What is child support?
Child support is when one or both parents provide financial support to the other, to cover the costs related to caring for the children that they share.
As per the Child Support (Assessment) Act 1989, a parent is legally required to financially support their children until they reach the age of 18 years old.
How is child support assessed?
The amount of child support paid or received by a person is based on a formula set out in the Act, or by an agreement reached between the parents.
How do you apply for a child support assessment?
Either parent can apply to the Child Support Agency through Services Australia (formerly known as the Department of Human Services), for an administrative assessment. In these circumstances, child support would be assessed in accordance with the Child Support Formula.
Child Support Formula
Under the Act, the current formula considers a range of factors, including the following:
- The taxable income of each parent;
- The number of children requiring support and their respective ages
- The children's costs
- The level of care each parent provides for the children, and
- Whether either parent has a legal duty to support any other children.
Level of Care
The higher the level of care provided by a parent, the less that parent will generally be required to pay in child support. This is because when a child is in a parent's care, the parent contributes to their overall costs by paying for a range of items, such as food, accommodation, clothing and extra-curricular activities.
The level of care provided by each parent is generally determined by the amount of nights a child spends in their care although a request can be made to have this based on hours as opposed to nights.
Services Australia provides an online calculator that can provide an estimate of child support payments conforming to the Child Support Formula that can be accessed via this link.
Private Child Support Agreements
Alternatively, parents can make their own informal or formal agreements about the amount of financial support that they will each provide for their children.
What are the benefits of a private child support agreement?
There are a number of benefits to having a private child support agreement, including that it gives future certainty regarding each parent's financial obligations for the children, and allows parents to negotiate terms that they are each happy with.
Should I formally document my private child support agreement?
There are significant risks in not formally documenting an agreement that has been reached with your former partner about child support and other matters.
If you were to agree on child support matters, but fail to document your agreement formally it is not legally binding or effective. To give finality to your arrangement and bind your former partner to an agreement, there are particular steps which should be taken that include the drafting of a Limited Child Support Agreement or a Binding Child Support Agreement. Each of these methods of documentation has particular requirements.
If an agreement is not documented it is possible that one party could claim additional child support from the other at a later date, and/or deny that any agreement was in place or that monies were paid.
Collection of child support
Collection of child support payments can be done through a private agreement or by Services Australia.
Services Australia encourages parents to make their own arrangements for collection of child support payments when the payer is likely to pay and where the child support assessments are based on reliable incomes. When there is a private collection arrangement, it is important that you record or document payments, as the other party could say that payments were not received. Centrelink will also assume that you have received your child support payments and calculate your Family Tax Benefit accordingly.
Alternatively, Services Australia can collect periodic payments of child support. If these payments are not made voluntarily, Services Australia can collect payments from a range of available funds, including wages, bank accounts, tax refunds, or Centrelink benefits. Services Australia can usually also collect overdue payments of up to three months.
Review of child support system
The Government has recently announced that they will undertake a review of the child support system due to concerns about the potential for child support payments to be used as a tool for financial abuse. For example, there are issues relating to private collection arrangements, in that payments are assumed to be received. Accordingly, there is no government oversight of what is being paid, with many parties owing a debt to the receiving parent. For further information regarding this, please see this article by ABC News.
How can we help?
Please contact our family law team for assistance with your family law matters including queries or concerns regarding child support.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.