There are 3 ways in which parties can arrange child support matters. They are:
Most people are aware that Child Support can be claimed via the Department of Human Services. This is done under the Child Support (Assessment) Act which requires an administrative assessment to be undertaken. This assessment is based on information available to the Registrar, and is often provided by the Applicant.
Child support under the act is calculated in accordance with a prescribed formula which takes into account the number of children, both parents’ income and a number of other factors.
Following an assessment the amount payable under the administrative assessment is enforceable by the Child Support Registrar against the liable parent. A significant advantage of this is that the liable parent’s payment can be taken from their salary. Further, the amount payable under the assessment is reviewable and is reviewed should circumstances change; say if a parent’s income increases or decreases significantly or if there is a change in parenting arrangements.
ii) Child Support Agreement
Many parents find they don’t need the involvement of the Registrar and are able to arrange their child support affairs by agreement. A child support agreement can include both periodic and non-periodic payments. Periodic payments are regular weekly or monthly payments and non-periodic payments cover items such as school and medical expenses.
If parents wish to formalise their agreement there are two ways in which this can be achieved:
a) Binding Child Support Agreement
A binding child support agreement replaces any assessment and is unable to be changed in the absence of further agreement between the parents unless the Court sets the agreement aside. This type of agreement is enforceable with periodic payments usually being enforced by the Child Support Registrar and other types of payments (such as school fees) being enforceable by the Court.
Setting the agreement aside is both expensive and not guaranteed (ie. it is a matter of discretion for the Court) so a binding agreement is the most secure way of permanently “locking” child support arrangements in place. This can be seen both as an advantage or a disadvantage depending on your circumstances. It is extremely important to consider including comprehensive terminating events in the agreement and we therefore advise that considerable care is taken in the drafting of such agreements.
b) Limited Child Support Agreement
A limited child support agreement replaces the assessment, but is far easier to set aside should either parent’s income change. Limited agreements can also be terminated by either party after 3 years.
iii) Informal Agreement
If parties are largely agreeable and no assessment has issued, they can simply enter into an informal arrangement based on mutual trust. Such agreements are unenforceable.