Spousal Support Advisory Guidelines:
A Draft
Proposal
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The dividing line between the two proposed formulas under the advisory
guidelines is the presence of a child support obligation.[22] Where the spouses have not had children or the
children have grown up and are on their own, the without child
support formula will apply. Where a spouse is paying child support,
the with child support formula will apply.
From a technical perspective, there must be a different formula for
spousal support in these cases, a formula that takes into account the
payment of child support and its priority over spousal support. Further,
because of tax and benefit issues, we have to use net rather than gross
incomes. Practically, the payment of child support usually means reduced
ability to pay spousal support. And, theoretically, there are different
rationales for the amount and duration of spousal support where there are
still dependent children to be cared for and supported.
This category of cases dominates in practice, in support statistics and
in jurisprudence. Any advisory guidelines must generate a workable formula
for amount and duration for this category, a formula that can adjust
across a wide range of incomes and family circumstances. For the most
part, marriages with dependent children will involve spousal support paid
by a parent who is also paying child support to the recipient spouse. The
basic formula in this chapter is constructed around this typical
situation. Variations on the basic formula are required to accommodate
cases of shared and split custody. There are also a sizeable number of
cases where the spouse paying spousal support has primary parental
responsibility for the children. In these custodial payor situations, an
alternative formula must be constructed.
Where there are dependent children, the primary rationale for spousal
support is compensatory. After Moge, spouses must, as Chief Justice
McLachlin put it in Bracklow, “compensate each other for foregone
careers and missed opportunities during the marriage upon the breakdown of
their union.” The main reason for those foregone careers and missed
opportunities is the assumption of primary responsibility by one spouse
for the care of children during the marriage. Where one spouse, in a
marriage with children, has become a full-time homemaker or has worked
outside the home part time or has worked as a secondary earner, there will
be disadvantage and loss at the end of the marriage, usually warranting
compensatory support. The compensatory rationale is encompassed by the
first of the four objectives of spousal support, in s.15.2(6)(a) of the
Divorce Act.
Under compensatory theory, it is usually necessary to estimate the
spouse’s disadvantage or loss by determining what the recipient’s career
or employment path might have been, had the recipient not adopted his or
her role during the marriage—not an easy task. The ideal evidence would be
individualized economic evidence of earning capacity loss, but few
litigants could afford such evidence and often it would be highly
speculative. Some spouses never establish a career or employment history.
For others, their pre-marital and marital choices were shaped by their
future expected role during marriage. And there are short marriages, where
past losses are relatively small and most of the spouse’s child-rearing
and any associated losses are still to come in the future.
As was explained in Chapter 1,
after Moge courts had to develop proxies to measure that loss where
there was no clear and specific career or employment path. Need became the
most common proxy, calculated through the conventional budget analysis.
Sometimes standard of living was used, with the post-separation position
of the recipient spouse measured against the marital standard or some
reasonable standard of living. In practice, crude compromises were made in
applying the compensatory approach.
More recently, what we have called the parental partnership rationale
has emerged in the literature and in the case law. On this approach, the
obligation for spousal support flows from parenthood rather than the
marital relationship itself. It is not the length of the marriage, or
marital interdependency, or merger over time, that drives this theory of
spousal support, but the presence of dependent children and the need to
provide care and support for those children. Unlike the conventional
compensatory approach, parental partnership looks at not just past loss,
but also the continuing economic disadvantage that flows from present and
future child-care responsibilities. For shorter marriages with younger
children, these present and future responsibilities are more telling.
Further, the parental partnership rationale better reflects the reality
that many women never acquire a career before marriage, or mould their
pre-marital employment in expectation of their primary parental role after
marriage.
The parental partnership rationale is firmly anchored in one of the
four statutory objectives in s.15.2(6) of the Divorce Act, where
clause (b) states a spousal support order should:
apportion between the spouses any financial consequences arising from
the care of any child of the marriage over and above any obligation for
the support of any child of the marriage.
The 1997 implementation of the Federal Child Support Guidelines
has reinforced this rationale. Under the Guidelines, only the direct costs
of child-rearing—and not even all of them—are included in child support.
The indirect costs of child-rearing were left to be compensated through
spousal support, as was recognized by the 1995 Family Law Committee’s
Report and Recommendations on Child Support. Principal amongst
these indirect costs is the custodial parent’s reduced ability to maximize
his or her income because of child-care responsibilities. Now that child
support is fixed under the Guidelines and determined by a different method
than before 1997, spousal support has to be adjusted to reflect the
concerns identified by the parental partnership model.
With the implementation of the Federal Child Support Guidelines
came the increased use of computer software. The software regularly and
graphically displays information like net disposable income, cash flow and
household standards of living. This information has made spouses, lawyers
and courts more conscious of the financial implications of child and
spousal support, in turn reflected in the use of these concepts in
determining the amount of spousal support. Before the Federal Child
Support Guidelines, and even afterwards for a while, most courts were
not prepared to award more than 50 percent of the family’s net
disposable income to the custodial spouse and children, leaving the single
payor spouse with the other 50 percent. With the new software, many
courts began consciously to allocate more than 50 percent of a
family’s net disposable income to the custodial parent and children, and
even as much as 60 percent, as in the Ontario Court of Appeal
decision in Andrews v. Andrews[23] and in numerous trial decisions across the
country.[24]
There is no simple way to construct a formula for spousal support where
the support payor is also paying child support. First, child support must
be determined, as it takes priority over spousal support in assessing the
payor’s ability to pay. Second, child support is not taxable or
deductible, but spousal support is taxable to the recipient and deductible
for the payor. Third, child and spousal support must be determined
separately, but it is very difficult in any formula to isolate spousal
finances cleanly from support of children.
