CHANGES TO BINDING CHILD SUPPORT AGREEMENTS
On 1 July 2018 amendments were made to the Child Support (Assessment) Act 1989 (Cth) (“the Act”) via the enactment of the Family Assistance and Child Support Legislation Amendment (Protecting Children) Act 2018. These amendments included a series of changes affecting Binding Child Support Agreements. In particular the amendments simplified the way that Binding Child Support Agreements can be terminated.
The amendments are significant because they are retrospective. That is, the amendments affect all Binding Child Support Agreements, regardless of whether they were signed before or after the amendments came into effect.
WHAT IS A BINDING CHILD SUPPORT AGREEMENT?
The Family Law Act 1975 allows eligible parents and carers to voluntarily enter into a written Child Support Agreement as an alternative to a formula assessment of child support.
A Child Support Agreement registered under the Act typically alters a party’s child support obligations which would otherwise be assessed by the Child Support Registrar. There are two types of child support agreements recognised under the Act, Binding Agreements and Limited Agreements.
| Binding Child Support Agreements | Limited Child Support Agreements |
| · Must be in writing and signed by both parties.· Parties must both obtain independent legal advice.
· Does not require a child support assessment by the CSA. · Amount of child support can be greater or less than the amount that would be determined by the CSA. · Possible for a parent to pay child support periodically · or in a lump sum. · Does not automatically expire, but parents may choose to include an expiry date in their agreement. · May be replaced or varied but only in very limited circumstances. |
· Must be in writing and signed by both parties.· Does not require the parties to obtain independent
· legal advice. · A child support assessment must be in place. · Agreement must be accepted by a Child Support Registrar. · Amount of child support must be equal to or greater to the CSA assessment amount. · Child support payments must be made periodically (not possible to make lump sum payments). · Have a “sunset” clause of three years, after which either party can give written notice to the CSA to have the agreement terminated. · Can be terminated at any time or replaced by a new agreement. |
WHAT THE CHANGES DO
Prior to the amendments, Binding Child Support Agreements could only be terminated by a written agreement between the parties (fairly rare in practice), or by a court order (difficult to obtain, time consuming and very rare in practice).
The changes have simplified the process by which a Binding Agreement may be suspended or terminated in circumstances where the care arrangements for the child have changed. The effect of the amendments is that the paying party does not need to make an application to the court to have a binding child support agreement terminated.
Pursuant to the amendments, the Agreement will be suspended, where the child’s care arrangements change and the party receiving child support (the payee) has less than 35% care of the child:
- for a period of more than 28 days; or
- for a period of 26 weeks where:
-
- the terms of the Agreement provide it may be suspended if a parent ceases to be a eligible carer for more than 28 days; or
- all parties to the agreement request it be suspended for longer than 28 days; or
- the Registrar determines there are special circumstances concerning the care change which allows the agreement to be suspended for more than 28 days;
If the payee resumes being an eligible carer within the 28 day or 26 week timeframe the Agreement will resume, otherwise the Agreement will be terminated.
The amendments also expand the use of amended Tax Assessments in a broader range of circumstances and the range of methods available to collect child support overpayments.
If you think that your Binding Child Support Agreement may be affected by the recent amendments or you want more information on how we can help you, with a Child Support Agreement or other Family Law Matter, Please contact:
Renee Smith, Accredited Family Law Specialist, rsmith@mtpartners.com.au
Emma Shuttleworth, eshuttleworth@mtpartners.com.au
The changes to the Child Support (Assessment) Act 1989 are changes that have drastically changed the landscape for Binding Child Support Agreements and it is highly likely that Agreements signed before 1 July 2018 do not cover these changes. If your care arrangements have changed since signing an Agreement, you may find that your Binding Child Support Agreement has been suspended, or even terminated.
If you have a Binding Child Support Agreement signed before 1 July 2018, we strongly advise you to contact our office and have one of our solicitors review same so that we can provide you with advice about how to proceed.
