Difference Between Binding & Limited Child Support Agreements

In Australia, the primary legislation governing the administration and assessment of child support is the Child Support (Assessment) Act 1989. It provides for the primary carer of a child or children to make a claim for child support from the other parent. Child Support arrangements can be addressed either by way of a Child Support Agreement (Binding or Limited) or assessment under the administrative process by Services Australia.

What is a Child Support Agreement?

 

The child support legislation allows parents to reach agreement on the amount of child support to be paid. There are two types of Child Support Agreements (CSAs), they can be either in the form of a Binding Child Support Agreement (BCSA) or a Limited Child Support Agreement (LCSA). They are both are private written agreements signed by both parents about the amount, frequency, and method of child support payments to be paid.

 

Limited Child Support Agreements

 

A Limited Child Support Agreement (LCSA) is a formal agreement about child support between carers or parents. An LCSA does not require legal advice. The LCSA can include the payment of cash or non-cash items such as school fees, extra-curricular activities and health insurance.

Before the Child Support Agency will accept a LSCA, you will need to have a child support assessment and the payments written up in the LSCA must be equal to or more than the annual rate in the assessment.

Under an LSCA, the parent must have at least 35% care of a child to receive child support.

When the Child Support Agency has accepted your LSCA you can choose to collect the money either privately under private collect,  or the Child Support Agency will collect it on your behalf, child support collect.

You have an obligation as a parent to:

• Lodge your tax on time; and
• Report your income accurately; and
• Inform the Child Support Agency of any changes; and
• If you are the paying parent, you must pay your child support in full and on time; and
• Let the Child Support Agency know of any care arrangements for your child/ children.

If new circumstances or changes in your child’s care impact your agreement, then the amount payable under your LCSA may change.

If you cannot agree to make a LCSA then you can seek legal advice about a Binding Child Support Agreement.

 

Binding Child Support Agreements

 

A Binding Child Support Agreement (BSCA) is a written agreement about child support between carers or parents. A BSCA can only be made if you have had legal advice and both parents have signed it.

Both parents or carers must agree on the amount for your child support payments. The amount you agree can be greater or less than the amount that would be payable under a child support assessment.

To receive child support under a BSCA, the parent must have at least 35% care of a child to receive child support.

Both of the parties to a BSCA must seek legal advice and receive a legal certificate to show that you have received legal advice. Without legal advice and the legal certificate, your BSCA will not be valid. If you do not want to seek legal advice and get the legal certificate you need for a BSCA, you can still make a LSCA with the other parent or carer of your child.

Once the Child Support Agency has accepted your BSCA you can choose to collect the money either privately under private collect,  or the Child Support Agency will collect it on your behalf, child support collect.

You have an obligation as a parent to:

• Lodge your tax on time; and
• Report your income accurately; and
• Inform the Child Support Agency of any changes; and
• If you are the paying parent, you must pay your child support in full and on time; and
• Let the Child Support Agency know of any care arrangements for your child/ children.

If new circumstances or changes in your child’s care impact your agreement,  and your BSCA has anticipated these changes, the amount payable may remain the same, or it may change depending on changes in your child’s care or the new circumstances that affect you and your agreement. However, if your BSCA has not been drafted to cover the changes in your circumstances then you may be able to end the BSCA, again, depending on the agreement you signed.

After the Registrar accepts the BCSA, the Child Support Agency may issue child support assessment notices to you as required by Child Support legislation.

 

 

What is the difference between a Limited and Binding Financial Agreement?

 

For an LCSA to be accepted by the Registrar there must be a child support administrative assessment in place at the time an application and the agreement must be for at least the annual rate of child support that would otherwise be payable under the administrative assessment.

A BCSA can be made and accepted by the Registrar even if a child support assessment hasn’t been made. It can be made for any amount both parents agree on. It could be less than, equal to, or more than the child support rate payable under an administrative assessment.

