Amendments to the Child Support (Registration and Collection) Act in 2008, changed the landscape on lump sum payments. Originally under the Child Support (Assessment) Act 1989 (Cth), eligible parties could make an application for a lump sum order in substitution of periodic payments. Now, a lump sum order can be made that does not alter the original assessed amount by crediting the payment against the assessed liability.
How does this work?
The liable parent is still responsible for the ongoing child support payments when they fall due, but the lump sum payment made under the Order will be credited against the assessed liability at the end of the financial year. It is therefore necessary for the Order to specify what percentage of the liability is to be met by the lump sum, otherwise the lump sum payment will be credited against the annual child support liability by 100%.
The Registrar must at the end of the financial year reduce the remaining lump sum payment by the monetary amount that has been credited against the assessed liability for that year. If the assessment began later than the start of the financial year, the assessed period will only be from the start date of the child support case.
On 1 July each year, the remaining lump sum payment is indexed in accordance with the Consumer Price Index (CPI).
Can I make an Application?
Lump sum applications are usually considered in circumstances where the liable parent is either income poor and asset rich, or where there has been a history of non-compliance and a strong view that compliance will be an issue with any future periodic assessment.
In order for an application to be made, an administrative assessment of child support must be in place through the Child Support Agency and a departure application must have previously been determined.
Prior to making an Order, the Court must have regard to section 124 of the Child Support (Assessment) Act, which requires consideration to be given to not only the administrative assessment and departure order, but also the carer’s current financial position and the effect the proposed order would have on them.
If you would like to discuss your child support options with one of our experienced child support solicitors, please contact Best Wilson Buckley Toowoomba (07) 4639 0000 or Best Wilson Buckley Family Law Brisbane (07) 3210 0281.