Difference between a Binding Child Support Agreement and a Limited Child Support Agreement

One of the biggest things at the forefront of people’s minds when they separate, is how to distribute expenses related to children moving forward.  The child support system in Australia is based on a formula regulated by Services Australia.

Parents can apply the child support assessment stipulated by Services Australia, or they can agree on a different arrangement.  It is always a good idea to formalise any alternate agreement reached for child support.

There are two ways to formalise a consent agreement as to child support; a Binding Child Support Agreement or a Limited Child Support Agreement.

In limited circumstances, a party can apply to the Court for a departure order from child support.

Binding Child Support Agreements

A Binding Child Support Agreement (“BCSA”) is a written agreement for child support to be paid.  They can include periodic payments (weekly, fortnightly or monthly) or non-periodic payments (such as health insurance, extra-curricular activities or other expenses for the children), or both.  They can also provide for lump sum payments of child support.

It is important for both parties to seek legal advice from a qualified family lawyer before entering into a BCSA.  In fact, this is a requirement for the agreement to be binding.  The reason for this is that once made, they are binding and they cannot be varied.  They can be terminated in limited events, such as a child turning 18 or if a parent ceases to be an eligible carer.  If a party wants to change the BCSA, the agreement must first be terminated.  It is therefore important that parties are sure that a BCSA is right for them prior to entering into this type of agreement.

In most cases there is no requirement for an administrative assessment by Services Australia to be in place prior to entering into a BSCA, however, it is a good idea to have at least some idea of what child support would be payable so you can determine if the BCSA is the best option for you.  An estimator as to possible child support that would be payable can be accessed here.

Limited Child Support Agreements

Limited Child Support Agreements (‘LCSA’) are a little more flexible.  They are still a written agreement which provides for periodic, non-periodic or lump sum payments of child support.

However, they do not require the parties to obtain legal advice.  It is still highly recommended that you obtain legal advice before considering any options outside of the child support formula.  Once made, the LCSA must be accepted by Services Australia.

Unlike under a BCSA, the payments under a LCSA cannot be less than what would be payable under a child support assessment.  Should a subsequent assessment vary more than 15% than the assessment at the time the agreement was entered into, and is not contemplated by the LCSA, this will trigger an election to terminate the LCSA.  In addition, LCSA’s which are in place longer than 3 years can also be terminated by either party on election.

Like the BCSA, the LCSA cannot be varied.  It must first be terminated in order to change the terms of the agreement.

Both types of agreements can only be entered into where there is consent of both parties.  If one party does not agree to enter into a BCSA or LCSA, then the parties can still rely on a child support assessment which is legislatively available to all separated families.  There are also avenues for those assessments to be varied where there are unique family circumstances.

This article is a short overview of the difference between a BCSA and LCSA.  As can be seen, these agreements are complex and specialised family law advice should be obtained prior to consideration and/or entering into an agreement to depart from a formal child support assessment.

At Gillard Family Lawyers we have two accredited specialists and experienced solicitors in family law that can provide advice to you with respect to Binding Child Support Agreements and Limited Children Support Agreements. We offer a reduced rate fixed fee initial consultation for $220. Simply, contact our friendly staff to make an appointment.