What is a child support agreement?
When parents separate, they still need to financially support their children.
A child support agreement is a formal written agreement about how child support will be paid. It can include regular cash payments and, in some cases, non-cash payments such as school fees or health insurance.
It does not matter whether the parents were married, in a de facto relationship or never lived together.
1. The two formal types of child support agreement
Limited child support agreement
- must be in writing and signed;
- requires an existing child support assessment;
- the agreed annual rate must be at least the assessed amount;
- independent legal advice is not compulsory;
- can include cash and non-cash payments; and
- has more ways to be ended than a binding agreement.
Binding child support agreement
- must be in writing and signed;
- each party must obtain independent legal advice before signing;
- the required legal certificates must be provided;
- can provide for more or less than the formula assessment; and
- is much harder to end once it is in force.
2. How a limited child support agreement works
A limited agreement can only be accepted where a child support assessment is already in place.
The annual amount payable under the agreement must be equal to or greater than the annual amount payable under that assessment.
Legal advice is not compulsory, although parents can still choose to obtain it.
3. How a binding child support agreement works
A binding child support agreement gives parents more freedom to decide the amount and method of child support.
The agreed amount can be more or less than the amount that would otherwise be payable under a child support assessment.
But the legal requirements are strict. Each party must receive independent legal advice before signing. Their own lawyer must explain the effect of the agreement and its advantages and disadvantages, and complete the required certificate.
4. A binding agreement cannot simply be changed later
This is one of the most important differences.
A binding child support agreement cannot simply be varied because circumstances change. It usually needs to be ended or replaced in one of the legally recognised ways.
Depending on the circumstances, that may involve:
- a new binding child support agreement that replaces or terminates the old one;
- a binding termination agreement;
- a Court order setting the agreement aside; or
- the agreement ending because the person entitled to receive child support is no longer an eligible carer.
A binding agreement can outlast major changes in your life
A job loss, new relationship, change in school fees or change in care arrangements does not automatically rewrite the agreement. That is why independent legal advice is mandatory before a binding agreement is signed.
5. What can an agreement cover?
An agreement can deal with regular child support payments and may also deal with agreed non-cash expenses.
Examples can include:
- school fees;
- health insurance;
- medical or dental expenses;
- extracurricular activities;
- regular periodic payments; or
- other agreed costs for the child.
The wording matters. It should be clear who pays, how much, when payment is due and how non-cash expenses are treated.
6. A simple example
7. What about an informal private arrangement?
Some parents simply agree between themselves about payments without making a formal limited or binding child support agreement.
This can work where communication is good, but it does not have the same legal status or protections as a formal agreement accepted under the child support system.
8. What does Services Australia do?
Services Australia can assess child support under the standard formula and can also accept formal child support agreements that meet the legal requirements.
Once an agreement is accepted, the receiving parent can generally choose between:
- Private Collect — the parents manage the payments themselves; or
- Child Support Collect — Services Australia collects and transfers the payments.
Services Australia also makes a notional assessment for accepted agreements. This can be relevant to family assistance payments.
9. What if the care arrangements change?
Changes in care can affect child support and can also affect an existing agreement.
Services Australia says parents should report care changes straight away. Delays can result in the new care percentage applying only from the date it is reported, or can create a debt or overpayment.
A receiving parent generally needs at least 35% care of a child to receive child support under an agreement.
10. How can a limited agreement end?
A limited agreement can end in several ways, including:
- both parties agreeing in writing to end it;
- one party ending it after it has been in place for 3 years or more, using the required written notice;
- a qualifying change of more than 15% in the notional assessment where the change was not contemplated by the agreement;
- a new agreement replacing it;
- a Court order setting it aside; or
- the receiving carer ceasing to be an eligible carer of the child.
11. What if one parent does not pay?
If payments are being collected through Services Australia, unpaid child support can become a debt and Services Australia has collection and enforcement powers.
Depending on the circumstances, collection action can include deductions from income or bank accounts, intercepting tax refunds and, in serious cases, preventing a person from leaving Australia until the debt is addressed.
If the parents are using Private Collect or an informal arrangement, the practical enforcement options can be different. Get advice early if payments stop.
12. When should you get legal advice?
Legal advice is compulsory before signing a binding child support agreement, but it can also be useful for a limited agreement where:
- school fees or substantial private expenses are involved;
- care arrangements may change;
- one parent’s income is irregular or business-based;
- the agreement is intended to operate for many years;
- there are several children of different ages;
- one parent lives overseas; or
- there is family violence, coercion or a significant power imbalance.
The simple way to think about it
More flexible, requires an existing assessment, must be at least the assessed amount, and does not require legal advice.
More flexible on the amount, but much stricter legally. Independent legal advice is compulsory and ending it later can be difficult.