The main difference between an LCSA and a BCSA arises when one or both parties want to change the agreement. The differences are as follows:

 

To change a limited child support agreement:

 

1. 1. You both agree to end the agreement, either in writing or entering into a new Limited (or Binding) Child Support Agreement;
   2. If you do not agree to terminate the Agreement, either party can apply to the Court for an Order to terminate the Agreement;
   3. If at any time the amount payable under the normal Child Support formula assessment changes by 15% from the previous assessment, in circumstances which were not foreseen by the agreement, either party can ask the Child Support Agency to end the agreement (however, be aware that time limits apply); or
   4. If the Agreement is over 3 years old, either party can give written notice to the Child Support Agency to end the Agreement.

Limited Child Support Agreements -v- Binding Child Support Agreements: Let’s compare!

 

Do I need a Child Support Assessment?

LSCA: Yes

BCSA: No.  You can enter into a BCSA without a Child Support Assessment.

 

Are there set levels of payment?

LSCA: The amount payable must be the same as or more than the amount payable under a Child Support Assessment.

BCSA: More Flexible.  Your BCSA can determine specific amounts for each child, with periodic payments that could even be Zero.

 

Can I end my agreement?

LSCA: Yes. You or the other party to the agreement can give 60 days’ notice if the notional assessment varies by more than 15%. Variations are due to changes in your children’s care arrangements and needs as they grow and mature, and changes in your or the other party’s taxable income. Also, as long as your agreement has been in place for more than 3 years, one or other of the parties can end the LSCA.

BCSA: BSCA’s provide certainty to you and the other party as they will end on the making of a new BSCA that either ends or replaces the previous BSCA. BSCA’s end when the child completes secondary school or reaches 18 years (whichever is the latter), or by a Court Order.

 

Do I need legal advice?

LSCA: No.

BCSA: Yes. Both you and the other party to the agreement will need to get legal advice and provide a Section 80C certificate that details that you have had advice about the effect of the agreement on your rights and that you have been made aware of the advantages and disadvantages at the point of time in which you received the advice.

When does the Agreement take effect?

LSCA: On registration by the Child Support Agency.

BCSA: On the day the Agreement is finalised and either party to the Agreement can register the BSCA with the Child Support Agency.

 

What are the different types of child support payments?

 

Payments under a CSA can include payment of cash or non-cash items, such as school fees and health insurance. Periodic payments are a specific amount to be paid to the receiving parent on a regular basis, for example weekly, fortnightly, or monthly. These payments may be paid directly to the receiving parent or through Services Australia.

 

Can payment be enforced?

 

Periodic payments can be enforced by registering the agreement with Services Australia. Non-periodic payments are those made for example to third parties or received by you for expenses such as school fees, private health premiums and gap payments are defined by the legislation as non-periodic payments.

The CSA provides that the Child Support Agency is unable to compel a liable parent to make non-periodic payments. To compel a party to an agreement to pay non-periodic payments the agreement must be registered with the Family Court.

Registration ensures that if you or the other party have any issues with payment in the future, that the Court can enforce it. If you do not register your agreement with the Family Court, there is no means by which the non-periodic payments under your agreement can be enforced.

 

What happens if you don’t enter a Binding Child Support Agreement?

 

If you do not enter into a Binding Child Support Agreement, then your obligations to pay or receive child support will be governed by the Child Support (Assessment) Act. In those circumstances Services Australia administratively assesses the amount of child support payable by one or other of you based on a formula set out in the legislation. This includes considering both parents’ taxable incomes, the age of the children, and the level of care that each parent has of the children.

Under a child support assessment, the paying parent has an obligation to pay child support in respect of each child until they are 18 years of age. The receiving parent has the right to seek a review of the administrative assessment, and in some circumstances, make a departure application to the court. The amount a party is to pay may change if either party’s income increases or decreases, or there is a change in living arrangements for the children.

The online Child Support Estimator can be used to estimate the amount payable. If, for example, you are obtaining Centrelink benefits and your ex-partner has a fulltime job as a builder and you share care of the children equally, it is likely that your ex-partner would be required to make some payment to you.  If this is like your circumstances, make sure you do this assessment so that you understand how much you would receive each month.

 

Looking for assistance with your Child Support Agreement?

If you feel that you would like assistance or guidance to find your next step about Child Support Agreements Call Nadine Love or Dr John on 07 5455 6347 or email admin@anumis.com.au for your complimentary chat and we will be happy to assist you.

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