This formula for cases with child support—the with child
support formula—differs from the without child support
formula set out in Chapter 5.
First, the with child support formula uses the net incomes
of the spouses, not their gross incomes. Second, the with child
support formula divides the pool of combined net incomes
between the two spouses, not just the difference between the spouses’
gross incomes. Third, in the with child support formula, the upper
and lower percentage limits for net income division do not change with
the length of the marriage.
Unlike the without child support formula, this formula must use
net income. While gross income would be simpler to understand,
calculate and implement, nothing remains simple once child support has to
be considered. Different tax treatment demands more detailed after-tax
calculations, and ability to pay must be more accurately assessed. Net
income computations will usually require computer software, another
unavoidable complication.
Thanks to that same computer software, many lawyers have become
familiar with net disposable income or monthly cash flow calculations.
Judges now often use such calculations to underpin their spousal support
decisions.[25] In the current software programs, these numbers
include child and spousal support to produce what we would call family
net disposable income or cash flow. This larger pool of net income is
then divided between the spouses. Often, more than 50 percent of this
family net disposable income is allocated to the recipient spouse and
children by way of combined child and spousal support, or sometimes as
much as 60 percent and occasionally even more. Under the formula
proposed here for spousal support, we divide a different and smaller pool
of net income, after removing the spouses’ respective child support
obligations—what we call individual net disposable income or
INDI.
We considered using the more familiar family net disposable income as
the basis for our with child support formula, rather than this
newer variation of individual net disposable income. In the end we opted
for individual net disposable income. First, the family net disposable
income of the recipient spouse includes both child and spousal support,
bulking up the recipient’s income in a somewhat misleading fashion and
masking the impact of spousal support upon the recipient parent’s
individual income. Second, allocating family NDI between spouses blurs the
distinction between child and spousal support, between child and adult
claims upon income. Individual NDI attempts to back out the child support
contributions of each spouse, to obtain a better estimate of the income
pool that remains to be divided between the adults. Third, after
separation, the spouses see themselves, not as one family, but more as
individuals with distinct relationships with their children and their
former spouses. Fourth, separating out each spouse’s individual net
disposable income, after removal of child support obligations, produced a
more robust and sophisticated formula, one that adjusted better across
income levels and numbers of children.
Set out in the box below is a summary of how this basic with child
support formula works. Remember that this formula applies where the
higher income spouse is paying both child and spousal support to the lower
income spouse who is also the parent with custody or primary care of the
children.
|
The Basic With Child Support
Formula
(1) Determine the individual net disposable income
(INDI) of each spouse:
- Guidelines Income minus Child Support minus
Taxes and Deductions = Payor’s INDI
- Guidelines Income minus Notional Child Support
minus Taxes and Deductions plus Government Benefits
and Credits = Recipient’s INDI
(2) Add together the individual net disposable incomes.
Determine the range of spousal support amounts that would be
required to leave the lower income recipient spouse with between 40
and 46 percent of the combined INDI. |
6.3.1 Calculating individual net
disposable income
Basic to this formula is the concept of individual net disposable
income, an attempt to isolate a pool of net disposable income
available after adjustment for child support obligations.
We start with the Guidelines income of each spouse. In the interests of
uniformity and efficiency, we use the same definition of income as that
found in the Federal Child Support Guidelines. That definition is a
gross income measure (except for some of the Schedule III adjustments,
like the deduction of union dues). For the most part, since 1997 courts
have used the same measure of income for purposes of both child and
spousal support. There is, however, one distinct variation in the
calculation of the recipient’s income under this formula, discussed
further below, namely the inclusion of government benefits and refundable
credits.
Next, we deduct or back out from each spouse’s income their respective
contributions to child support.
For the child support payor, that would usually be the table
amount, plus any contributions to special or extraordinary expenses, or
any other amount fixed under any other provisions of the Federal Child
Support Guidelines. Such support payments are automatically deducted
from the payor’s income by the current software.
For the child support recipient, we propose the deduction of a
notional table amount, plus any contributions by the recipient
spouse to s. 7 expenses. At the moment, the deduction of these
amounts from the recipient spouse’s income has to be done manually, but
the software can be modified to do this in future. In reality, the
recipient will likely spend more than these amounts through direct
spending for the children in her or his care. But by this means we are
making an adjustment, however imperfect, for the recipient’s child support
obligation. We could construct a formula without this notional child
support number, but any formula would then adjust to the number of
children and income levels with less precision and with less transparency
about the role of the recipient parent.
Second, income taxes and other deductions must be subtracted
from the incomes of both the payor and the recipient to obtain net
incomes. As spousal support is transferred from one spouse to another,
because of tax effects, the size of the total pool of individual net
disposable income actually changes slightly, which complicates these
calculations. The current software does these calculations automatically,
as differing hypothetical amounts of spousal support are transferred.
