Child Support and COVID-19
Needless to say, the COVID-19 pandemic has had a profound and far-reaching impact across Australia, and the globe, affecting all facets of people’s everyday lives. Child support is no exception, and as a paying or receiving parent it is important to consider how COVID-19 may affect your child support payments.
Child Support Assessments and COVID-19
The amount of child support payable under an assessment carried out by the Child Support Agency is calculated having regard to, among other things, taxable income. Many parents around Australia have been unable to work or have suffered reduced hours as a result of the recent pandemic. For parents paying child support, this likely means a reduction in child support obligations, subject to any variation to the receiving parent’s income.
Updated child support assessments are ordinarily undertaken by the Child Support Agency when a paying and/or receiving parent files his or her tax return with the ATO. To ensure that changes to income are accounted for as soon as possible, however, parents have the ability to provide the Child Support Agency with an estimate of income, which will then be relied upon for a recalculation of child support obligations. If the estimate turns out to be higher or lower than the income declared in that parent’s next tax return, their total child support obligation will be credited or debited accordingly.
For parents currently receiving JobKeeper payments from Centrelink, there will be no change to your child support obligations unless the amount received is less than you were receiving at the time of the last assessment.
For parents receiving JobSeeker payments, those payments are not classified as income for child support purposes.
Child Support Agreements and COVID-19
Parties to Binding or Limited Child Support Agreements are able to apply to the court to set aside the agreement on the basis that exceptional circumstances have arisen that would result the applying parent or child/ren to whom the agreement applies suffering hardship (there are also other grounds to set aside an agreement, but none of them are likely to relate to the issues presented by the COVID-19 pandemic).
The Family Court of Australia recently heard an application where the paying parent sought an order to set aside a Binding Child Support Agreement due to the effects of the COVID-19 pandemic on his manufacturing business.
The applicant gave evidence that the sales in his business had decreased by approximately 90% due to the pandemic. The court was satisfied that the decrease in sales and the recovery of finances in an uncertain economy was an exceptional circumstance, and it determined that the applicant would suffer hardship if the agreement was not set aside. Thus, the agreement was set aside on the day the pandemic was announced.
As the pandemic continues to have an impact on lives and livelihoods, it seems likely that the Family Court will receive more applications seeking to set aside Binding and Limited Child Support Agreements.
If you require assistance in relation to any family law enquiry, please contact Christopher Mason on +61 8 8210 1231 or cmason@normans.com.au.
