Child Support – The Details
As you and your spouse separate and divorce, child support will be a one of the issues you will need to address. The primary purpose of child support is to guarantee that children’s day-to-day needs will be met through regular periodic support payments. Additionally, child support allows children to enjoy the same or similar standard of living of their parents. Child support can be arranged by agreement between the parents, or through an administrative assessment conducted by the Child Support Agency (CSA).
Child Support Agreements
Often the best way to arrange for child support is through an agreement between the parents in the form of a child support agreement. This method allows parties to deviate from the formula used in the administrative assessment used by the CSA to determine support. There are two types of agreements that may address child support: a binding child support agreement and a limited child support agreement.
Child support agreements are considered binding if both parties to the agreement were given independent legal advice (from separate counsel), and the agreement must state that this is in fact the case. Additionally, the counsellor who administered the legal advice must also execute and sign a certificate, which is included in the agreement. A binding child support agreement can be for any amount – including an amount less than prescribed under the CSA formula.
Unlike a binding child support agreement, a limited child support agreement does not require that the parties obtain independent legal counsel. The only requirements for this type of arrangement are that the agreement be in writing, signed by both parties, and that the amount agreed to is at least equal to the amount payable under the child support agency formula.
It is not possible to modify or alter a child support agreement; rather you must terminate the agreement and enter into a new one. The Child Support Assessment Act provides for several ways to terminate a child support agreement:
- by entering into a fresh agreement
- by agreement in writing
- a court order
- a new notional assessment, and
- simply if the agreement is three or more years old.
Child Support Agency and Administrative Assessments
Should you and your former spouse be unable to reach an agreement and execute either a binding or limited child support agreement, you may arrange for child support through the CSA. In order to obtain this, you must first make an application for administrative assessment of child support. The assessment will be made using the appropriate formula and can be subject to private enforcement or registered for collection through the CSA.
Administrative assessments are calculated by using a formula that requires parents to share in the support of their children and is based upon the level of care provided as well as their respective incomes. The various applicable formulas take into consideration a child support income amount, adjusted taxable income, self-support amount, and relevant dependent child allowance, among other figures. There are six formulas available, although the most common is “formula 1.”
The steps to determine formula 1 are as follows:
- Calculate each parent’s daily child support income for the child
- Calculate the parents’ daily combined child support income for the child
- Calculate each parent’s daily income percentage for the child
- Calculate each parent’s daily percentage of care for the child
- Calculate each parent’s daily cost percentage for the child
- Calculate each parent’s daily child support percentage for the child
- Calculate the daily cost of the child
- If a parent has a positive child support percentage under step 6, the annual rate of daily child support payable by the parent for the child is calculated by using this formula:
Parent’s daily child support percentage for the day
X (multiplied by)
Costs of the child for the day
Formulas 2, 3, 4, 5, and 6 are less common. They are variations provided to consider non-parent carers, non-resident parents, multiple cases, and special circumstances or deceased parents.
Should any of the elements used in the formula change, the CSA should be notified so that the child support amount may be recalculated.
It is possible to be awarded an amount that is inconsistent with the administrative assessment of child support. If you are seeking a departure from the assessment you simply need to fill out a form and submit it to the CSA who will then schedule a conference to hear the parties. A written decision is ultimately provided to both parties. In determining whether a departure is proper, grounds for such must be established, it must be just and equitable, and it must be deemed otherwise proper, and there must be a special circumstance. The Child Support (Assessment) Act 1989 has enumerated ten types of special circumstances:
- Costs of caring for a child. It costs you more than 5% of your child support income amount to spend time with the children.
- Special needs of a child. It costs you extra to cover the children’s special needs.
- Manner expected by the parents. It costs you extra to care for, educate or train the children in the way that you and the other parent intended.
- Income and earning capacity of the child. The child support assessment does not take into account the income, earning capacity, property or financial resources of the children.
- Money, goods, or property from the payer for the benefit of the children. The children, the payee or someone else has received, or will receive money, goods, or property form the payer for the benefit o the children.
- High costs of child care. You are the payee, you have sole care of the children, an it costs you more than 5% of your child support income amount for the child care for children younger than 12 years of age at the start of the child support period.
- Necessary expenses in self-support. You have necessary expenses in supporting yourself that affect your ability to support the children.
- Income, earning capacity, property or financial resources of one or both parents. The child support assessment does not take into account the income, earning capacity, property or financial resources of one or both parents.
- Legal duty to maintain another person or other children. You have a legal duty to maintain another person or other children not included in the child support assessment, and it costs you: more than 5% of your child support income to have contact with that person or those children, extra to cover the special needs of that person or those children, extra to cover the necessary expenses of that person or those children.
- Additional income. You have earned additional income for the benefit of resident children.
A child support assessment ends upon a child support terminating event. Such an event can occur when the child turns 18, when the child is adopted, or when the child, carer or liable parent dies among other events.
Alternative Payment Methods
While it is most common to receive child support in periodic payments, it is also permissible to receive it in a lump sum payment. The most common situations where lump sum orders are considered are where there are difficulties in enforcement or where the liable parent is asset rich and income poor, although there are many other situations in which a lump sum could be awarded.
Another payment method that has been gaining in popularity is a combination of the periodic payment and lump sum concepts. This results when the liable parent deposits the sum to be held on trust and distributed as child support liabilities accrue.
Finally, a party does have a right to make objections regarding decisions made by the CSA. The objecting party must lodge the objection 28 days from service of the decision, and a decision regarding the objection will be made within 60 days. Additionally, there is a formal process available to allow parties to appeal an objection decision.