Clearly permissible deductions would be for federal and provincial
income taxes, as well as employment insurance premiums and Canada Pension
Plan contributions. Union dues and professional fees are already deducted
from Guidelines income under the adjustments of Schedule III to the
Federal Child Support Guidelines. Deductions should be recognized
for certain benefits, e.g. medical or dental insurance, group life
insurance, and other benefit plans, especially those that provide
immediate or contingent benefits to the former spouse or the children of
the marriage.
More contentious are deductions for mandatory pension
contributions. We have concluded that there should not be an
automatic deduction for such pension contributions, but the size of these
mandatory deductions may sometimes be used as a factor to justify fixing
an amount towards the lower end of the spousal support range.
We reached this conclusion after considerable discussion. Like EI, CPP
and other deductions, pension contributions are mandatory deductions, in
that the employee has no control over, and no access to, that money. But,
unlike other deductions, pension contributions are a form of forced saving
that permit the pension member to accumulate an asset. Further, after
separation, the spouse receiving support does not usually share in the
further pension value being accumulated by post-separation contributions.
Finally, there are serious problems of horizontal equity in allowing a
deduction for mandatory pension contributions by employees. What about
payors with non-contributory pension plans or RRSPs or those without any
pension scheme at all? And what about the recipient spouse—would we have
to allow a notional or actual deduction for the recipient too, to reflect
her or his saving for retirement? In the end, we decided it was fairer and
simpler not to allow an automatic deduction for pension
contributions.
Third, we do propose to include in each spouse’s income
the amounts identified for government benefits and refundable
credits. Included are the Child Tax Benefit, the National Child
Benefit, the GST credit, the refundable medical credit and various
provincial benefit and credit schemes.
Under the Federal Child Support Guidelines these benefits and
credits are generally not treated as income. For lower income
custodial parents, typically the support recipients, these amounts are
significant. As for payors, only low-income payor spouses obtain any of
these—basically the GST credit—and most of those low-income spouses will
not be paying spousal support. In some circumstances the custodial parent
and recipient of these benefits and credits will also be the payor of
spousal support.
We did consider backing-out the child portion of these benefits, since
the bulk of the benefits and credits are tied to the children in the
recipient spouse’s care, e.g. the Child Tax Benefit, part of the GST
credit, and the various provincial programs. The logic of doing so would
be similar to that applied in respect of the spouses’ child support
obligations, i.e. to get at the remaining net disposable income available
to the spouses as individuals.
In the end, we decided to include these amounts in income, for three
reasons. First, these benefits and credits reduce with the amount of the
spousal support transferred to the recipient spouse, especially through
the lower and middle-income brackets. Including these benefits and credits
in the recipient’s income gives a much clearer picture of the impact of
spousal support upon the recipient’s actual net disposable income. Second,
some fine lines would have to be drawn between child- and
non-child-related portions of these benefits and credits. A precise
disentanglement would be complicated and for little practical gain. Third,
for lower income recipient spouses, these amounts are sizeable, reaching
as high as $7,000 to $8,000 annually for two children. Their removal would
produce significantly higher amounts of spousal support, which would cause
significant hardship for payor spouses, especially those with lower
incomes, unless the formula percentages were adjusted.
6.3.2 The Basic Formula: Dividing
Individual Net Disposable Income
Once the individual net disposable income (INDI) of each spouse has
been determined, the next step is to add together these individual net
disposable incomes. Then we have to iterate (i.e. to estimate hypothetical
spousal support repeatedly) in order to determine the amount of spousal
support that will leave the lower income recipient spouse with between 40
and 46 percent of the combined pool of individual net disposable
income.
For the examples which follow, these calculations have been done by a
mix of software and manual calculations. Once software suppliers make
programming changes, it will be possible to obtain these numbers more
easily. One important technical point should be noted. Where there are
section 7 expenses, the calculations are further complicated by the
Guidelines requirement that the spouses’ proportionate contributions must
be determined after the transfer of spousal support from payor to
recipient. To derive the s. 7 contributions, you must know the amount
of spousal support, another loop for the software to undertake.
Accordingly, to simplify the arithmetic and the exposition, there are no
s. 7 expenses in the examples below.
How did we arrive at the percentages for the range, from 40 to
46 percent of the individual net disposable income? This was a
critical issue in the construction of this formula. In our earlier Sneak
Preview, we had suggested a higher range, from 44 to 50 percent of
INDI. We have ultimately opted for a lower range, after much discussion
with the Advisory Group, some limited feedback from the Sneak Preview,
further reviews of the case law in various provinces, and some more hard
thought about the upper and lower bounds for these ranges.
We found that a range of 40 to 46 percent of individual net
disposable income typically covered spousal support outcomes in the
middle of the very wide range of outcomes now observed in most
Canadian provinces. To capture the middle of the range on a national basis
means that some areas will find the upper bound (46 percent) a bit
low and other areas will consider even the lower bound (40 percent)
at the higher end of their local range.
Prior to the Sneak Preview, we had experimented with a range of 40 to
50 percent of INDI. But that produced far too broad a range in
absolute dollar terms. One of the objectives of these advisory guidelines
is to develop more predictability and consistency in spousal support
outcomes and a ten-percentage point range simply failed to do that. Since
then, we have generally worked with five or six percentage point ranges.
