Interpreting and making a decision on a Child Support agreement 277-02010020

Examine each part of the agreement to ensure:

• the intention of the parties to the agreement is clear
• Child Support is able to administer the agreement
• the correct legislation is applied

Note: run, but do not save, eligibility to identify any other issues that need to be addressed with customers. See Eligibility Cuba process help.

Anticipating issues similar to the ones outlined below and discussing them with customers may avoid disputes arising later.

The made on date for an agreement is the date that all parties to the agreement have signed the agreement.

It is the signature of the last party to sign that determines the date on which the agreement was made. For example, if one parent signed the agreement on 25 June 2018, then the other parent signed on 02 July 2018, the agreement was made on 02 July 2018.

If the date that each party signed the agreement is not clear, talk to the customers to confirm when each of them signed the agreement. See Contact with Child Support customers.

If there is a dispute about when the last party signed the agreement, consider other possible sources of confirmation. For example, statements from the solicitors or any witnesses to the signatures.

If the made on date still cannot be determined, consult a Service Support Officer (SSO).

Child Support cannot refuse an agreement simply because it is difficult to administer.

If none of the agreement is administrable, this will probably be because the agreement does not actually contain any provision that may be present in a child support agreement, and if so, Child Support must refuse to accept the agreement.

If a part of a binding agreement cannot be administered, contact customers to discuss their options if they want to change or remove a condition within their agreement.

A binding agreement cannot be changed after it has been made, so a new agreement would have to be made. New independent legal advice must be provided to both parties about the effect of the new agreement and the advantages and disadvantages of making the agreement before it is signed. See Contact with Child Support customers and Assessing a new Child Support agreement - Alterations to binding agreements (before acceptance by the Registrar). If required seek assistance from a SSO.

If the part which is not administrable is severable from the agreement, consider if the remainder of the agreement can be given effect to as per the original intention of the agreement,

Example 1 - Part of a binding agreement is not administrable but can be removed while maintaining the intent of the agreement:

• Child Support receives a child support agreement for 3 children with an amount payable of $90 per week per child while they are attending secondary education and $150 per week per child from the start of their tertiary education until they complete their first tertiary degree
• The portion of the agreement attempting to deal with support for the child after they turn 18 during their tertiary education cannot be administered by Child Support
• After discussing this with both customers, they agree the intention of the agreement was for the payee to receive the agreement rate using either the rate applicable during secondary education or the rate applicable to tertiary education for each child. But both parties acknowledge Child Support cannot extend the assessment past the child’s 18th birthday to cover all of their tertiary education. Child Support can still accept the agreement and will disregard the portion of the agreement that deals with tertiary education after the child’s 18th birthday, without altering the overall intent of the agreement. If a customer has any concerns about the part of the agreement that cannot be administered by Child Support, they may wish to discuss their options with their legal advisor

Example 2 - Part of a binding agreement is not administrable and if removed would prevent the intent of the original agreement:

• Child Support receives a binding child support agreement for 3 children with a periodic child support amount of $50 per week per child. A clause requires the payer to make a lump sum payment of $20,000 to the payee on 9 May. The periodic child support clause depends on the non-periodic payment being paid on 9 May but the lump sum payment is not made
• After 9 May the payer applies for the child support agreement to be accepted. As the periodic amounts were agreed to on the basis of the non-periodic payment being paid by 9 May the periodic payment provisions cannot be applied in isolation from the non-periodic payment. Since the clauses are not severable and the non-periodic payment has not been paid, the agreement should not be accepted. If a customer has any concerns about the agreement not being able to be administered by Child Support, they may wish to discuss their options with their legal advisor

Document the decision and conversations with customers in the Additional Registration Information window.

If part of a limited agreement cannot be administered, contact customers and provide them with options if they wish to change or remove a condition within their agreement. See Contact with Child Support customers and Assessing a new Child Support agreement, Alterations to a limited agreement (before acceptance by the Registrar).

Investigate if the remainder of the agreement can be given effect to as per the original intention of the agreement if that part which is not administrable is severable from the agreement.

If a customer has any concerns about the part of the agreement that cannot be administered by Child Support, they may wish to discuss their options with their legal advisor.

