Child Support Agreements: Binding vs. Limited

Child support is a financial obligation whereby one parent must pay to the other parent a contribution into their household to help cover the costs of raising a child or children following separation or divorce.

Child support typically includes a contribution towards the basic necessities for your child or children such as food, housing and household bills, clothing, education, and healthcare. Child support can be assessed and paid via Services Australia (Child Support), although parents can also enter into their own private agreements regarding how much (if any) child support is payable from one to the other.

When it comes to child support arrangements, understanding the differences between a Binding Child Support Agreement and a Limited Child Support Agreement is crucial.

Key Differences

1. Assessment Requirements

Limited Child Support Agreement: Must have a child support assessment already in place.

Binding Child Support Agreement: May be entered into without an existing child support assessment.

2. Payment Amount

Limited Child Support Agreement: The payment amount must be equal to or greater than the amount determined by the child support assessment.

Binding Child Support Agreement: Parents can agree on any amount they choose including contributions towards more than the “basic necessities” or the child support assessment including private school fees, extra-curricular activities, private health insurance and medical or health related “gap” payments for example.

3. Termination

Limited Child Support Agreement: Only operates for a maximum of 3 years or may be terminated by either party with 60 days’ notice if the notional assessment changes. Automatically ends when the child turns 18 or completes secondary school.

Binding Child Support Agreement: Ends upon the creation of a new Binding Agreement, when the child turns 18 or completes secondary school, or by court order. Offers greater certainty as it lacks the flexible termination clause of the Limited Agreement.

4. Requirements and Registration

Limited Child Support Agreement: May be prepared by parents or with the assistance of a lawyer. Terms take effect only after registration and acceptance by Services Australia (Child Support).

Binding Child Support Agreement: Parents must both obtain independent legal advice. Agreement takes effect immediately upon finalisation, with registration with Services Australia (Child Support) or the Family Court by being optional.

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Which agreement is right for me?

There are various advantages and disadvantages with both types of child support agreement and determining what is right for you and your children is something we can assist you with. Please reach out to the FLL team for further advice.

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