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The Commonwealth government has introduced a number of legislative changes impacting the circumstances of children on the breakdown of families.  As part of those changes, the government passed the Child Support Legislation Amendment (Reform of the Child Support Scheme  New Formula and other Measures) Act 2006 (Cth) (the Act).

Although the Act received Royal Assent on 6 December 2006, some of the changes do not take effect until 1 July 2008.  Important changes to child support agreements are among the provisions that do not take effect until 2008.

Registration of Child Support Agreements

It is important for all child support agreements to identify a specific start date.  This date may be the same date as the agreement is signed, or a date after the agreement is signed.  It cannot be an earlier date.  The significance of identifying a start date relates to registration of the child support agreement.  Within 28 days from the start date identified in the agreement, parties to a child support agreement can apply to the Registrar to have the child support agreement registered.  If the agreement is accepted by the Registrar within the 28-day period, acceptance of the agreement will be backdated to the start date of the agreement.

Types of Child Support Agreements

Beginning on 1 July 2008, there will be two types of child support agreements:

1.            Binding child support agreements; and
2.            Limited child support agreements.

1.            Binding Child Support Agreements

In order for a child support agreement to be binding, it must be in writing and signed by both parties.  The agreement must also include a statement by each party to the effect that they obtained independent legal advice from a legal practitioner before signing the agreement.  In addition to this statement, certificates from the legal practitioners who provided the advice must be attached to the agreement.  Each party must also be provided with a copy of the agreement after it has been signed.

The significance of entering into a binding child support agreement is that parties may agree on an amount of child support that is either greater or less than the amount which the payor would be required to pay under an administrative assessment.  A binding child support agreement can also address payments for the cost of special expenses such as education, medical costs or extracurricular activities.

Once parties have chosen to enter into a binding child support agreement they cannot vary its terms.  Instead, the agreement can be terminated in one of three ways.

The parties can enter into a new binding child support agreement which expressly terminates the previous agreement.

The parties can enter into a termination agreement ending the arrangements between the parties.  The termination agreement must be in writing and signed by both parties and must also include certificates certifying that both parties obtained independent legal advice prior to entering into the termination agreement.

A binding child support agreement can be set aside by court order in limited circumstances.

A court can set aside a binding child support agreement where:

• A party's agreement was obtained by fraud or a failure to disclose material information;
• One party exerted undue influence or engaged in unconscionable conduct;
• There has been a significant change in the circumstances of one of the parties to the agreement or of a child who is the subject of the agreement;
• The agreement provided for an inadequate level of child support, having regard to the financial circumstances of both parties.

2.            Limited Child Support Agreements

Limited child support agreements must also be in writing and signed by both parties.  The key difference, however, it that it is not necessary to obtain legal advice about the effect of entering into the agreement.  Limited child support agreements are intended simply to provide safeguards on parents' interests in the absence of legal advice.  As a result, under a limited child support agreement the amount of support payable cannot be less than the annual rate that would be payable under an administrative assessment.

The legislation also sets out how limited child support agreements can be terminated, including by entering into a new child support agreement, by entering into a termination agreement, or by a court setting aside the agreement.  In addition, it may be terminated by the variation of the notional assessment of child support by more than 15% in circumstances not contemplated by the agreement.  Furthermore, where the agreement was made over three years earlier, one party may give notice of termination.

These changes introduced by the Act come into effect on 1 July 2008.