Lump Sum child support 277-02030000

A lump sum binding agreement is a unique type of agreement where the parties can agree to a lump sum payment amount being credited against the amount payable under the administrative assessment. It is a way of formalising the payment of large sums of child support. The lump sum is credited against the amount payable each year at 100% (unless the agreement specifies a lower percentage), and any remaining lump sum credit is indexed at the Consumer Price Index (CPI) on 1 July each year. See the Child Support Guide 5.3.3: Crediting lump sum payments.

From 1 July 2008 parents (or a non-parent carer) with a child support assessment in force can apply to a court for an order that requires the payer to provide child support in the form of a lump sum to be credited against the liability payable. The court can make a section 123A court order if it would be just, equitable and otherwise proper to do so.

See the Child Support Guide 4.3.2: Applications and orders about decisions under the Assessment Act.

The crediting of the lump sum against the liability payable under a section 123A order works the same as the crediting of a lump sum under a lump sum binding agreement. The payments are credited once a year, and any remaining lump sum is indexed annually by a CPI factor.

A court order (sections 124 and 125) or child support agreement (section 84(1)(d)) can provide for a parent to pay child support in the form of payments to third parties. These are non-periodic payment provisions. The Assessment Act does not limit the types of payments that can be included in these provisions, but the most common forms are school fees, mortgage payments, health insurance and the costs of orthodontic treatment.

A non-periodic payment provision works by specifying how the non-periodic payment will affect the annual rate payable under the administrative assessment. For example, the one-off payment of $5,000 in private school fees by the paying parent may be specified to reduce the annual rate under the administrative assessment by 50%. If the annual rate of the administrative assessment was $12,000, then the annual rate of the administrative assessment would be reduced by 50% to $6,000. The paying parent would still need to pay $6,000 for child support.

Non-periodic payment provisions can be contained in:

• a limited child support agreement
• a binding child support agreement, or
• a court order made under section 124

A court order (section 124) or child support agreement (section 84(1)(f)) can also provide for non-periodic payments that do not affect the annual rate payable under the administrative assessment. These payments are paid in addition to the assessed annual rate.

It is important to recognise the difference between a lump sum payment provision and a non-periodic payment provision. The difference is:

• a non-periodic payment provision can be in either a binding or limited agreement, or in a court order made under section 124 and must reduce the annual rate of the assessment by an agreed amount or percentage (except where the court finds that special circumstances exist), whereas
• a lump sum payment credit does not reduce the annual rate under the assessment but creates a credit against the amount payable under the assessment

Note: an agreement that includes a lump sum payment provision could also include other provisions that may alter the assessment.

For more information on the differences between the 2 see the Child Support Guide 2.7.1: What is a child support agreement? If more information is required, seek help from a Service Support Officer (SSO).