Support and related income considerations

When support (either child or spousal) is an issue in a family law case, there are a number of questions which need to be addressed before the actual support calculation is made.  

For example, in the case of child support, is a young person over the age of 18 still eligible to receive child support?  If so, in what form is that support to be paid? To whom? 

On the issue of spousal support, is the potential support recipient making best efforts to contribute to his or her own support based on their current ability to do so?

The income of the potential payor is a key question to address in any consideration of support obligations.  “Income for tax purposes" is not necessarily “income for support purposes” in family law.  In other words, simply because Canada Revenue Agency accepts a potential payor’s representations of his or her income for tax purposes does not mean that a family law Judge will do the same. 

Family law spreads a much wider sweep over a potential payor’s income sources to determine the true extent of his or her ability to pay support.  

The Child Support Guidelines, which technically apply to the calculation of child support but have now been wildly accepted as applying to spousal support calculations as well, permit the inclusion in income for support purposes of a wide variety of income sources.  The intent of the legislation is to ensure that financial dependants receive support based on all sources of the payor's actual income but also on sources which are available to the payor, even if he or she chooses not to tap into them. 

By way of one example only, income earned by a business which is not paid out to a shareholder but could be is vulnerable to being included in his or her income for support purposes.  Personal expenses run through the business are also vulnerable to being added back to the payor’s income for support purposes.

Income and support obligations

For the purposes of determining a payor's support obligations (assuming he or she has any), income is not just money they "bring home".  For both child and spousal support, it is the gross income of the payor which is used to determine the extent and amount (we call this "quantum") of their payments.

The Federal Child Support Guidelines (and their provincial counterpart) give judges broad powers to "tag" various forms of income for support purposes. For example, if you are a business owner, you should not assume that it is only the income on which you are taxed by CRA which will determine how much support you pay. As I tell my clients often, in this area of the law "what is good enough for the tax man may not be good enough for a family law judge" meaning that over time, family law in Ontario has carved out special rules relating to income for support purposes. Areas which are vulnerable to consideration under the heading of "income" include (but are not limited to) salaries paid to non-arm's-length parties, personal expenses deducted (even if such a deduction is accepted by CRA), earnings left in the company and not drawn out without a valid explanation and bonuses. In certain circumstances, even cashed RRSPs can be considered income for support purposes.

If you would like more information, I suggest you consult a lawyer in your area but in any event, as a first source, you should turn to the specific wording of the Child Support Guidelines and their companion Schedules.

The ebb and flow of the tide...

What is the "table" amount of child support?

Family law Courts and lawyers use this phrase in their daily parlance - the "table" amount of child support - what does it mean?

This is one of the two components of child support payable in Canada (as opposed to a contribution to special and extraordinary or "section 7" expenses).

This component of child support is calculated based on tables which are part of the Child Support Guidelines (both federal and provincial) - hence the monicker. These tables provide net figures of monthly child support payable, based on the following factors:

1. the number of children in question;
2. the province in question;
3. the income level of the payor (and only the payor parent - the income of the residential parent is not generally relevant for the table child support calculation).

Some issues to think about when talking about the table amount of child support:

1. special considerations apply when the income of the payor parent is more than $150,000;

2. special considerations apply in shared custody and split custody situations (see my earlier post about the confusion surrounding the issue of the word "custody" in these situations).

3. the question of "income for support purposes", ie: the income to be used when determining child support obligations under the tables, is not an easy one, particularly in situations where the payor parent is self-employed.

The table amount of child support is neither taxable to the recipient parent nor tax-deductible to the payor parent.

A beautiful fence in Northern Ontario..

Photo by AJJ

Pensions in Family Law

Pensions are relevant in family law for a number of reasons. These include the issues of income and equalization.

On the income front, a pension in pay is likely an income source for the purposes of calculating support obligations. In other words, individuals receiving a pension may still be obligated to make support payments. Retirement does not signal an automatic end to support payments.

Pensions are also assets which are subject to equalization under the Family Law Act. They have a value for the purposes of one's net family property and we use actuaries (pension valuators) to establish that value. Just like with respect to all other assets subject to equalization, a pension valuator establishes any value the pension had at the date of marriage (for which you get credit), as well as the value of the pension at the valuation date.

In some family law cases, a pension can be both an income source and an asset subject to equalization, which gives rise to the issue of "double dipping". You are encouraged to seek advice on this very interesting but somewhat tricky area of family law.

Changes to Child Support

A child support order is never final. It can, and often should be, changed. Such changes are called "variations". Reasons for these variations are too many to exhaustively discuss here.

On the most basic level, the amount of child support should increase and decrease with corresponding (material) changes to the income of the parent who is paying support. Changes in child support may also be triggered by a change in a child's educational status (eg: they begin to attend university) or a change in a child's residential status (they begin sharing their residence with both parents).

Contrary to "prevailing gossip", in Canada, child support does not automatically end when a child turns 18. Such support continues if the child remains "a child of the marriage" or otherwise a dependant, for legitimate reasons.