The lower boundary of this range—40 percent of INDI—does ensure
that the recipient spouse will receive not less than 50 percent of
the family net disposable income in all cases involving two or more
children, and slightly below that in one-child cases.
The upper end of this range—46 percent of INDI—falls short of an
equal split, which would leave both spouses in the same individual
position. Despite the intellectual attraction of a 50/50 split, there are
a number of practical problems that convinced us that it was not
appropriate to set the upper limit of the range there. First, very few
courts are currently prepared to push spousal support amounts that high.
Second, there was a live concern for the access-related expenses of the
payor spouse, expenses that are not otherwise reflected in the formula.
Most payors will be exercising access and most will be spending directly
upon their children during the time they spend with their children. Third,
there were concerns for the payor in the situation where the payor has
employment-related expenses and the recipient spouse is at home full time
and receiving large spousal support.
It may be that these upper and lower limits of the percentage range
will have to be adjusted, after experience with the advisory guidelines
and after continued tracking of current trends in support outcomes in this
category of cases.
We should repeat here a central difference between this formula and the
without child support formula: the length of the marriage does not
affect the upper and lower percentages in this with child support
formula.
We also wish to stress the inter-relationship between the percentage
limits and the precise elements of our version of individual net
disposable income. If a notional table amount were not removed from the
recipient spouse’s income, or if government benefits and refundable
credits were excluded, then the formula percentages would have to
change. Our objective throughout has been to develop formulas that can
capture the bulk of current outcomes, while at the same time demonstrating
robustness in adjusting across incomes and child support amounts and
custodial situations.
As a result of computer software, lawyers and courts now have available
to them net disposable income or monthly cash flow calculations on a
family basis: the payor’s net disposable income after deduction of
child and spousal support and taxes, and the recipient’s after addition of
child and spousal support (and deduction of taxes). How do these more
familiar family NDI percentages compare to our range of individual net
disposable income divisions? Typically, the 46 percent of INDI at the
upper end of our proposed formula generates a family net disposable income
for the recipient spouse of 56 to 58 percent where there are two
children. At the lower end of the range, a spousal support amount that
leaves the recipient spouse with 40 percent of INDI will typically
leave that spouse and the children with more than 50 percent of the
family net disposable income. For comparison purposes, we have provided
family net disposable income proportions in the examples below.
We recognize that Quebec has a different scheme of determining child
support, which in turn has implications for fixing spousal support. As the
Quebec child support amounts are often lower at high-income levels than
those under the Federal Child Support Guidelines, that would leave
a slightly larger pool of individual net disposable income available to be
divided for spousal support purposes. The application of the advisory
guidelines in divorce cases in Quebec is dealt with in more detail in Chapter 9.
At this point it helps to give a few examples of the ranges of monthly
spousal support generated by this basic formula. Afterwards, we will
address the factors that might affect what precise amount of support is
fixed within that range. Then we will move to the issue of duration.
For illustration purposes, we assume that these parents and children
all live in Ontario, as the use of one jurisdiction simplifies the
exposition of the formula’s operation. We have included, in Appendix C,
a detailed explanation of the calculations required for this formula,
using Example 6.1 below. In Appendix D
we have provided the ranges of spousal support that the basic formula
would generate in each of the other provinces and territories, again using
the facts of Example 6.1.
Further, as explained above, there are no section 7 expenses in
these examples. If there were s. 7 expenses, then the individual net
disposable income available to be divided between the spouses would be
smaller and the spousal support ranges would be lower.
Because many are familiar with family net disposable income (or
monthly cash flow) calculations from the existing computer software, we
have also shown the impact of the spousal support ranges upon the
family net disposable incomes of the spouses, as we present and
discuss these examples.
Example 6.1
Ted and Alice have separated after 11 years together. Ted works at a
local manufacturing plant, earning $80,000 gross per year. Alice has
been home with the two children, now aged 8 and 10, who continue to
reside with her after separation. After the separation, Alice found
work, less than full time, earning $20,000 gross per year. Alice’s
mother provides lunch and after-school care for the children, for
nothing, when Alice has to work. Ted will pay the table amount for child
support, $1,031 per month. Alice’s notional table amount would be $285.
There are no s. 7 expenses (if there were, the spousal amounts would be
lower).
Under our proposed formula, Ted would pay spousal support in the
range of $697 to $1,287 per month.
Using the family net disposable income figures (or the similar
monthly cash flow figures) more familiar to current software users,
spousal support of $1,287 monthly along with the child support would leave
Alice and the children with $3,792 per month and Ted with $2,906 per
month, a 56.6/43.4 percentage split of the family’s net disposable income
in favour of Alice and the children. At the lower end of the range, with
spousal support of $697 per month, the net disposable income of the family
would be split 51.6/48.4 in favour of Alice and the children, leaving Ted
with $3,283 monthly and Alice and the children with $3,505. (For purposes
of exposition, if the intention was to split the family NDI equally, as
some judges do, with one half for Alice and the children and one half for
Ted, then spousal support would have to be reduced to $512 per month.)
