Part of the process when finalising your affairs after the breakdown of a relationship involving children is to decide what the care arrangements for the children will look like and the financial support required for that care. The Child Support (Assessment) Act 1989 provides that every parent has a primary duty to maintain their child. Generally, the parent who has the primary care of the children will apply to Services Australia (formerly Child Support Australia) for a Child Support Assessment. This assessment determines the financial support from the parents to meet the day-to-day needs of the children; either parent may apply for an assessment.
Some parents will often choose to enter into a binding child support agreement at the same time as finalising their property matters. There are two different types of agreements you can have that deal with child support, a binding child support agreement and a limited child support agreement. So, what is a binding child support agreement, and can anyone get one?
Binding Child Support Agreement
A binding child support agreement (“Binding Agreement”) is a written agreement between the parents or eligible carers regarding the financial support of the child/children. This gives parents or carers more freedom and flexibility regarding the financial support for the child/children while at the same time providing a level of certainty and finality regarding child support payments.
In order to enter into a binding agreement both parties to the agreement will need to firstly agree on how much child support will be paid. Unlike a limited child support agreement, a binding agreement can be either more or less than the amount that would be payable under a child support assessment. A parent or eligible carer must also have at least 35% care of the child/children to be able to enter into a binding agreement.
Once both parties to the agreement have decided and agreed on an amount payable, an agreement can only be accepted by the Registrar if both parties have signed the agreement and have received independent legal advice from a solicitor. Independent legal advice can only be given by a solicitor who holds a current practicing certificate. The solicitor providing the advice is required to provide a signed certificate advising that they have provided that person with advice in relation to the advantages and disadvantages and the effect of the binding agreement.
Once these steps have been completed the agreement is then required to be sent to the Registrar of the Child Support Agency to be accepted. Once accepted, the binding agreement will have effect as though they were court orders.
The advantages of a Binding Child Support Agreement are:
- There is no requirement to already have a child support assessment in place
- Flexibility and control over amount
- Provides certainty and finality
- Amount of support can be more or less than the amount assessed by Services Australia
- Can be registered with the Federal Circuit and Family Court of Australia
The disadvantages of a Binding Child Support Agreement are:
- In force until the child/children turns 18 or end of school
- Is binding on the parties despite any changes in income, earning capacity or loss of employment
- Requires independent legal advice and a certificate signed by a practicing lawyer under Section 80C of the Child Support (Assessment) Act 1989
- They are final and very difficult to vary
- The agreement can only be set aside by a Termination Agreement or a new Binding Child Support Agreement
Limited Child Support Agreement
A Limited Child Support Agreement, just like the binding child support agreement, provides parents and eligible carers with the flexibility of deciding what financial support will be in place for their child/children moving forward. The agreement must be in writing and signed by both parties.
In order to enter into a limited child support agreement (“limited agreement”) the parents and/or eligible carers of the child/children will still need to agree to an amount of support payable, however this amount has to be either equal to or above the amount of child support as assessed by Services Australia. The limited agreement is only in place for a maximum of three (3) years and must be registered with the Registrar of the Child Support Agency.
The advantages of a Limited Child Support Agreement are:
- Parties are not required to obtain independent legal advice
- Have the flexibility to renegotiate after the three year period has expired
The disadvantages of having a Limited Child Support Agreement are:
- They are only in place for a maximum of three (3) years
- There must be a child support assessment in place already
What can you include?
The benefit of having either a binding or limited child support agreement is that you can make provision for the things that are important for your family and your circumstances. You can find provisions that may be included in your child support agreement in Section 84 of the Child Support (Assessment) Act 1989 and may include things, but not limited to:
- School fees
- Uniforms, books
- School camps, excursions
- Extracurricular activities
- Private health insurance
- Medical needs of the childcare fees
- What do you want the agreement to cover
If you require advice or further information on either binding or limited child support agreements, please do not hesitate to contact the friendly team at Miller Sockhill Lawyers.