Broadly, there are three options for parents with respect to the financial maintenance of children:
- Obtain an administrative assessment from Services Australia (Child Support);
- Execute a Child Support Agreement; or
- Have an informal agreement.
Administrative Assessment
Services Australia (Child Support) (“the agency” also known as the Child Support Agency or CSA) will make an assessment of child support upon application by a parent. The agency will apply a formula to the family’s circumstances to determine the amount of periodic child support to be paid and by whom. This will be assessed as a weekly, monthly and annual amount.
Generally speaking, you’ll either pay child support if your percentage of care of a child is less than your share of the combined income or you’ll receive child support if your percentage of care of a child is more than your share of the combined income.
The formula applied by the agency considers the parents’ income and combined income, the child(ren)’s age, each parent’s percentage of care which is based on overnight care of the child(ren) and the average costs of raising a child. An administrative assessment will not account for extra-curricular expenses or private school fees however a parent may apply for a change of assessment in a limited set of special circumstances. One of these circumstances includes if the costs of maintaining a child are significantly affected by high costs of caring for, educating, or training the child in the way both parents intended.
Either parent may apply to Services Australia for an assessment, provided there is no Child Support Agreement in place.
Child Support Agreement
If parents which to formalise a private agreement reached between them, they can do so by either entering into a Binding Child Support Agreement (BCSA) or a Limited Child Support Agreement (LCSA).
For the BCSA, the agreement must be voluntarily entered and will only be binding if both parents have received independent legal advice on the agreement before signing the agreement. An agreement may be registered with the agency and either party may apply to the Child Support Registrar for acceptance of a child support agreement.
A BCSA can set out parents’ obligations with respect to periodic and non-periodic payments. This may include regular payments by one parent and/or payment of non-periodic expenses such as private school fees, extra-curricular activities, private health insurance and out of pocket medical expenses. In a BCSA, parents may agree for child support payments to be less than what the agency would assess.
For the LCSA, these agreements do not require each party to receive independent legal advice before they are signed, however this agreement must be for more than the agency’s assessment.
Informal Agreement
Parents may ‘self-manage’ their child support by informal agreement. This means that there is no documented binding agreement or assessment in place. Parents with informal agreements mutually decide what financial contributions they each make for their child(ren) and when and how this is paid. This option is not binding or enforceable.
If at any time this becomes impractical, or parties cannot agree they may enter into a child support agreement if they both agree or either party may make an application to the agency for an assessment.
