The Legal Practitioner's Guide

5.2 (b) Payments to third parties

A court order or child support agreement can also make provision for a parent to pay child support in the form of payments to third parties (sections 124 and 95). 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. The payments may reduce, or be in addition to, the child support payable.

Court orders

• "That pursuant to section 124 of the Child Support (Assessment) Act 1989 [Parent A's name] provide child support to [Parent B's name] for the child(ren) [child(ren)'s names] by way of payment of [all school fees] for [child(ren)'s names] while the said children continue to attend [name of school]. Payment is to commence with the 20XX school year.

• The child support ordered to be paid by way of [school fees] is to reduce the amount payable under the administrative assessment of child support. For the period from [start date] to [end date] the [school fees] are to reduce the annual rate of child support by [x% (100% or some other specified percentage)].

OR

• The child support ordered to be paid by way of [school fees] is to reduce the amount payable under the administrative assessment of child support. For the period from [start date] to [end date] the [school fees] are to have an annual value of $x and the annual rate of child support for the days in that period is to be reduced by that amount ($x).

OR

• The child support ordered to be paid by way of [school fees] is to reduce the amount payable under the administrative assessment of child support. For the 20XX calendar year the [school fees] are to have an annual value of $y and the annual rate of child support for the days in that year is to be reduced by that amount ($y).

Child support agreement

• [Parent A's name] and [Parent B's name] agree that [Parent A's name] will provide child support to [Parent B's name] for the child(ren) [child(ren)'s names] by paying [school fees] for [child(ren)'s name(s)] while they continue to attend [name of school]. Payment is to commence with the 20XX school year.

• The child support that [Parent A's name] will pay by way of [school fees] is to reduce the amount payable under the administrative assessment of child support. For the period from [start date] to [end date] the [school fees] are to reduce the annual rate of child support for that period by [x% (100% or some other specified percentage)].

OR

• The child support that [Parent A's name] will pay by way of [school fees] is to reduce the amount payable under the administrative assessment of child support. For the 20XX calendar year the [school fees] are to have an annual value of $y and the annual rate of child support for the days in that year is to be reduced by that amount ($y); and

• For each subsequent calendar year, the annual value of the [school fees] is to be increased by (x% or $z). The annual rate of child support payable in each of those years is to be reduced by the annual value of [school fees] for the relevant year.

Tips and problems

Reduction of child support payable clauses
Orders and agreements for child support by way of payments to third parties must specify whether the payments are to reduce the child support payable and, if so, at what dollar or percentage rate (sections 125 and 84(1)(d)).

If there is more than one eligible child it should be made clear how the reduction applies to each child, as the child support formula applying from 1 July 2008 calculates child support for each child separately. For example, it may be appropriate to specify an amount per child.

Note: at the end of a liability (eg, the child turns 18) any 'unused' non-periodic amount is not a credit and CSA cannot refund that amount. The parties may wish to include a clause to address this possible eventuality in their order or agreement.

School Fees
Some parents may wish to specify that the payment of school fees will only apply/continue if the child attends a particular school. Also, it may be prudent to define what 'school fees' do and do not include. For example, whether the fees are intended to cover some extra curricular activities such as music, sport, excursions etc.

Enforcing payments to third parties
CSA can only register periodic amounts of child support for collection. The payee must make his or her own arrangements to enforce payment of third party payments that the payer is required to pay under a court order or agreement (sections 95(3) and 141).

When does the reduction take effect?
There is no provision in the Assessment Act for the reduction to be dependent on the payer making the required payments to third parties.

CSA must amend the child support assessment to give effect to the reduction clause of a court order for non-periodic payment(s) as soon as the order becomes final (section 127).

If CSA accepts a child support agreement that requires the payer to make payments to third parties, CSA must immediately give effect to any reduction clause in that agreement (sections 94(1) and 95(3)).

Sometimes, parties enter into a child support agreement where it is ancillary to other family law matters such as a financial agreement or a property settlement. Where one is contingent upon the other, the agreement should include a clause to the effect that the agreement, and CSA's acceptance of it, will be contingent upon the execution of the other matter and vice versa.

When the payee receives Family Tax Benefit
Generally, where the payee receives Family Tax Benefit (Part A) (FTB) at more than the base rate, and the parents make an agreement about the child support to be paid, then the payee's FTB will be assessed on the notional amount of child support that would have been paid if the agreement had not been made (see chapter 2.3).

The court must consider social security implications before it makes the order (section 123A). The Family Assistance Office can advise the payee how a child support agreement will affect his or her Family Tax Benefit entitlement. More information is available by calling 136 150 or at www.familyassist.gov.au.

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