Binding Child Support Agreement
A binding child support agreement is a written agreement between parents that sets out how much child support will be paid and how it will be paid. Once accepted, it overrides the standard child support formula and fixes the amount payable.
Each parent must obtain independent legal advice before signing for the agreement to be accepted. Once in place, the agreed amount applies regardless of changes in income or care, unless the agreement is replaced or set aside.
Key takeaways for parents
Australia’s child support system does not recognise informal private arrangements. Parents who want agreed payment terms to override the formula need a binding agreement; otherwise, either parent can abandon the private arrangement and seek a formula assessment.
- Agreed payment terms can prevent ordinary earnings changes from affecting child support, allowing both parents to maximise their income without formula disincentives; and
- The payer risks being committed beyond their means if income falls, unless the agreement allows changes in defined circumstances.
A binding agreement need not set one unchanging amount. It can include provisions for exceptional circumstances or specified changes in income.
Definition
A binding child support agreement is a written agreement between parents (and/or a non-parent carer) on the amount of child support to be paid, and how it will be paid.
Each party to the binding child support agreement must have received independent legal advice before entering into the agreement. Binding child support agreements operate in a similar manner to financial agreements that separating parents might make in relation to property, superannuation and spousal maintenance.
Definition source: Guides to Social Policy Law, Child Support Guide, Binding child support agreements.
Override the formula
A binding child support agreement removes the standard formula from the process. Instead of calculating child support based on income, care, and costs of children, the agreed amount written into the agreement becomes the payable amount.
Once the agreement is accepted, the system does not apply the 8-step formula. The agreement effectively overrides the calculation.
The agreement can include periodic payments, lump sums, or payments made in other ways such as school fees. Once registered, Services Australia will use the agreement as the basis for collection and enforcement.
Agreed payment example
Chris and Amanda agree that Chris will pay $18,000 per year in child support, plus private school fees directly to the school. Chris and Amanda record the arrangement in a binding child support agreement and both obtain legal advice before signing.
After the agreement is accepted, the formula is no longer used. Chris pays the agreed amount regardless of changes in income unless the agreement is later replaced or set aside.
What it means to have a binding agreement
A binding child support agreement provides certainty because the payment amount is fixed and does not change with income or reassessments. A fixed payment allows both parents to plan financially and, where relevant, increase their income without affecting the agreed child support amount.
Independent legal advice creates an upfront cost. Each parent must obtain separate advice before signing. If the terms are already agreed, costs can be reduced by preparing a draft agreement before seeing separate lawyers, but each parent still needs their own advice and certification.
The agreement is difficult to change. A binding agreement cannot be varied like a formula assessment. To change it, the existing agreement must be ended and replaced, or set aside in limited circumstances.
What it means to have no agreement
Without a binding child support agreement, the child support formula determines the amount payable. Formula payments adjust over time based on income, care arrangements, and the number and ages of children.
You retain flexibility to seek reassessments or changes through Services Australia, but you do not have the certainty or control that a binding agreement provides.