Example 1 - Part of a limited agreement is not administrable but can be removed while maintaining the intent of the agreement:

• Child Support receives a child support agreement for 3 children (1 of whom is the payer’s step child) with an amount payable of $90 per week per child. The step child is not an eligible child under sub-section 82(1) of the Assessment Act and cannot be included in the agreement. After discussing this with both customers, they agree that the intention of the agreement was for the payee to receive $90 per child for child support. Child Support can disregard the liability for the step child when accepting the agreement without altering the intent of the agreement in relation to the other 2 eligible children

Example 2 - Part of a limited agreement is not administrable and if removed would defeat the intent of the original agreement:

• Child Support receives a child support agreement for 3 children with a periodic child support amount of $50 per week per child. A clause requires the payer to make a non-periodic payment of $17,000 to a joint mortgage on 7 May. The periodic child support clause depends on the non-periodic payment being paid on 7 May but the lump sum payment is not made
• After 7 May, the payer applies for the child support agreement to be accepted. As the periodic amounts were agreed to on the basis of the non-periodic payment being paid by 7 May, the periodic payment provisions cannot be applied in isolation from the non-periodic payment
• Since the clauses are not severable and the non-periodic payment has not been paid, the agreement should not be accepted

Document the decision and conversations with customers in the Additional Registration Information window.

Examine the agreement to identify clauses that Child Support cannot enforce or automatically administer which could cause unintended future effects.

Discussions should be held with both parties about any such clauses before the agreement is accepted, to clarify their understanding of the effect and the limitations of any such clauses in their agreement.

There is generally no standard clause, it will depend on the particular wording used by the parties in their specific agreement as to what events/conditions may cause a clause to become active, and if so, what effect it should have on the rate of child support payable under the agreement.

Check the exact wording of all the clauses in the agreement, and contact customers to explain how Child Support would usually interpret and apply their clause.

Consider if it is clear:

• how Child Support is to test whether the clause should be applied
• what evidence, if any, is needed before the clause can be applied
• from what date the clause will affect the assessment if it is applied, especially if there is any delay in notifying Child Support about the changed circumstances

Also consider whether the clause ceases to have effect if the party’s circumstances change again and if so:

• how this is to be established
• from what date the clause will cease to have effect
• what agreement rate will then be applicable again

Remind the customers they must promptly inform Child Support if their circumstances change in relation to income, employment status, and care, or in relation to any other circumstance or event that is covered by their child support agreement.

Explain that this could impact on the activation/deactivation of clauses affecting the agreement rate payable and on the notional assessment details.

Document the conversations with customers, in particular whether they have a common or different interpretation of any ambiguous wording in the Additional Registration Information window.

Refer to the following for further information:

• periodic amounts that are not specified per child, go to Step 7
• mix of periodic child support obligations and other than periodic child support obligations, go to Step 8
• start date of agreement not specified, go to Step 9
• end date of agreement not specified, go to Step 10
• unemployment clause, go to Step 11
• low income/reduced income/changed income clause, go to Step 12
• specified events clause, go to Step 13
• change in care clause, go to Step 14
• receiving parent ceases to be an eligible carer, see Suspending or Ending a Child Support agreement due to care
• maintenance recorded as a foreign currency, go to step 15

If periodic amounts have not been specified for each child or the agreement does not specify how a rate is to be apportioned for each child, the rate will be apportioned equally between all children. If an agreement was made prior to 1 July 2018 and it sets a rate per case and the agreement does not specify how the rate is to be apportioned, the rate will be apportioned equally between all children who remain assessed on the agreement as at 30 June 2018.

The 1 July 2018 changes to the apportioning of agreement rates apply to WA Ex-nuptial agreements made on or after 15 May 2019. The rate will be apportioned equally between all children who remain assessed on the agreement as at 14 May 2019 if:

• an agreement on a WA Ex-nuptial case was made prior to 15 May 2019, and
• it sets a rate per case and the agreement does not specify how the rate is to be apportioned.

For WA Ex-Nuptial cases, any apportionment will only occur from 15 May 2019.

Example 1 - No child support amount specified for each child

If the child support payable is set as a whole amount, for example, $120 per week for 3 children, then this amount will be apportioned equally at $40 per week for each child.

Example 2 - Applying apportionment to children on agreement as at 30 June 2018

If the child support payable is set as a whole amount, for example, $120 per week for 3 children but on 30 June 2018 only 2 children remained assessed on the agreement (because 1 child has turned 18), the rate of $120 per week will be apportioned equally between the remaining 2 children from 1 July 2018.

Example 3 – Agreement has apportionment instructions

If the agreement provides instructions about how a periodic amount or annual rate is to be apportioned, for example, $100 per week for child A and $150 per week for child B, this should be keyed at a rate of $100 per per week for child A and $150 per week for child B.

An agreement may specify a periodic rate per child, but it may also provide that the formula rate is to be used if the formula result is higher than the agreement periodic rate.

Example 4 - The child support payable is set at the higher rate of either $50 per child per week or at $50 above the normal assessed rate per child. Child Support can administer the clause as both customers can contact Child Support when the assessment changes. For example, lodgement of tax returns or changes in circumstances.

