What is a Binding Child Support Agreement?

What is a Binding Child Support Agreement?

A Binding Child Support Agreement is a written document which allows parties to formalise their own arrangements for child support rather than being subject to a Child Support Assessment issued by Services Australia (formerly known as the Child Support Agency).

An Assessment issued by Services Australia is often based on a complicated calculation depending upon the income of the parties, the age of the children and the amount of time the children spend in each parties care. The Assessment can as a result vary dramatically each year.

It allows the parties to, amongst other things:

1. Agree to pay an amount less than the Assessment;
2. Agree to pay more than the Assessment;
3. Pay additional amounts for school fees, medical or extra-curricular expenses or any other expenses that the parties might foreshadow for their children. An assessment incorporates all of the costs of the children and doesn’t provide for additional costs.

The Legal requirements of a Binding Child Support Agreement

Given the power of a Binding Child Support Agreement, there are numerous legal requirements to ensure the Agreement is enforceable against the parties, such as:

1. the Agreement needs to be in writing;
2. The Agreement needs to be signed by both parties; and
3. both parties need to obtain independent legal advice as to the effect of the agreement, and the advantages and disadvantages of entering into the agreement.

Once an agreement satisfies the legal requirements, it can be registered with Services Australia. You can then decide whether you opt for private collection of the periodic amount (that is the weekly or monthly amount you have agreed that the other party will pay) or ask for Services Australia to collect it for you. Services Australia have wide ranging powers to collect periodic amounts, for example, from the pay of the non-paying spouse or from ATO refunds the non-paying spouse is entitled to.

When does a Binding Child Support Agreement end?

Binding Child Support Agreements are, as the name suggests, binding until certain events occur, included but not limited to the following (referred to as “terminating events”):

1. The child turns 18;
2. The child becomes a member of a couple;
3. The child is no longer present in Australia, an Australian citizen, and no longer ordinarily resident in Australia.

In some very limited circumstances it may be possible to set the agreement aside by way of court application.

Benefits and Risks

One of the real benefits is for the payer and payee to have certainty about how much the child support will be over the course of the Agreement and be able to better plan their financial future. It is possible to specify that the support will increase in line with the consumer price index each year OR keep as a static amount throughout the course of the agreement. For the paying party, it is possible to draft in a fall back provision that if their income were to fall below a certain level that child support would be suspended or revert to a lesser amount.

However it needs to be recognised that parties circumstances do change and it may be more advantageous to rely upon Services Australia to issue assessments for child support based upon the parties circumstances from time to time.

If you require any advice about Binding Child Support Agreement please do not hesitate to contact our experienced family law team  at Watts McCray