It is not necessary to have an administrative assessment in force prior to entering into a Binding Child Support Agreement. However, if a binding agreement is registered with the DHS-Child Support, a notional formula assessment will be created. A notional assessment is the formula based assessment that would apply if the agreement was not in place.
Some fundamental characteristics of Binding Child Support Agreements are listed below:
- can provide for the payment of child support that is less than, equal to, or more than the rate of child support that would be payable under the formula assessment;
- can provide for periodic, non-periodic and lump sum payments;
- each party must receive legal advice from a legal practitioner, and a Certificate of Independent Legal Advice must be annexed to the Binding Child Support Agreement;
- can be terminated by executing a Termination Agreement or a further Binding Child Support Agreement. Both alternatives require the provision of independent legal advice to each party;
- can be set aside by a court under s 136 of the Child Support (Assessment) Act 1989 (Cth);
- Family Tax Benefit (A) entitlements will be calculated by reference to the child support payable under the notional formula assessment, (notthe amount payable under the Agreement); and
- A new notional assessment will be issued each three years or where the amount of child support payable under the agreement changes by more than 15%. Parties have options to challenge the new notional assessment within 14 days.
It is mandatory for each party to receive independent legal advice before entering a Binding Child Support Agreement. Section 80C of the Child Support (Assessment) Act (1989) requires legal practitioners to advise parties as to:
(i) the effect of the agreement on the rights of that party;
(ii) the advantages and disadvantages, at the time that the advice was provided, to the party of making the agreement
To provide this advice, a legal practitioner would need an understanding of the Child Support scheme, and knowledge of the financial situation of each party. This involves the exchange of financial information. Even if a party indicates that s/he is perfectly satisfied with the terms of the agreement, the law requires that the advice be given by the legal practitioner.
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.