By Chloe McGuinness (Senior Associate) and Monica Blizzard (Director)
This is the final in a three-part series about the changes to Child Support in 2018. This segment deals with how the amendments affect Binding Child Support Agreements.
Binding Child Support Agreements
Section 80C of the Child Support (Assessment) Act 1989 (“the Act”) enables parents to enter into a private agreement about child support, rather than relying on the child support assessment.
Binding Child Support Agreements are often used in circumstances where parents agree that the Child Support Assessment on its own will be insufficient to meet the needs of the child or children.
A Binding Child Support Agreement usually provides for one parent to pay a periodic amount (which may or may not be more than the child support assessment amount) and/or makes provision for one or both parents to pay for or contribute to other expenses for the child such as school fees, health insurance or extracurricular activities (referred to as non-periodic payments).
For the agreement to be binding, both parties must receive independent legal advice about the terms of the agreement.
Setting aside or terminating a Binding Child Support Agreement
Prior to the amendments, the only way to terminate a Binding Child Support Agreement was if the parties agreed in writing or one of them obtained a court order. To obtain a Court Order, a party had to show that there were exceptional circumstances that had arisen since the agreement was made and that the Applicant or the child would suffer hardship if the agreement was not set aside.
The amendments enable the Child Support Agency to suspend or terminate a Binding Child Support Agreement when the care arrangements for the child change. If the parent receiving child support begins to have less than 35% care of the child, they cease to be an “eligible carer” for the purposes of the Act. Upon being notified of this change, the Registrar will suspend the Binding Child Support Agreement for a 28-day period. If this change of care continues for more than 28 days, then the Registrar can administratively terminate the Child Support Agreement.
Parties can elect to extend the suspension period for up to 26 weeks by agreement or if there are special circumstances such as hospitalisation or natural disasters.
If your Binding Child Support Agreement provides for the roles of the paying and the receiving parent to swap in the event the care of the child changes, then it will not be suspended when the care arrangements change.
Agreements made prior to 1 July 2008
Prior to 1 July 2008, parties were not required to obtain independent legal advice prior to entering into Binding Child Support Agreements. The Act has now been amended to enable the Court to set these Agreements aside if independent legal advice was not provided to at least one party and it would be unjust and inequitable if the Court did not set the Agreement aside.
When does this apply?
These amendments apply to Child Support Agreements made after 1 July 2018 or existing agreements where care of a child changes after 1 July 2018.
Please contact our Family & Relationship Law team if you require assistance with issues surrounding child support.