The amount of spousal support is obviously affected by the
number of children. If Ted and Alice had only one child, the
range would be higher, from $1,048 to $1,593 per month. If the couple had
three children, Ted’s ability to pay would be reduced, bringing the range
down to $391 to $975 monthly. Four children would lower that range even
further, down to a range from zero to $530 per month.
Example 6.2
Bob and Carol have separated after eight years of marriage and two
children, now aged 4 and 6, who are both living with Carol. Bob earns
$40,000 gross annually at a local building supply company, while Carol
has found part-time work, earning $10,000 per year. Carol’s mother
lives with Carol and provides care for the children when needed. Bob
pays the table amount of $570 per month for the children. Carol’s
notional table amount of child support would be $119 per month. There
are no s. 7 expenses.
Under our proposed formula, Bob would pay spousal support in
the range of zero to $191 per month.
Again, by way of comparison to the more familiar numbers, if Bob were
to pay child support of $570 and spousal support of $191 monthly, at the
upper end of the range, he would be left with $1,835 per month, while
Carol and the two children would have family net disposable income
of $2,252 monthly, or 55.1 percent of the family’s net disposable
income. At the lower end of the range, where no spousal support would be
paid, the share for Carol and the children would be 51.2 percent of
the family’s net disposable income.
Example 6.3
Drew and Kate have been married for four years. Drew earns $70,000
gross per year working for a department store. Kate used to work as a
clerk in the same store, but she has been home since their first child
was born. The children are now 1 and 3, living with Kate. Kate has no
income (and hence there is no notional table amount for her). Drew will
pay the table amount of $927 per month for the two children.
Under our proposed formula, Drew would pay spousal support to
Kate in the range of $1,157 to $1,477 per month.
If Drew were to pay spousal support of $1,477 monthly, he would have
$2,312 per month, while Kate and the children would have family net
disposable income of $2,897 monthly, or 55.6 percent of the total
family NDI. At the lower end of the range, spousal support of $1,157 per
month would leave Drew with $2,532 in family NDI, while Kate and the
children would have $2,616 monthly, or 50.8 percent of the family’s
NDI. (If Kate and the children were to receive 50 percent of the
family’s NDI, then spousal support would be lower, $1,107 per month.)
The basic with child support formula produces a range for the
amount of spousal support. As we did in Chapter 5,
here we canvass briefly some of the factors that might be considered in
fixing an amount within that range.
First, compensatory principles would suggest that the more the
recipient spouse gave up in the paid labour market, the higher one would
go within the range. To give a simple example, two tax lawyers marry fresh
out of law school, but one stays home with the children and the other
pursues a career within a large law firm. Compensatory logic would dictate
that something close to the maximum 46 percent would make sense here,
as the payor spouse’s income is a very good proxy measure of where the
recipient spouse would have been. Given the presence of dependent children
under this formula, almost every case will have a compensatory element and
the lower and higher ends of the range reflect that. What moves a case up
or down the range is the relative strength or weakness of the compensatory
claim.
Second, the age, number and needs of the children will affect
placement within the range. A child with special needs will usually demand
more time and resources from the care-giving parent, thus reducing that
parent’s ability to earn in the paid labour market and pushing spousal
support towards the upper end. The same will generally be true for the
parent with primary care of an infant or toddler, as contrasted to care of
an older child or adolescent. Generally speaking, when ability to pay is
in issue, the larger the number of children, the less income is left
available to pay spousal support. As income levels rise, spousal support
can be higher to reflect the fact that more children generally mean more
care-giving and more restrictions upon the custodial parent’s ability to
work outside the home.
Third, the needs and ability to pay of the payor spouse will
have special importance at the lower end of the income spectrum. For
example, at this lower end the amount of any mandatory deduction for
pension contributions will likely have to be taken into account in
determining ability to pay. Also a concern for lower income payors will be
their direct spending on expenses for the children during their time with
the children. A lower income payor should be left with sufficient funds to
exercise meaningful access to his or her children.
Fourth, the needs and standard of living of the recipient and the
children will tend to push spousal support awards towards the higher
end of the range. Even when spousal support is at the maximum
46 percent of individual net disposable income, a homemaker recipient
and the children will be left with a noticeably lower household standard
of living (assuming no new partners or children for either spouse). At
lower income levels, need will create pressure to move to the higher end
of the range, but that will be balanced by the needs of the payor spouse,
as mentioned above. By contrast, if the recipient has remarried or
re-partnered, then spousal support could be set towards the lower end of
the range. Equally, the recipient may have reduced living costs, which
might justify support at the lower end.
Fifth, length of marriage will still be a factor to help
determine where within the range spousal support should be set, but only
one of a number of factors. All other things being equal, the longer the
marriage, the more likely it is that one might move towards the higher end
of the range. But all other things are rarely equal, as a short marriage
with very young children and a stay-at-home custodial parent may be a far
more compelling case for the maximum amount.
Sixth, self-sufficiency incentives might encourage an
award at the higher end of the range, where this could mean that a
recipient spouse obtains retraining or education, and then remunerative
employment and less support in future. Or, as happens under the current
case law, a judge might fix an amount at the lower end to encourage the
recipient to make greater efforts towards self-sufficiency.
We emphasize that this is not an exhaustive list of factors, just an
attempt to identify some of the most prominent factors that might affect
the precise amount fixed within the range. For the most part, these are
familiar factors in the current discretionary case law.
