Child Support Obligations
Despite parties severing all ties after separation or divorce as parents they have an ongoing obligation to support their children financially until, in most cases, the child reaches 18. This obligation is governed by the Child Support (Assessment) Act, and administered by the Child Support Agency (CSA).
Either parent or a non-parent carer can apply to the CSA to assess the annual rate of child support payable. The rate is determined by applying the Child Support Formula to the parties’ circumstances including their income, “care percentage”, “cost percentage” and the costs of raising each child. Once the assessment is complete, the CSA can collect child support from the paying parent and disburse to the receiving parent.
Every family is different, and special circumstances are sometimes not considered in the application of the Child Support Formula. In the event that parties feel their circumstances have not been properly considered they can apply to the CSA for a change of assessment. Examples of special circumstances include one parent incurring high costs in order to spend time with their child such as travelling and accommodation costs or a child with special needs or a disability, which affects the cost of maintaining that child. Alternatively, the parents may have expected that the child should attend a private school, or the costs of childcare arrangements may be very high. Further, one parent’s income, property, financial resources or earning capacity may not be accurately reflected in the application of the Child Support Formula.
There are 10 grounds upon which a parent can seek to change the Child Support assessment, in addition the Child Support Registrar must also be satisfied that the proposed change of assessment is “just and equitable”, and “otherwise proper”.
Rather than rely on the Child Support Formula parties can enter into a private agreement for the calculation and collection of child support. This agreement can provide for periodic child support payments (weekly or monthly), non-periodic payments (school fees or private health insurance) or lump sum payments. A lump sum payment may be a cash payment or by way of a transfer of property.
In the event that parties elect to enter into a private agreement, it is important that they obtain independent legal advice, without which the agreement may not be binding. The Child Support Agency differentiates between a Limited Child Support Agreement, where the parties do not need legal advice, and a Binding Child Support Agreement, for which legal advice is compulsory.
Either party can elect to terminate a Limited Child Support Agreement after 3 years, or where a notional assessment of Child Support differs by more than 15 % from the previous assessment. This means that one party can end the agreement at will if their circumstances change. Alternatively, a Binding Child Support Agreement can only be set aside by agreement between the parties or by Order of the Court.
Leach Legal can provide advice in relation to child support agreements or obligations arising under the Child Support (Assessment) Act.