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Child Support Child Support Agreements

Child Support Agreements

There are two types of Child Support Agreements: Binding Child-Support Agreements and Limited Child Support Agreements.

Child Support Agreements can provide for financial support in various ways such as the payment of school fees, health insurance premiums or mortgage repayments, as well as periodic cash payments.

A Child Support Assessment can be changed by entering into a Child Support agreement. Such an agreement should be signed and in writing.

Where there has been no Child Support Assessment there may be a private Child Support Agreement or the parents may have their Child Support Agreement registered with the Child Support Agency.

Some parents may prefer for the Child Support Agency to work out the amount to be paid, but the amounts may be transferred privately. Private collection is recommended in cases where the payer is likely to pay or has a good payment history

Where parents make their own arrangements for the payment of Child Support, it is important to maintain a record and/or receipts for all payments made or received, these receipts should be retained in order to avoid disputes.

Payments can be collected by the Child Support Agency. Both parents may prefer this option or in situations where the parent liable to pay child support is failing to pay. Notification to the Child Support Agency creates an ‘enforceable maintenance liability’. The Child Support Agency has broad powers to collect child support debts including collecting from wages, intercepting tax refunds and collecting money from bank accounts. If payments are not made on time and in full, late payment penalties can be charged.

If parents agree, they can end a Child Support agreement at any time by making a further agreement terminating the earlier agreement, but independent legal advice is required for an agreement terminating a Binding Child Support agreement.

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Child Support Child Support Agreements

Limited Child Support Agreements

A Limited Child Support Agreement is usually reached outside of court, between the two parents of the child for whom child support will be paid. Legal advice is not necessary for the agreement to be binding. Such agreements are generally not used if the agreement is intended to be long term.

Firstly, an administrative assessment into the circumstances of the parties is required, to ensure that the situation and all assets of the parties are taken into account when determining a child support amount.

Limited Child Support Agreements provide more flexibility to parents. For instance the Limited Child Support Agreement is easier to terminate than Binding Child Support Agreements. Termination can occur upon the making of a new agreement or a written agreement to end the existing agreement. It is also possible to terminate an agreement if there is a significant change in the circumstances of either or both of the parties. The agreement can also be terminated by one party without the agreement of the other.

Limited Child Support Agreements can be entered into without legal advice.  Either party to the agreement can terminate the agreement after 3 years or if the amount that would be payable under a Child Support Assessment changes by more than 15%.  The amount of Child Support payable under a Limited Child Support Agreements must be at least the amount that would be payable under the Child Support Agency formula.

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Child Support Child Support Agreements

Binding Child Support Agreements

A Binding Child Support Agreement takes the form of a Binding Financial Agreement, but it relates to child support. Binding Child Support Agreements can only be entered into after both parties have received legal advice from separate lawyers. Such advice is also required before terminating an agreement.

The amount payable under a Binding Child Support Agreements can be for any amount, including amounts that are less than the amount payable under the Child Support Agency formula. A Binding Child Support Agreement differs from a Limited Child Support Agreement in this respect, a Limited Child Support Agreement must include an amount at least equal to, or more than the amount calculated by the Child Support Agency formula.

Any changes to Consent Orders must be in the best interests of the child, considerations for how the changes affect the parents are secondary.

Binding Child Support Agreements can be changed by agreement (when both parents agree to change) or by Court Orders (when only one parent requires change).

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Child Support Child Support Agreements

Child Support Agreements and Family Tax Benefit entitlements

There is a principle that government contributions should not replace financial support from parents. To be entitled to claim Family Tax Benefit Part A for a child, a person must be caring for the child for at least 35% of the time. Family Tax Benefit Part A is affected by the amount of income a family receives and the amount of Child Support that is received for each child.

Your Family Tax Benefit Part A may be worked out using a different amount than the Child Support amount in your private agreement. Where a Child Support Agreement is in place, Family Tax Benefit will be paid on the basis of the Child Support that would have been payable if the agreement had not been made (the notional assessment).  This can be an issue with Binding Child Support Agreements where the amount payable is less than the amount calculated by the Child Support Agency

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Child Support Child Support Agreements

Can my husband and I come to an agreement?

Couples are encouraged to reach agreements on their own regarding child support.   Some couples are able to do this on their own without any outside intervention.  Other couples may require some help.  A Family Dispute Resolution Practitioner can often help parents work through the issue that come up regarding child support and other issues regarding children.

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Child Support Child Support Agreements

Court Orders and the Child Support Agency

The Child Support Agency is notified of Court Orders that start a registrable maintenance liability.

After notification, the Child Support Agency registers a liability for collection. The Child Support Agency only registers the parts of the Court Order that concern child maintenance.

A payee can elect for the Child Support Agency to collect maintenance for them, or not. If the payee elects for the Child Support Agency to collect maintenance payments on their behalf, then the payment liability is known as an enforceable maintenance liability.

Court Orders can only be changed by changing the Binding Child Support Agreement or by application to the court.

Categories
Child Support Child Support Agreements

Change by the Court (only one parent requires change)

If only one parent wishes to end the Binding Child Support Agreements, they may seek a Court Order to set the agreement aside, but such an order will be available only in very limited circumstances.

To set the agreement aside the Court must be satisfied as follows:

  • the agreement of the party was obtained by fraud or failure to disclose material information, or through undue influence, duress, or unconscionable conduct such that it would be unjust not to set the agreement aside; or
  • that exceptional circumstances have arisen since the agreement was made, so that the child or applicant parent will suffer hardship if the agreement remains in place.

If one party has persuaded the other party to accept (without proper legal advice) an ‘unfair’ or inappropriate Child Support amount, then the agreement may be set aside.

Both Limited Child Support Agreements and Binding Child Support Agreements can be set aside by court order, however, Binding Child Support Agreements are harder to set aside than Limited Child Support Agreements.