In most cases where there are dependent children, the courts order
indefinite spousal support, usually subject to review or sometimes just
left to variation. Even when the recipient spouse is expected to become
self-sufficient in the foreseeable future, courts have not often imposed
time limits in initial support orders. Where the recipient spouse is not
employed outside the home, or is employed part time, the timing of any
review will be tied to the age of the children, or to some period of
adjustment after separation, or to the completion of a program of
education or training. As the recipient spouse becomes employed or more
fully employed, spousal support will eventually be reduced, to top up the
recipient’s employment earnings, or support may even be terminated. In
other cases, support is reduced or terminated if the recipient spouse
remarries or re-partners.
In practice, where there are dependent children, few indefinite orders
are truly indefinite. Many intervening events will lead to changes or even
termination. Some of these issues are canvassed in Chapter 10,
which deals with variation, review, remarriage, second families, etc. By
making orders indefinite, the current law simply postpones all of the
difficult issues relating to duration.
Under the without child support formula, discussed in Part 5, we
have proposed that durational limits be brought back under any advisory
guidelines, provided the limits are reasonably generous. The time limits
in that formula are keyed to the length of the marriage, i.e. .5 to
1 year of spousal support for each year the spouses have cohabited,
subject to the exceptions for indefinite support.
Under the with child support formula, one option was simply to
leave duration indefinite in all cases, thereby avoiding all of the
difficult issues of duration where there are dependent children. Such an
approach would, however, be inconsistent with our durational approach
under the without child support formula. It would also be
inconsistent with the underlying parental partnership rationale for
spousal support. This rationale emphasizes the ongoing responsibilities
for child-care after separation and the resulting limitations on the
custodial or residential parent’s earning abilities. When those
responsibilities cease, there must be some other reason for support to
continue, such as the length of the marriage.
What we propose is an approach to duration for marriages with dependent
children that maintains the current practices, while introducing the
general idea of a maximum duration or outside time limit for the
payment of spousal support. Initial orders would continue to be
indefinite in form, subject to the usual processes of review or
variation. That would not change. What would be different would be the
acceptance of generally understood outside time limits on the
cumulative duration of spousal support in these cases that would inform
the process of review and variation. These outside time limits would
combine the factors of length of marriage and length of the remaining
child-rearing period, under two different tests for maximum duration.
These time limits are generous, with elements of flexibility built in.
For longer marriages, it makes sense that a recipient spouse should get
the benefit of the time limits based upon length of marriage that might be
obtained under the without child support formula, as these will
typically run well beyond the end of any child-rearing period. More
difficult is the situation of the custodial or residential parent who has
the care of young children after a shorter marriage. Here we have chosen
an outside time limit based on the child-rearing period remaining. Thus,
we propose two tests for maximum duration under this formula, one for
longer marriages and another for shorter marriages.
6.6.1 The longer-marriage test for
duration
Our first test for duration appliesin longer marriages
and is modelled on the test for duration under the without child
support formula: where the length of the marriage exceeds the number
of years remaining for the last or youngest child to finish high school,
then the maximum duration under the with child support
formula will be the length of the marriage, subject to the provisions
under the without child support formula for indefinite support
after 20 years of marriage.
This first test will govern for most marriages of 10 years or more,
i.e. most medium and long marriages where there are still dependent
children at home at the time of the initial order. Where the dependent
children are older and by implication the marriage has been longer, the
indefinite support provisions that apply where the marriage has lasted 20
years will often take effect.
We can use Example 6.1 above to explain this test. Ted and
Alice cohabited for 11 years during their marriage and are now in
their late thirties or early forties, with two children, aged 8 and 10 at
separation. The maximum duration under the without child support
formula would be 11 years. That is longer than the 10 years remaining
to the end of high school for the youngest child. The initial support
order would be indefinite in form, but it would be expected that the
maximum duration for spousal support would be 11 years. Reviews and
variations in the meantime may have brought support to an end before then,
and certainly the amount may have been reduced significantly during this
period. But if support is still in pay after 11 years, there would be
an expectation, barring exceptional circumstances, that support would be
terminated at that point on an application for review or variation.
Note that this test speaks only of maximum duration. We do
not propose any minimum duration, or lower end of a range,
for marriages with dependent children. We adopt this approach to duration
under both the longer-marriage and shorter-marriage tests. In our view,
this different approach to duration in marriages involving dependent
children more appropriately reflects the past, present and future demands
of child-rearing and the impact of these demands upon the recipient
spouse’s earning capacities. In the without child support formula,
the lower end of the range for duration is fixed at one-half year for each
year of marriage. That part of the formula would not be imported here,
under our longer-marriage test for duration. Practically, most of these
cases with children would likely end up at the longer end of the range
anyway. Duration shorter than the maximum is possible under both of our
tests, but only through the normal process of review or variation,
depending upon the individual income and employment situations of the
spouses.
