2.7.4 Effect of a Child Support Agreement Once Accepted by the Registrar (Other than Lump Sum Payment Provisions)
The effect of a child support agreement accepted by the Registrar depends on whether child support is already payable and the kind of provisions the agreement contains.
CSA Act section 34B, section 93, section 94, section 95, Part 7A
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The effect of a child support agreement will depend on the provisions it contains, and, for binding agreements, on whether there was an administrative assessment of child support in place when the application for acceptance of the agreement was made.
- Agreements that cover periods before and after 1 July 2008
- Date of effect where child support is not already payable
- Date of effect where child support is already payable
- Effect of certain provisions of a child support agreement
- Provisional notional assessments
- Notional assessments
- Subsequent provisional notional assessment
- Transitional arrangements for child support agreements
- WA ex-nuptial cases
Agreements that cover periods before & after 1 July 2008
Some child support agreements where the application to the Registrar for acceptance was made on or after 1 July 2008 will affect child support assessments for periods prior to 1 July 2008, as well as periods from 1 July 2008. In these circumstances, the child support agreement will be treated as 2 separate child support agreements, one for the period prior to 1 July 2008 and the other for the period from 1 July 2008.
The pre-1 July 2008 legislation will apply to the first child support agreement, for the period prior to 1 July 2008. The current legislation, as outlined in this topic, will apply to the second child support agreement, for the period from 1 July 2008. This may mean that one of the agreements is accepted and the other is not accepted (item 16 of schedule 6 of the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (2008 Budget and Other Measures) Act 2008).
Date of effect where child support is not already payable
When the Registrar accepts a child support agreement where child support is not already payable, the Registrar will make an administrative assessment of child support under section 93(2). In these circumstances, an administrative assessment under section 31 does not occur because an application for administrative assessment has not been made. The child support assessment will start from the day on which the application for acceptance of the agreement was made to the Registrar (section 93(1)(g)). The Registrar will make the administrative assessment in accordance with the provisions of the agreement (section 93(3)).
Date of effect where child support is already payable
When the Registrar accepts a child support agreement in a case where child support is already payable, the assessment will be varied from (section 34B(2)):
- if the application for acceptance of the child support agreement was made within 28 days after the agreement was signed, or 90 days if the parent is a resident of a reciprocating jurisdiction (section 34B(3)), the date specified in the agreement provided that date is not before the date the child support liability began (in which case the assessment will be varied from the start date of the child support liability), or
- if the application for acceptance of the child support agreement was made within 28 days after the agreement was signed (or 90 days if the parent is a resident of a reciprocating jurisdiction) and no date is specified in the agreement, the date the agreement was signed, or
- if the application for acceptance of the child support agreement was not made within 28 days after the agreement was signed (or 90 days if the parent is a resident of a reciprocating jurisdiction) the day on which the application for acceptance of the agreement was made to the Registrar.
Effect of certain provisions of a child support agreement
Once a child support agreement is accepted by the Registrar the provisions have effect as though they were court orders (section 95).
If a child support agreement includes:
- a provision for periodic payments by a parent,
- a provision varying a provision of that kind, or
- a provision agreeing on any other matter that a court can include in an order for a change to the assessment (see 4.3.2 for more information (section 118)),
the provision has the same effect on the child support assessment as a court order made by consent (section 95(2)). This means the child support assessment must take into account those provisions of the agreement.
If a child support agreement includes a provision for a parent to provide child support to the other party otherwise than in the form of periodic amounts paid to the other parent (non-periodic payment provisions):
- the provision has effect, for the purposes of making an assessment under Part 5, as if it is a consent order under section 124, and
- if the agreement is registered in a court with jurisdiction under the FL Act, the court can enforce the provision as if it were an order made under the FL Act (section 95(3)).
If a child support agreement includes a provision stating:
- whether a non-periodic amount is to be credited against a parent's child support liability under an assessment, and
- stating the annual value or specifying a percentage by which the child support payable should be reduced,
those statements have effect as if they were statements made by a court under section 125 in an order under section 124. This means that the Registrar must amend the child support assessment to give effect to those crediting provisions (section 127).
