Child support legislation was first introduced in 1989. The effect of the legislation was to change the calculation of child support from Court determined and payee collected, to an amount calculated by a mathematical formula and collected by the Child Support Agency (CSA).
From July 2006 the Federal Government implemented changes to the Child Support Scheme in three stages that would come into effect in July 2006, January 2007 and July 2008.
These changes included adjustments to the formula and calculations.
In addition, the changes now provide for parents to enter into private agreements. These are referred to as:
a) Binding Agreements; or
b) Limited Agreements.
What is a Binding Child Support Agreement?
Binding Child Support Agreements are:
- Formal agreements confirmed in writing and signed by both parties
- Made after the parties have obtained independent legal advice to enter into or end the agreement
- Include a Certificate from each parent’s lawyer confirming they have provided the parent with independent legal advice
- Can be made for any amount that both parties agree is appropriate in their circumstances including amounts that are less than the child support assessment amount
- Can only be terminated by a new Binding Agreement or by a Court Order setting aside the agreement.
What is a Limited Child Support Agreement?
Limited Agreements have the following differences to binding agreements:
- Parents do not need to seek legal advice before entering into them
- There must be a formula assessment already in place; and
- Amounts payable under the agreement must be equal to, or greater than, the child support assessment amount.
These agreements will take into account what is known as a child support Notional Assessment. The child support Notional Assessment is the amount of child support that would have been payable under the Child Support Formula if the agreement wasn’t in place. A child support Notional Assessment is used to work out how much Family Tax Benefit you will receive. If the CSA Notional Assessment changes by more than 15%, either parent may be able to end the agreement by writing to the Child Support Agency. This means that parents can terminate agreements if their circumstances change in ways that weren’t covered by the agreement.