Note: some types of complex agreement provisions (such as the one in the example above) cannot be handled automatically and will need manual adjustment each time the formula rate would otherwise be changing. Other types of complex agreement provisions (for example, if the agreement in the example above had provided for the child support to be set at the higher of $50 per child per week or at just the normal assessed rate per child) can be recorded in a way that should ensure they are automatically applied. See Formula Modification window Help.

Example - Child support agreement with the following clauses:

• A - the agreement sets the periodic child support for three children at $50 per child per month, and
• B - the payer is also required to pay half of the payee’s monthly mortgage of $500

Child Support can accept the agreement as a whole, that is, both clauses will both be accepted.

Accepting clause A will create a legal obligation for the payer to pay the periodic child support which may be collected and enforced by Child Support.

Accepting clause B will also create a legal obligation for the payer to pay the non-periodic child support (that is half of the mortgage repayments), but the non- periodic child support will not be included in the child support assessment, and this cannot be collected and enforced by Child Support.

If the payer fails to pay half of the mortgage, Child Support cannot take enforcement action about this, but the payee may take private enforcement action about the mortgage payments.

If the start date of the agreement is not specified that does not mean the agreement cannot be accepted.

If there is no start date specified, the start date of the agreement will depend on whether:

• child support was already payable under an administrative assessment, and
• the application for acceptance of the agreement was made within 28 days of the date the last signatory signed the agreement

See Step 1 in the Start date of agreement determines the legislation applied table and the Child Support Guide 2.7.4: Effect of a Child Support Agreement Once Accepted by the Registrar (Other than Lump Sum Payment Provisions) for detail on date of effect where child support is not already payable or is already payable.

Start date of the agreement may be contingent on another event happening, or the rate of child support payable under an agreement may be contingent on another event happening.

See the Child Support Guide 2.7.1: What Is a Child Support Agreement? about Agreements with conditions and pre-requisites for detail.

More than one start date in an agreement

Some agreements can be unclear as to the date from when any liability should commence, or be varied to reflect the terms of the agreement.

Check the agreement to identify the correct start date and seek clarification from the parties to the agreement if required.

If unsure of the correct start date for the agreement, seek support from an SSO.

If the end date of the agreement is not specified, the agreement will automatically end for each child as they turn 18. In some circumstances an agreement may be extended to the last day of the secondary school year if an application is made to extend the assessment, See Eighteen year old children extending a child support assessment.

Agreements also commonly list other events that will cause the particular child support agreement to end. Check the exact wording of any provisions in the agreement and ensure both parties are aware of any limitations of the wording used.

For example, if the agreement states that the agreement is ends if a s12 terminating event happens, make sure that both parties are aware that a change of care between the parents is not automatically s12 terminating event. If one of the parents has at least 35% care after the care change it is not a terminating event. However, their agreement may be suspended or terminated due to a care change that results in the payee having less than 35% care. See Suspending or Ending a Child Support agreement due to care

If an agreement made prior to 23 May 2018 (15 May 2019 for WA Ex-nuptial children) includes a clause that states the agreement will end in the event of a terminating event, the agreement will end if a section 151 election is accepted and a terminating event occurs (unless the agreement contains an specific definition of terminating event for the purposes of the agreement which does not include the assessment ending due to a s151 election). See Managing changes affecting a Child Support agreement.

If the agreement was made on or after 23 May 2018 and it states it will end if a s12 terminating event happens, explain to the parties that the reference in the agreement will not apply to a terminating event that results from a section 151 election to end an assessment. See Managing changes affecting a Child Support agreement.

Note: the legislative changes commencing from 23 May 2018 apply to WA Ex-nuptial cases from 15 May 2019. These cases will be administered as agreements made prior to 23 May 2018.

In some cases, unemployment clauses can only be activated when customers are in receipt of a Centrelink benefit.

This could affect self-employed customers during periods of no or low employment activity and who are neither engaged in current employment nor are eligible for Centrelink unemployment benefits. Customers who are unemployed but have a spouse with income may not be eligible for Centrelink benefits.

Customers should also be aware of the impact of underemployment. If a customer’s hours of employment reduce significantly but they are still employed, they will not be able to activate the clause. See Contact with Child Support customers.

Check the exact wording of any Low income / Reduced income/ Changed income clause in the agreement and contact customers to explain how Child Support would usually interpret and apply their clause.

An agreement may cover the possibility of a party’s circumstances changing by a specified event happening in the future and, if so, whether that should have any impact on the agreement rate payable.

Ensure both parties are aware of any limitations of the wording they have used.

For example, if the agreement states that the agreement is ended for a child if the child becomes employed, discuss and clarify with the parties whether this is intended to include part time or holiday employment or is only intended to apply to permanent full time employment?