Provisional notional assessment
Once the Registrar has decided to accept a child support agreement, a provisional notional assessment must be made. This provisional notional assessment will be calculated using both parents' adjusted taxable income and the most recent care details for the children available to the Registrar (section 146B(2)).
In making the provisional notional assessment the Registrar must take into account any relevant decision under Part 6A of the Act (change of assessment) and also any departure order made by a court under Division 4 of Part 7 of the Act (section 146B(2)). If the administrative assessment is based on a parent's estimate of income, the Registrar must disregard the estimate and make the provisional notional assessment on the parent's adjusted taxable income for the last relevant year of income for the child support period (section 146BA(1)(b)).
The Registrar must serve notice, in writing, of the provisional notional assessment on both parties. The notice will advise the parties they are entitled to seek a variation of the provisional notional assessment (section 146B(5)).
Varying a provisional notional assessment
If a parent feels that a provisional notional assessment does not reflect their circumstances, they may seek a variation of the provisional notional assessment (section 146C) within 14 days of receiving the notice by doing one or more of the following:
- Making an application to exclude additional income earned post separation (2.5.2) (sections 44 and 146C(1)(aa)).
- Making an application to reduce the annual notional assessment rate to nil (2.5.4) (sections 66A and 146C(1)(ab)).
- Notifying the Registrar of a change to the percentage of care (2.2.6) that the payer or payee has of the child/ren (section 146C(1)(a)).
- Making an application for a change of assessment (2.6.2) to the Registrar, where relevant special circumstances exist to depart from the provisional notional assessment (section 146D and Part 6A). A decision to depart from the provisional notional assessment relates to the provisional notional assessment only.
Note: The Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (Further 2008 Budget and Other Measures) Act 2008 amended section 146D to provide that where a child support agreement is accepted by the Registrar after a departure application is made under section 98B but before the departure application has been determined, the departure application is taken to be an application for a variation of the provisional notional assessment. This provision takes effect from 6 January 2009 and applies to agreements accepted on or after 6 January 2009.
- If the applicant is a parent of the relevant child, making an election to estimate their adjusted taxable income (section 146G). The parent may make an election if he or she estimates that their adjusted taxable income for the 12 months from the date of the provisional notional assessment will be at least 15% less than the adjusted taxable income used in the provisional notional assessment. The adjusted taxable income used in the provisional notional assessment can be one issued by the ATO or one based on a declaration made by the parent.
Note: A parent may not elect to use an estimate of income where an income amount order (section 5) is in force, other than the relevant child support agreement, in relation to the parent and the particular period of time relevant to the provisional notional assessment (section 146G(2)).
At any time before the provisional notional assessment becomes a notional assessment, a parent who made an election to estimate may revoke that election and substitute a new election (section 146K).
The Registrar may refuse to accept the estimate election if it is likely to be less than the actual amount that would be the parent's adjusted taxable income for that 12 month period (section 146H).
A parent may not object to the Registrar varying, or refusing to vary, a provisional notional assessment. Instead, once the provisional notional assessment becomes a notional assessment, a parent can object (4.1.2) to the particulars of the notional assessment (CSRC Act section 80(1), item 14A).
Multiple provisional notional assessments
In some circumstances where both parents have requested a new provisional notional assessment and then sought to vary those assessments, more than one provisional notional assessment can exist at the same time. All variations to all provisional notional assessments must be finalised before a provisional notional assessment can become a notional assessment.
Example: C and D have a limited child support agreement. C requests a new provisional notional assessment and seeks a variation to reflect their new income by applying for a change of assessment.
While the change of assessment application is being considered, D notifies a change in care of the children.
More than 14 days have passed since D received notice of the new provisional notional assessment so they are unable to seek a variation to this assessment. D therefore requests a new provisional notional assessment, and then seeks a variation.
This second provisional notional assessment is varied to reflect the change in care. However, it is unable to be converted to a notional assessment while the change of assessment decision relating to the first provisional notional assessment is pending.
