Agreements in relation to child support can be formal or informal.
Some parents prefer to have an informal child support agreement between themselves rather than having Services Australia (formerly the Child Support Agency) collect the child support on their behalf. In this case, they can still have a child support assessment in place but opt to collect the payments privately between themselves or, alternatively, some people never worry about having a child support assessment in place and simply reach an informal agreement between themselves in relation to what child support payments, if any, will be made.
Whilst it is great if you can reach agreement amicably and keep matters between yourselves, issues can arise in the future that you are unable to resolve without the involvement of Services Australia, or one party may just stop paying, which is then likely to result in Services Australia becoming involved. For this reason, we generally recommend formalising any agreement that is reached for child support as it is such a grey area and can cause confusion and distress when parents are trying to work out what child support payments cover and what they don’t. The benefit of having a formal child support agreement in place is that it can define exactly what is covered by the payments and what is not and how much each parent will contribute to other costs.
There are two ways to formalise a child support agreement and that is by way of:
- a limited child support agreement; or
- a binding child support agreement.
Either agreement can be registered with Services Australia.
Limited child support agreement
A limited child support agreement is less formal than a binding child support agreement and there are fewer criteria to be met to formalise a limited child support agreement.
In order to make a limited child support agreement, there must be an administrative assessment in place by Services Australia and the amount to be paid pursuant to the agreement must be equal to or greater than the assessment that is in place. This type of agreement can be entered into without either party obtaining legal advice although, for the reasons outlined earlier, we recommend you obtain advice prior to entering into any agreement.
A limited child support agreement remains in place for three years and can be ended:
- by making a further agreement;
- if both parents agree in writing;
- by a court order; or
- if the notional assessment changes by more than 15% either parent can choose to end the agreement.
This type of agreement can also be ended by either parent at any time, three years after the agreement has been in place.
Binding child support agreement
A binding child support agreement can be made with or without a current assessment in place from Services Australia. Further, a binding child support agreement can be less than, equal to, or more than, the child support assessment in place, if any.
Just like a limited child support agreement, a binding child support agreement can deal with both periodic payments and non-periodic payments. This means there can be clauses included in the agreement to address who will pay for the children’s uniforms, extra-curricular activities, instruments, school fees and anything else that parents wish to include.
A binding child support agreement can only be ended in writing by both parents, by making another binding agreement or by a court order. The binding child support agreement also requires both parents to obtain independent legal advice prior to signing a binding child support agreement. This requires the solicitors engaged by each parent to sign a certificate confirming such advice has been provided thereby making the agreement binding.