Australian parents have a legal obligation to support their children. Those payments are known as child support payments. Child support payments can be made by agreement between parents, via the Child Support Agency, or in some cases by court order.
The Child Support Agency
The Child Support Agency has the responsibility of assessing and collecting child support when parents or one parent asks it to do so. It is a Commonwealth Government agency, co-operating with the tax office.
Child Support Agency assessed payments are based on factors such as the nights children spend with each parent, the age of the children, and the income of each parent. The formula and the rules are complex. You can go to an online estimator to work out how much support the agency will require you to pay for your children, or how much you will be entitled to receive on behalf of your children here.
Some parents will find that the formula works for them, and others will find that it does not. The Agency has limited discretion to vary payments to suit the particular circumstances of any one family. Most people will report that it is not easy to deal with the bureaucracy of the Agency.
DIY Child Support
It is not necessary to involve the Child Support Agency in your child support arrangements, and you can make your own agreements.
There is no legal requirement for documents to be written about child support, or a formal payment/collection procedure to be organised. However, it is always prudent to keep records, particularly if payments are being made or received in cash.
Private arrangements cannot usually be enforced. Hence, undocumented private arrangements work best for parents who have a high level of trust and cooperation.
Private Child Support Agreements
You can have a private child support agreement, either short term (Limited Child Support Agreement) or long term (Binding Child Support Agreement). Legal assistance and advice will be required to draw and register these agreements, which are then enforceable by the Child Support Agency or the court.
How Much Should I Pay or Receive?
If you choose to use the Agency assessment, the amount will be clear.
You can agree to pay or receive less or more than the Child Support Agency assessment calculation, but be aware that if you are also receiving Centrelink, it is necessary for the payments to be at a minimum level, to avoid your parenting payment being reduced. You should check with Centrelink for current rules.
For many families, it is most realistic to look at past expenditure on their children in deciding how much needs to be allocated for their ongoing support.
The Agency formula caps parents’ incomes when assessing payments. For higher income families, an assessed payment may not be adequate to maintain the current standard of living for their children. Parents then have to make spending decisions, or accept that their children’s standard of living will fall.
Private School Fees
School fees are not included in a Child Support Agency assessment. The question of who pays school fees, and in what proportion, will depend on your respective incomes and overall financial circumstances.
Your intentions about private education will be considered, too. Your intention is usually evidenced by the completion and signing of a school enrolment form, or current attendance of your child at a private school. If you can afford to continue your child’s current form of education, it is expected that this will be done, unless there is a mutual agreement to change schools.
Child Support for Over 18s?
While children are under the age of 18 or still at secondary school, they will be covered by child support law. Once a child leaves school, or turns 18, whichever is later, they are entitled to adult child maintenance, and are no longer covered by child support law.
Adult children who are students or who are living with a disability may have an entitlement to support from one or both parents. There is no formula and the amount payable will depend on the needs of the child and your income and ability to pay. Generally, tertiary students will be expected to access part time work and any government entitlement before determining their needs.
Every family’s situation is different and you need to figure out what is best for you. Your Divorce Financial Planner or collaborative team are ideally placed to offer this kind of information and support.