It's very simple.
Sexual acts and the images (and video etc) of sexual acts
are dealt with by different (but compatible) bits of law.
I won't bother quoting bits of actual legislation, because they won't mean much to you.
Let's start with sexual acts.
The law here is clear and settled - a 14 year old is, as a matter of law, incapable of consenting.
Therefore, absent consent, you are looking at sexual assault, and, for certain acts, r**e.
This is true no matter what the child actually says,
and no matter how <ahem> personally sophisticated that individual child may be.
It's also true even if the other party is 16 or over.
Let's now consider a sexual act of which images (or video etc) are made or taken.
In this situation, if anyone involved is not yet 18, then that's child pornography.
Everyone being 16 or over doesn't matter.
Everyone giving supposed consent to being filmed/ photographed doesn't matter.
If anyone is under 18, then it's still child pornography.
So yes, it is certainly possible for a sexual act to which everyone has validly consented,
to still be child pornography.
Now, lets talk about offences.
Producing child pornography can be an offence.*
Possessing it can be a separate offence.
Distributing it (sharing it, posting it, forwarding it) can be a separate offence again.
A person can commit all three, or any one, or any two, of those offences.
A person can be an accessory (before or after) to any of those offences,
and/or can be faced with conspiracy, and/or with what used to be called "aid and abet" type offences.
And that's just the Crimes Act and Criminal Code offences.
Space does not really permit discussion of the telecommunications offences,
nor the grounds for civil action for defamation.
Further, pics and video that a person has taken/made/shot can be used as
both evidence in the child pornography prosecution, and potentially also as evidence
in a prosecution for any acts depicted which are themselves offences.
As to penalties - anything from a bond to more than ten years in prison.
It depends on the facts and circumstances of the offences, aspects of the offenders,
and the technicalities of the individual charges.
That said, it tends to the harsher end of the scale, even for young people.
Now, here's the kicker.
A child can commit theses offences - even when the pics or video is of themselves.
Don't say you haven't been warned.
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* This includes, but is not limited to, taking pics or making video.
It also includes media like Skype (recording and just using),
as well as using Snapchat and similar products,
as well as both transmitting and, separately, recording
streamed video such as a webcam.