When the change of assessment decision is made, a new notional assessment is made that reflects both the change of assessment decision relating to C's income and the change in care.
A provisional notional assessment becomes a notional assessment:
- 14 days after the notice of the provisional notional assessment is received by all the parties, or
- if an application for variation was lodged, then on the day on which the Registrar varies, or refuses to vary, the provisional notional assessment amount.
The notional assessment is the child support amount that would have been payable but for the child support agreement (taking into account the relevant circumstances of a case, including change of assessment) (section 146A).
The notional assessment amount is used in calculating the relevant amount of FTB Part A payable to the payee. However, prior to the notional assessment issuing, the child support amount payable under the agreement will be used in calculating the relevant amount of FTB Part A payable to the payee.
A notional assessment will apply to all child support agreements (other than lump sum payment provisions), where the application for acceptance is received by the Registrar on or after 1 July 2008 (section 146B).
The Registrar must serve written notice of the notional assessment on the parties (section 146E). Either party may object (4.1.2) to the particulars of the notional assessment (CSRC Act section 80(1) item 14A). If aggrieved by the objection decision they may then apply to the AAT for a first review of the objection decision (4.2.1).
Subsequent provisional notional assessment
The Registrar will make a new provisional notional assessment:
- where the child support agreement remains in force and it is 3 years since the notional assessment was last calculated (section 146F(a)),
- where the child support payable under a child support agreement (binding or limited) changes by more than 15% (section 146F(c)), or
- for limited agreements, on request of either party (section 146F(b)).
Example: M and F have an agreement for 2 children, A and B who are both in F's 100% care. Under the agreement, M is required to pay F an annual rate of $4000 for each child. B leaves F's care and is now living with M. The rate payable under the agreement by M reduces from $8000 for A and B to $4000 for A only. This represents more than a 15% change in the annual rate and a new provisional notional assessment is issued.
See 2.7.5 for details about when an agreement may be terminated, including when a limited child support agreement may be terminated if a new notional assessment differs by more than 15% from the previous notional assessment in circumstances not contemplated by the agreement.
Transitional arrangements for child support agreements
Prior to 1 July 2008, the Registrar reviewed all child support agreements that would be in force on that day (Item 73, Schedule 5, Reform of the Child Support Scheme, New Formula and Other Measures Act) (the Reforms Act).
The Registrar considered each agreement to determine whether the agreement contained provisions that would continue after 1 July 2008. Regulation 21 of the Child Support Reforms Regulations specifies which provisions of an agreement would continue to operate after 1 July 2008.
Where the continuity of the agreement provisions are not affected by the changed legislation, then it became a special type of binding child support agreement known as a transitional child support agreement (item 74(1)(b)(i) of the Reforms Act).
The Registrar will not issue notional assessments in relation to transitional child support agreements. Where the assessment is determined under a transitional agreement, a parent's entitlement to FTB Part A will be assessed on the basis of the agreed amount of child support pursuant to the transitional agreement.
A transitional agreement can be ended by a written agreement entered into without legal advice (item 75(6) of the Reforms Act).
Where a child support agreement contained provisions that do not operate after 1 July 2008, e.g. based on components of the previous child support formula that no longer exist, it was terminated by the Registrar as at 30 June 2008 (item 74(1)(b)(ii) of the Reforms Act). An administrative assessment based on the child support formula was made for the period after 1 July 2008, where an administrative assessment was in place before the child support agreement was accepted. If no administrative assessment was in place before the child support agreement was accepted then the Registrar's decision to terminate the child support agreement has the effect of a terminating event (item 74(2) of the Reforms Act).
The Registrar notified the parties in writing of the decision to terminate or make binding each such agreement (item 74(3) of the Reforms Act). The parties were also advised of their objection and appeal rights (items 74(4) to (6) of the Reforms Act).
WA ex-nuptial cases
The information on this page applies to WA ex-nuptial children.
See 1.4.3 for details of the date from which various provisions had effect for WA ex-nuptial cases.