Different Types of Child Support Arrangements

There are a number of ways that child support can be managed between parents.

Some parents choose to and are able to have very flexible, informal arrangements between them.

Others prefer for their arrangements to be managed via the Child Support Agency – and other parents prefer to formalise the arrangements via a Private Agreement to determine how expenses that might not necessarily be covered or sufficient under a child support assessment through the Child Support Agency will be paid by each parent.

Determining how you want to manage your child support is the first step.

Irrespective of whether there is a private agreement in place or child support is managed by the Child Support Agency, as a parent, it is your obligation to ensure that:

  • If you are the paying parent, that you pay the full amount of your child support on time;
  • You lodge your tax return on time;
  • You report all income accurately; and
  • You tell the government about any changes in your circumstances.

The Child Support Agency

The Child Support Agency has designed a formula that takes into account each parents circumstances to determine what amount of child support is to be paid.

This formula takes into account:

  • Each parent’s income and the combined income amount;
  • How much time each parents cares for each child; and
  • Each child’s age.

The costs of a child is worked out based on research conducted by the Child Support Agency into what parents spend on children in Australia.

Once an application for a child support assessment has been made, the Child Support Agency will contact the applicant and discuss options for collection.

The formula does not include an allowance for private school fees or health insurance premiums.

Private Child Support Agreements

The Child Support (Assessment) Act also provides for two types of agreements that set or alter the amount of child support to be paid to take things into account such as:

  • payment of private school fees;
  • payment of uniforms, books and extra-curricular-activities;
  • payment of private health insurance;
  • additional costs due to the ‘special needs’ of a child.

The two types of Private Child Support Agreements include:

  • Limited Child Support Agreements; and,
  • Binding Child Support Agreements.

Binding Child Support and Limited Child Support Agreements: What’s the Difference?

Both Limited Child Support Agreements (LCSA) and Binding Child Support Agreements (BCSA) allow parents to formalise their child support arrangements. 

Both agreements need to be signed by the parties and lodged with the Child Support Agency. However, both types of agreement are different. As a result, you should carefully consider which type of child support agreement is right for you. In the table below, we set out the similarities and the differences.

Limited Child Support Agreement (LCSA) Binding Child Support Agreement (BCSA)
Only lasts three (3) years.   Will only end when a terminating event occurs, such as the child turning 18, etc.
Parties do not need to obtain legal advice prior to entering into a LCSA.    Parties do need to obtain independent legal advice before entering into a BCSA and attach a certificate signed by the solicitor.  
A child support assessment must be undertaken by the Child Support Agency.   No child support assessment needs to be undertaken by the Child Support Agency.
Amount payable by a parent must be equal to or more than the amount specified in the child support assessment. Amount payable can be for any amount (including less than any amount specified in a child support assessment, if the parties have obtained an assessment from the Child Support Agency).  
Changing a Limited Child Support Agreement Changing a Binding Child Support Agreement
The LCSA can change or end if the parents agree to end the current LCSA, either in writing, or by entering into a new LCSA or a BCSA.  The new LCSA will again only last three (3) years.   A BCSA will end if one of the terminating events as set out in the legislation or in the BCSA occurs.
If, at any time, the amount payable under the child support assessment changes by 15% from the previous assessment, in circumstances which were not foreseen by the LCSA, either party can ask the Child Support Agency to end the LCSA.   The BCSA can end if the parents agree to end the BCSA by entering into a Termination Agreement or a new BCSA or LCSA. To do so, both parties will need to obtain independent legal advice.
Once it has been three (3) years since the LCSA was entered into, either party can give written notice to the Child Support Agency to end the LCSA.   If both parties do not agree to terminate the BCSA, either party can apply to the Court for an Order to terminate the BCSA. There are only very limited circumstances in which such an Order will be made.  
If both parties do not agree to terminate the LCSA, either party can apply to the Court for an Order to terminate the LCSA.  There are only very limited circumstances in which such an Order will be made.    

If you would like to receive more information about child support agreements, or if you’re unsure which agreement is right for you, then please contact us or get started online today.