Is there an alternative to child support? Here’s a simple guide to your options

Have you recently separated from your partner, and are struggling to deal with the complexities of child support? Chances are if you’re the higher income earner, irrespective of whether or not you are sharing parental care, you are probably liable under the Child Support (Assessment) Act 1989 to pay periodic child support to the other parent, in accordance with the formula in the Act.

By Mehzabin Farazi, Solicitor at Watts McCray, Sydney

However, if you’re wondering about child support alternatives, the Act also allows parents to make their own private arrangements to provide a “proper level of financial support” for their children, outside of the jurisdiction of the Act and of government processes.

Which path would be better for you? Let’s have a quick look at both options below.

Child support assessment

Under the Act, you can apply for child support from the other parent of a child if:

• you are a parent of a child, and are not living with the other parent on a genuine domestic basis; or
• you are an eligible carer (such as a grandparent or aunt, for example) of the child for over 35% of the night of the year, and do not live with the child’s parent on a genuine domestic basis

You can be liable to pay child support if:

• you are a parent of a child under 18 (biologically, by adoption, or by assisted reproductive technology) and;
• you live in Australia, or a prescribed overseas jurisdiction.

Once a parent or carer applies for a child support assessment, Services Australia calculates the amount of child support payable by the liable parent based on a formula. The formula to calculate the child support amount is mathematically complex, but broadly speaking it involves consideration of both the parent/carer’s income and the liable parent’s income, the age(s) of the child(ren), the amount of time the children spend with each parent and the number of children in each parties’ care. Importantly, if these factors vary, then the amount of child support payable per year can also vary.

The Services Australia website can help you obtain a quick and anonymous estimate of the amount you may be required to pay.

Child support alternatives

Private agreement

We here at Watts McCray can offer you an alternative to the above default system of child support assessment.

If both you and the other parent/carer are agreeable, then the Act allows you to enter a child support agreement that dispenses with the jurisdiction of the government to determine and control the amount of child support payable.

There are two types of agreement that can be made

• limited child support agreements
• binding child support agreements

Limited agreements do not require legal advice, which can save you money on legal fees – however, there are major drawbacks, the main one being that these agreements are of limited scope, duration and stability. One party can terminate the agreement by notice to the other after three years, or if the notional amount of child support payable (as assessed under the Act) changes by more than 15%.

The agreement can also be replaced by a subsequent limited agreement (again requiring no legal advice). The court can also set these agreements aside at any time if they are found unjust due to a significant change in circumstances, or if the rate of payment is found to be improper or inadequate.

Binding agreements

At Watts McCray, we often recommend that our clients enter binding child support agreements (if we believe it to be appropriate in your circumstances). These agreements operate similarly to binding financial agreements, and provide a much more stable and consistent future for you, than both the default government process, and limited agreements.

Binding agreements require both parties to obtain legal advice from independent lawyers about the effect of the agreement on your rights, and the advantages and disadvantages of the agreement; before signing.

The amount of child support to be paid under the agreement can be more or less than the amount that would be payable under an official child support assessment.

The payment can be periodic, such as weekly, fortnightly, monthly or annually. The payments can even be paid in a lump sum form. In fact, payments can be set to end after a specific time frame, irrespective of the age of the children.

Unlike the child support assessment process, issues such as changing incomes, or the number and ages of children do not have to have an effect on binding agreements at all. Unlike limited agreements, binding agreements cannot be terminated by one party after three years, nor can the court set them aside if circumstances make them unjust, improper or inadequate. There may however be exceptional circumstances in which a court may set them aside, but such circumstances are rare.

For more information on child support alternatives, binding child support agreements, or on child support and parenting in general, contact us at Watts McCray. Everyone’s situation is unique, and we can only give you practical legal advice that best suits you once we know your specific circumstances. Click here to get started.