Legal realities: Navigating child support

Few legal issues generate as much debate, or confusion as how to fairly and effectively manage child support after separation. Navigating financial obligations post-separation can be complex and emotionally charged. However, Australian family law offers a range of tools to support separating parents in making fair and enforceable arrangements. Among these are Child Support Agreements, which can formalise customised solutions, such as payments for school fees or health insurance and help reduce conflict while promoting financial certainty.

In this article, we unpack how these agreements work, who they are for, and how to make sure everyone, especially any children involved, are protected. 

The Child Support Agency

While the Child Support Agency has mechanisms by which you may object to an administrative assessment, what many people may not realise is that parents can reach their own agreement in relation to child support and, more importantly, document it so that it’s enforceable.

Child Support Agreements have become a significant aspect of property settlement negotiations. They play a crucial role in reducing conflicts between parents as both parties are actively involved in the negotiation process. Parents may opt to include specific payments to third parties, such as health insurance or school fees, by establishing a Child Support Agreement. This approach can help ensure the stability of these payments and any additional educational expenses.

What are the different types of agreements?

There are two types of formal Agreements:

1. Binding Child Support Agreements; and
2. Limited Child Support Agreements.

Not everyone will qualify for a Child Support Agreement, so it is recommended to check with the Child Support Agency or a family lawyer if you’re not sure.

Binding Child Support Agreements

A Binding Child Support Agreement (BCSA) is a private contract-like agreement between the eligible carer and the liable parent. The main advantage of a BCSA is that it provides certainty. Both parties are aware of their respective responsibilities, and if all the requirements are met, the agreement is legally binding.

The most significant disadvantage is the other side of the same coin. The Agreement will generally remain in force until the child is 18 years old. If one parent loses their job, the obligations under the Agreement will remain in force, regardless of the change in circumstances. There may also be flow-on issues regarding Family Tax Benefits and other government payments.

The downside is that it’s hard to overturn a BCSA (almost impossible). A number of cases have indicated that the bar in relation to the above is set very high, and applications to overturn a BCSA are rarely successful. Given the pretty serious nature of the Agreement, both parties are required to obtain independent legal advice prior to signing.

Limited Child Support Agreements

Limited Child Support Agreements (LCSA) are generally more flexible compared to BCSAs. Unlike BCSAs, parties are not required to obtain legal advice prior to signing an LCSA. To be registered by the Department, there must be an Administrative Assessment already in place and the amount payable pursuant to the LCSA must be the same or higher than the assessed amount. Upon registration, the Department issues a Notional Assessment stating the amount of child support payable, but for the LCSA. This may affect Family Tax Benefits. 

An LCSA may be terminated in the following circumstances:

• replacing it with a further LCSA;
• by Court Order;
• if the notional assessment changes by more than 15% from the previous assessment, in a way not anticipated by the agreement, and either party wants to end it; or
• if it has been more than 3 years and one party wants to end the LCSA - you may do so by writing to the Child Support Registrar.

Implications

A well-structured agreement can help avoid disputes, ensure consistent support for children, and accommodate practical needs like school fees or medical costs. As with any important financial or legal decision, it’s essential to seek professional advice to ensure the agreement reflects your family’s needs and stands up over time. With the right approach, child support can be a collaborative step toward a more stable future for everyone involved.