care is required for the children, and the co-parenting relationship/agreement of the two parties.

4. There are two different types of Child Support Agreements – Binding or Limited.

Binding Child Support Agreements begin from when they are signed, and only conclude either when the last child turns 18 years or finishes school, or by a further written agreement or termination agreement between the parties.

Limited Child Support Agreements operate only for a period of 3 years, after which time the parties can either enter into a new Child Support Agreement or terminate the agreement and revert to paying and receiving child support in accordance with the Assessment from the Child Support Agency.

Both types of Agreements require the parties to meet a set of requirements, one of which is the necessity to receive legal advice prior to signing the Agreement. If you are considering entering into a Child Support Agreement, ensure that you consult with a lawyer prior to signing the Agreement.

5. A Child Support Agreement must be registered with the Child Support Agency to ensure that it is binding and enforceable.

You can register your Child Support Agreement by contacting the Child Support Agency and providing them with a certified copy of the Agreement.

However, this may not be the end of it for your particular matter. If your Child Support Agreement contains any ‘non-periodic payment’ such as the payment of school fees, medical expenses, extra-curricular expenses or lump sum payments, then your Child Support Agreement may also need to be registered with the Federal Circuit and Family Court of Australia to ensure that it is enforceable if one party defaults on the Agreement.

If you think that your Agreement contains non-periodic payments, then you should contact your lawyer to check whether your Agreement should be registered with the Federal Circuit and Family Court of Australia.

A private Child Support Agreement is often a better way for parties to deal with child support as it takes into account the specific circumstances of each family, whereas the Assessment from the Child Support Agency is a one-size-fits-all approach that is not tailored to the specific needs of each child. 

The most significant benefit of a private Child Support Agreement is that the amount of child support payable does not change depending on the parties’ respective incomes, number of dependents or due to any insignificant changes to the parenting arrangements.

The other benefit is that it can provide for how the child’s actual expenses will be paid by each parent. This can include the costs of extra-curricular activities, any out-of-pocket medical or healthcare costs, school and education costs, private healthcare membership and childcare including outside school care costs.  What costs are included and how these costs are shared by each parent into the private agreement is unique to each situation. 

If you have a child with a greater level of needs or where both parents want a certain lifestyle maintained, then a Binding Child Support Agreement may be more suitable than the assessed amount through the Department of Human Services as it can account for your child’s financial support and ensure that their needs are met. 

The tricky part of a Child Support Agreement is that it must be agreed between the parties and both parties must voluntarily and willingly enter into the Agreement after receiving legal advice as to the advantages and disadvantages of the Agreement. 

If the parties are unable to agree, then the default situation is that the Assessment from the Child Support Agency applies.

We find that the majority of the people we are working with are opting to negotiate a private child support agreement, rather than only adopting the assessed amount of child support, to ensure that the full extent of their children’s financial support is provided for by both parents. 

If you would like to discuss Child Support Agreements further and think that a tailored Child Support Agreement may be a better fit for your family, then please do not hesitate to contact us.

***Disclaimer***

This article is for general information purposes only and does not constitute legal advice or any other professional advice.