An Australian child support agreement may list maintenance in a foreign currency. Typically this occurs when one parent resides outside of Australia.

As there is no provision in the system to register amounts expressed in a foreign currency, the maintenance amount must be converted to Australian dollars.

The following hierarchy should be adopted when applying an exchange rate to convert the foreign currency into Australian dollars:

• if the agreement specifies an exchange rate, apply this
• if an exchange rate is not included, contact both parents to give them an opportunity to agree on the exchange rate that should be applied. See Contact with Child Support customers.
• if both parents cannot agree on the exchange rate apply the Commonwealth Bank of Australia (CBA) telegraphic transfer rate on the day that the agreement is accepted.

Document the discussion and outcome, see Documenting Child Support information.

Agreements that effect the assessment prior to 1 July 2008 and after 1 July 2008, must be treated and recorded as two separate agreements if:

• it was lodged on or after 1 July 2008
• it has a start date before 1 July 2008 and an end date on or after 1 July 2008, and
• an application for acceptance of the agreement is made within 28 days of the agreement being signed

The applicable legislation needs to be applied to the agreement for the period before 1 July 2008 and for the period from 1 July 2008 onwards. In some circumstances this may result in only one of the agreements being accepted.

Transitional agreements must be escalated to a Program Support Manager via a SSO for approval. The Program Support Manager must use Administering agreements and court varied assessments (CVA) lodged on or after 1 July 2008 that include both pre and post 1 July 2008 periods when deciding whether to approve the acceptance of the agreement.

Post 1 July 2008 legislation must be apply to agreements with a start date from 1 July 2008 onward.

See Suspending or ending a Child Support agreements due to care

For agreements made:

• before 1 July 2018, the pre 1 July 2018 legislation applies
• after 1 July 2018 the 1 July 2018 legislation applies, effective from 1 July 2018
• about WA ex nuptial children, the 1 July 2018 legislation applies, effective from15 May 2019, to agreements made:
• on or after 15 May 2019, or
• between 1 July 2018 and 14 May 2019 with an application for acceptance made on or after 15 May 2019.

Run eligibility and view the Eligibility Preconfirmation results window to identify any other issues that arise on the case that need to be discussed with customers. See Eligibility Cuba process help for more information.

Contact is not required to either customer when:

• the agreement is properly made
• can be clearly interpreted
• does not require further clarification
• full effect can be given to the provisions, and
• none of the 'must contact' criteria below apply

If customer contact is not required, go to step 4

Customer contact must occur for:

• initiating agreements
• international agreements
• known family and domestic violence issues
• Culturally and Linguistically Diverse (CALD) customers
• Indigenous and/or Remote customers
• Personalised Services customers
• the business otherwise determines the agreement to be complex. This includes, but is not limited to, where further information or clarification from either party is required or full effect cannot be given to the provisions of the agreement

Contact customers to acknowledge and discuss the following prior to making the decision to accept or reject the agreement:

• receipt of the child support agreement
• the terms of the child support agreement
• Child Support's interpretation of the particulars of the agreement
• whether the agreement is properly made
• identified issues such as those listed in Step 5 in the Interpret agreement table
• the importance of informing Child Support if their circumstances change. Changes to income, employment status, care, or any other circumstance or event covered by the child support agreement could impact the activation/deactivation of clauses and the notional assessment details
• customer options
• provisional notional assessments (PNA) and notional assessments (NA). If the customer has a current estimate of income, explain that the provisional notional assessment will be based on their adjusted taxable income (ATI) for the last relevant year of income and not the estimate used in the administrative assessment. If their current income is lower they will be able to make a PNA estimate if they want to vary the PNA before it converts to a notional assessment
  Note: if either customer has an estimate of income in place, the system will use this income when eligibility is run and the PNA is created. This is not correct as the PNA must be based on the adjusted taxable income for the last relevant year of income for the child support period. See the Generate a Provisional Notional Assessment (PNA) table in Notional assessment relating to child support agreements for information on how to correct the PNA before it is sent to customers.

Inform customers of the factors considered in making the decision to accept, reject or determine the agreement is incomplete. Discuss appropriate options available to them and document the decision on the Case or Additional Registration Information window.

If the parties to the agreement do not have a shared understanding of the intention or their understanding is not consistent with the words of the agreement, make a decision as to how the agreement should be interpreted. Seek further supporting evidence from both parties to assist in the determination, for example a copy of a letter/email discussing the agreement.

If unable to decide on the correct interpretation of the child support agreement, seek assistance from a SSO. See Technical support in Child Support.

Document the discussion in the Case or Additional Registration window. For more detail about what to document, see Documenting Child Support information.