11. Child Support Reform
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.
Changes from 1 July 2006
- Increase in the minimum rate of child support from $5.00 a week to $6.15 a week
- Reduction in maximum payments by lowering the child support income cap from $139,347 to $104,702
- Introduction of a statutory test to be applied when determining earning capacity of a person
- Increase in the proportion of child support that may be provided as non-agency payments from 25% to 30%. (These are payments by the payer in partial satisfaction of his or her child support liability, such as child care, school fees, medical and dental bills etc)
Changes from 1 January 2007
- S 106 repealed and a new S106A (declaration as to parentage)
- Requirement to lodge an objection repealed
- The Social Security Appeals Tribunal (SSAT) is able to review CSA decisions instead of the Courts. An objection, after it is lodged with the CSA, is dealt with internally by the CSA. If a person is dissatisfied with the outcome of an objection, then he or she can apply to the SSAT for a review of the decision
- Private enforcement of Child Support debts. Previously where there were arrears this became a debt to the Commonwealth and recoverable only by the CSA. The new reforms enable the payee to apply to a Court to enforce arrears
Changes from July 2008
- A new formula was introduced; for most people this will reduce payments for children aged 0-12, but the formula calculation for children aged 13-17 will increase
- The cut for 0-12 years old is a result of research undertaken by a ministerial taskforce that children in this age bracket cost less to maintain
- Further to this, if a payer parent has one night a week with the child this will reduce the minimum payment by 24%
Under the new scheme, parents who wish to make a private agreement with respect to child support will be able to do so under two new types of agreements:
- Binding Agreements; or
- Limited Agreements.
What is a Binding Agreement ?
Binding 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 formula amount
- Can only be terminated by a new Binding Agreement or by a Court Order setting aside the agreement
What is a Limited 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 assessed by the formula.
These agreements will take into account what is known as CSA Notional Assessment. CSA 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 CSA 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.