6.6.2 The shorter-marriage test for
duration
The second test for duration under this formula, applicable to
shorter marriages, will operate where the period of time until the last or
youngest child finishes high school is greater than the length of the
marriage. These are mostly short or short-to-medium marriages, typically
(but not always) under 10 years in length. The current case law is
inconsistent and erratic on duration for these marriages, ranging from
indefinite orders without conditions, to indefinite orders with short
review periods and sometimes stringent review conditions, and even
occasionally to time limits. Despite the language of indefinite support,
the reality in most cases is that support does not continue for long, as
re-employment, retraining, remarriage and other changes often intervene to
bring spousal support to an end.
We too have struggled with duration for this category of cases. On the
one hand, many of these custodial parents face some of the most serious
disadvantages of all spouses, especially mothers with little employment
history who have very young children in their care, all of which militates
in favour of no time limits or very long time limits. On the other hand,
many recipient spouses do have good education and employment backgrounds,
are younger, and are emerging from shorter marriages and briefer periods
out of the paid labour market, all indicators of quicker recovery of
earning capacity. Inevitably, as under the current law, this means that
reviews are a critical means of sorting out the individual circumstances
of the recipient spouses.
Under this second, shorter-marriage test for duration, where the
period of time until the last or youngest child finishes high school is
greater than the length of the marriage, any initial order for spousal
support would likely be indefinite in form, subject to review,
including any conditions stated in the initial order or agreement
concerning training, education or employment. The date for review
would be tied to the age of the children at the time of the initial order
or agreement:
- where the children are of pre-school age, then no later than the
month after the last or youngest child commences full-time school;
or
- where the children are under the age of twelve, then no later than
the month after the last or youngest child reaches the age of twelve.
Reviews may be fixed more frequently, or at different intervals, or
with more or less stringent conditions, under this approach. The starting
premise is that the with child support formula generates reasonably
generous amounts of spousal support and the flip side should be a clear
obligation upon recipient spouses to work towards self-sufficiency or at
least the maximum of their earning capacity in the context of their
child-care responsibilities.
The maximum duration for spousal support under this test would
be the date when the last or youngest child finishes high school.
Relatively few cases will reach this outside time limit and those that do
will likely involve reduced amounts of top-up support by that date. Hence,
extensions beyond that date should only be granted in exceptional
circumstances, e.g. some cases involving special needs children. In
effect, the maximum duration here would operate like a terminating review
order, to use the language of Bergeron v. Bergeron.[26] As with the longer-marriage test for duration, we
do not propose any minimum duration.
The basic formula is constructed around the typical fact situation,
where the higher income spouse pays child and spousal support to the lower
income spouse who has the primary care of the children. Here we address
custodial variations, such as shared custody or split custody.
6.7.1 Shared custody
Where the spouses have shared custody, the starting point for
the calculation of child support under s. 9(a) of the Federal
Child Support Guidelines has been the straight set-off of table
amounts for the number of children subject to shared custody, based upon
current appeal decisions. That amount is then adjusted, usually upwards,
but occasionally downwards, based upon s. 9(b) (increased costs of
shared custody) and s. 9(c) (other circumstances, including actual
spending, assets and debts, etc.).
Under the basic formula, we deduct the child support paid from the
payor’s income and then we deduct that child support amount paid plus a
notional amount for child support from the recipient’s income, to obtain
individual net disposable income. Shared custody requires some changes to
this basic formula.
Assume for the moment that the payor is paying only the straight
set-off amount of child support in a shared custody case. If we were only
to deduct the smaller set-off amount of child support for the payor spouse
in a shared custody situation, that would misrepresent and understate the
payor parent’s contribution to child support. Shared custody assumes that
both parents spend directly upon the child in their shared care. We would
propose that the full table amount (plus any s. 7 contributions) be
deducted from the payor spouse’s net disposable income. For the recipient,
we would deduct the notional table amount (plus any contribution to
s. 7 expenses). This would be done in the calculation of INDI, even
though the child support paid by the payor and received by the recipient
would be the straight set-off amount.
To make matters more difficult, courts often increase the amount of
support beyond the straight set-off amount, sometimes to reflect the
increased costs of shared custody (or the respective abilities of the
parents to incur those increased costs) and sometimes to adjust for the
recipient parent’s larger share of actual costs. Occasionally, an amount
lower than the set-off will be ordered. The determination of child support
in shared custody cases remains uncertain and controversial. The Supreme
Court of Canada has heard an appeal from Contino v.
Leonelli-Contino[27] and that decision may provide some greater
guidance on the interpretation of s. 9.
In the meantime, there remains the question of what the with child
support formula should do in a shared custody case where a court
orders either more or less than the straight set-off amount. For now, we
suggest that no adjustment should be made in either case and that the
individual net disposable income for the payor and the recipient be
calculated as described above. This method of calculation may have to be
changed after the decision in Contino.
If we follow the method of calculation described above, it turns out
that the spousal support ranges are basically the same in these shared
custody situations as in sole custody situations. Shared custody
arrangements do not result in any lowering of spousal support. A typical
shared custody example can demonstrate this result.
Example 6.4
Peter and Cynthia have separated after nine years together. Peter
works as a reporter at the local television station, earning $65,000
gross per year, while his wife Cynthia works for a local arts
organization, earning $39,000 gross per year. First, assume their two
children, aged 8 and 7, are in the sole or primary custody of Cynthia.
