Binding child support agreement
A formal agreement for child support signed by both parents. Legal advice is required before entering into a binding agreement.
You need to know
A binding child support agreement allows you to make a financial agreement about your child support payments and how they are paid. A binding agreement can be made whether you already have a child support assessment or not. The binding agreement can be made for any amount that you and the other parent agree to. Your agreement may include payment of cash or non-cash items. Examples of non-cash items are school fees and health insurance.
Both parties to the agreement must obtain independent legal advice before making or ending a binding agreement.
The legal advice you get must be provided by a legal provider who has been admitted by the Supreme Court of a state or territory of Australia and holds a current practicing certificate.
You need to provide a legal certificate signed by a legal provider and attach it to the agreement. The certificate confirms that you have received legal advice. We cannot accept your binding agreement without it. The binding agreement must also contain a statement that you received the legal advice before you signed the agreement.
We recommend that solicitors provide us with a draft of your binding agreement before it is signed so we can check if:
- it satisfies the legal requirements of the child support legislation
- it achieves the outcomes intended by the parents, and
- we can give effect to certain clauses that come into effect when the circumstances of the parents change in the future
Lump sum payments
You can make a binding agreement that credits a privately made lump sum payment or the value of a transfer of property, against the liability that is payable under an administrative assessment. You can specify the rate at which the lump sum is credited at 100% or less and you can specify the amount of the periodic child support liability in your agreement.
If you make this type of agreement, you must have a child support assessment in place before the agreement can be accepted. The lump sum payment, or the value of a transferred asset, must be equal to or greater than the annual child support rate under the current child support assessment. At the end of each year’s assessment, the lump sum payment will be credited at the rate of 100% of the child support payable or at a lesser rate if specified in the agreement. The remaining lump sum amount will be indexed every year by the Consumer Price Index. When the lump sum amount is reduced to nil, child support under the child support assessment will again be payable.
The paying parent will have until the end of the binding agreement to pay lump sum payments in the form of property transfer, where division of the property involves court proceedings.
Binding agreements and your family payments
Binding agreements can be for amounts less than the child support assessment. Where the amount is less than the child support assessment, we will use the amount from the child support assessment when calculating your Family Tax Benefit.
Read more about Family Tax Benefit.
After a child support agreement is accepted, we make an assessment of what the child support payable would be if the agreement was not in place. We call this a 'notional assessment'.
A 'provisional notional assessment' is provided to both parents to check that their circumstances, including care and income details are properly reflected. A parent may also make an application for a change of assessment if they think there are special circumstances that means the assessment is unfair. Parents have 14 days to contact us and update their details if necessary.
The provisional notional assessment becomes a notional assessment 14 days after it is issued or when all requests to vary details have been finalised.
The notional assessment amount is used to calculate your entitlement to the Family Tax Benefit (FTB) Part A. The amount of FTB Part A you get will be based on the child support agreement until the notional assessment is in place.
Your notional assessment is updated:
- every 3 years, and
- if the amount of child support payable under the agreement changes by more than 15%
Child support payments are based on an assessment of your adjusted taxable income from a previous year (last year of relevant income).
Provisional income is used in your child support assessment if your income for the most recent financial year has not been assessed by the Australian Taxation Office (ATO).
Child support payments and Family Tax Benefit (FTB) Part A are closely linked. Any child support you receive may affect the amount of FTB you receive.
As a parent, you have responsibilities and rights. You also have choices in arranging your child support in a way that works for you and the other parent.
A binding agreement can only end before the date specified in the agreement if the parents make a new binding agreement that ends the former agreement. If parents cannot agree to make a 'termination agreement', a parent may apply to a court for an order that sets aside the agreement. These court applications can be costly and complex.
If you want more information about ending a binding child support agreement, you should contact your legal provider.
Parenting plans are written plans that can include an agreement about the amount of time your children will be in each parent’s care.
When you leave Australia on military deployment, a number of things will change that we need to know about. This is so we can make sure your child support assessment is accurate.
Once you have read about eligibility the next steps are:
- Apply for a child support assessment
- We will assess your application and let you know the outcome
Paying child support
Collecting child support
Decide what collection option is right for you.
You and the other parent decide the most convenient way for payments to be made between yourselves.
We collect and transfer child support payments for you.
Changes to your circumstances may affect your child support assessment, so it’s important that you tell us as soon as possible.