Do I still have to pay Child Support if I have lost my income or if my income has been reduced as a result of a COVID-19 lockdown?
COVID-19 has had a far-reaching effect on all corners of Australian society and this current lockdown in Greater Sydney has once again resulted in the substantial loss of jobs and/or a significant reduction in income for some people. However, does a reduction in income or loss of employment mean that you are no longer liable to pay your Child Support obligations? The answer to this depends on how your Child Support obligations have been documented.
Informal Arrangement
If you and your former partner have an ad hoc agreement with respect to Child Support which is not formally documented, we suggest that you attempt to communicate your current circumstances to your former partner and have a frank discussion about where you are currently sitting financially as a result of this lockdown.
You should try to have some open dialogue around how you can continue to contribute to the expenses of the children which may include paying your obligations at a reduced capacity or otherwise pausing your payments until such time that you resume paid employment or your income increases to its previous level.
Child Support Assessment
If you currently have a Child Support Assessment issued by Child Support Agency – Services Australia, we encourage you to contact the Agency as soon as possible to notify them of your change in income.
Child Support Assessments are based upon (among other things) the payees and payers respective taxable incomes and therefore, if you no longer have a steady income or your income has reduced, you should provide the Agency with an estimate of your current income which will be relied upon for a recalculation of your Child Support obligations. In these circumstances, your Assessment will likely be reduced for a period of time until you notify the Agency that you have resumed paid employment, or your income has increased to its previous level.
Child Support Agreements
If you have entered into either a Binding or Limited Child Support Agreement, these Agreements cannot be varied. In order to alter your obligations pursuant to these Agreements, you have the following options available:
- you and your former partner may agree to enter into a new Child Support Agreement, however, both parties must agree to do so and both parties will be required to obtain independent legal advice to enter into a new Agreement;
- you and your former partner may agree to enter into a Termination Agreement which will void any previous Child Support Agreement you may have had; or
- you can file an Application with the Court to ‘set aside’ the Agreement on the basis that a ‘significant change in circumstances makes the Agreement unjust’ or ‘exceptional circumstances have arisen that would result in the Applicant parent and/or child/ren to whom the Agreement applies to suffering hardship’.
Whilst it is generally considered quite difficult to meet the threshold to have a Child Support Agreement set aside by the Court, the Family Court of Australia has recently heard cases in which it has found that the economic effects of COVID-19 can constitute a ‘significant circumstance’.
For example, in Martyn & Martyn [2020] FamCA526, the Family Court set aside a Child Support Agreement having found that the COVID-19 restrictions put in place were so significant that they resulted in a 90% reduction of sales for the Fathers’ business and as such, this amounted to an exceptional circumstance and therefore the Father would suffer hardship if the Agreement was not set aside.
If you have any questions in relation to your Child Support obligations during this current lockdown or if you would like a free 15-minute consultation to discuss your situation, please call our Family Law team on 9523 5535.
If you found this article useful, you may also like to read Best tips for managing shared care arrangements in lockdown.