Peter’s table amount of child support would be $879 per month, Cynthia’s
$557 per month. Assume no s. 7 expenses. Under our proposed
formula, assuming entitlement, which may be contested in this
case, Peter would pay spousal support to Cynthia in the range of zero to
$302 per month. (At zero spousal support, Cynthia would have
42.7 percent of INDI.)
But what if Peter and Cynthia shared custody, say on a week about,
50/50 basis? First, assume Peter only paid the straight set-off
amount of child support,
i.e. $879 – $557 = $322. We would still deduct
from Peter’s income the full table amount of $879 and we would still
reduce Cynthia’s income by her notional table amount of $577, but
Cynthia would now be receiving only $322 per month, an amount removed
from her income (no longer the full $879 paid in the sole custody
setting). The result would be the same range for spousal support as
above, zero to $302 per month.
6.7.2 Split custody
In a split custody situation, more significant changes to the
basic formula are required. If each parent has one or more children in
their primary care or custody, then s. 8 of the Federal Child
Support Guidelines requires a set-off of table amounts, with each
spouse paying the table amount for the number of children in the other
spouse's custody. But this means that each parent will also be considered
to support the child or children in their care directly, out of their
remaining income. Thus, in the split custody situation, a notional table
amount must be deducted from each parent, not just the recipient
but the payor as well. Since there is one child in each household, there
are no economies of scale and accordingly larger proportions of their
incomes are devoted to child support, leaving a smaller pool of INDI to be
divided by way of spousal support. Again, as with shared custody, this
would be done in the calculation of INDI, even though the child support
paid by the payor and received by the recipient would be the set-off
amount directed by the s. 8 formula.
Example 6.5
Take the case of Peter and Cynthia again, and assume that each parent
has custody of one child, same incomes, same facts. Peter’s one child
table amount would be $543 per month, Cynthia’s $337 per month.
Under s. 8 of the Federal Child Support Guidelines,
these table amounts would be offset, with Peter paying Cynthia $206 per
month. In calculating Peter’s individual net disposable income, for
spousal support purposes, we would propose to deduct the full one child
amount, twice, once for the table amount effectively paid to Cynthia and
once for the notional amount spent directly on the child in his care.
Similarly, in calculating Cynthia’s INDI, we would make a double
deduction of her one-child table amount, once for the amount effectively
paid to Peter for the child in his care, plus a notional table amount
for the child in Cynthia’s own care. The actual child support paid by
Peter to Cynthia would be $206, the one-child set-off amount under
s. 8. Using the split custody formula for spousal support, Peter
would pay spousal support to Cynthia in the range of zero to $325 per
month. (At zero spousal support, Cynthia would have 41.4 percent of
INDI.)
The basic formula for marriages with dependent children assumes that
the higher income spouse pays both child and spousal support to the
recipient parent, who also has sole or primary custody of the children.
The spousal support to be paid must then adjust for the payor’s child
support payments. The shared and split custody situations may change the
math, but both still involve the higher income spouse paying both child
and spousal support to the recipient.
A different formula is required where the higher income spouse paying
spousal support is also the parent with sole or primary custody of the
children. Now spousal support and child support flow in opposite
directions. The without child support formula does not apply,
however, as it assumes no dependent children. While we could just leave
this situation as an exception, with no formulaic solution, it is common
enough that we believe we should construct a formula to guide outcomes in
this situation.
We could have chosen either of our two formulas as a starting point and
then made modifications to accommodate custodial payors. We chose to start
from the without child support formula. In this situation the
recipient parent does not have the primary care of children and thus more
closely resembles the single recipient in the without child support
formula. The primary rationale for the payment of spousal support in these
cases will be merger over time, rather than parental partnership. That
said, a number of lower income recipient spouses in this situation will
continue to play an important role in their children’s lives and any
formula must be able to adjust in such cases. The other advantage of the
without child support formula is ease of calculation, but the
formula will have to be modified to back-out child support and to take
into account tax implications.
|
Formula for Spousal Support Paid by Custodial
Parent
(1) Reduce the payor spouse’s Guidelines income by the
grossed-up notional table amount for child support (plus a
gross-up of any contributions to s. 7 expenses).
(2) If the recipient spouse is paying child support, reduce the
recipient’s Guidelines income by the grossed-up amount of child
support paid (table amount plus any s. 7 contributions).
(3) Determine the adjusted gross income difference between
the spouses and then quantum ranges from 1.5 percent to
2 percent for each year of marriage, up to a maximum of 50.
(4) Duration ranges from .5 to 1 year of support for each
year of marriage, with the same rules for indefinite support as
under the without child support
formula. |
In reducing gross incomes by grossed-up amounts for child support, this
formula does the same thing conceptually as the basic with child
support formula—it establishes the spouses’ available incomes after
their child support obligations are fulfilled. To gross up the child
support will require a calculation of the gross value of the non-taxable
child support, using the appropriate marginal tax rate for the payor or
recipient spouse.
Example 6.6
Kathleen and Gordon were married for 21 years. They have two
children, one a self-supporting university student, and the other a high
school student living with Gordon. Gordon is a pharmacist and earns
$73,500 gross per year. Kathleen was home with the children and, for
years, ran a child care operation at home. Kathleen has done some
retraining, but has also has had serious health problems. She has no
income at present and cannot pay child support. Assume no s. 7
expenses.
There would be little question of entitlement to spousal support on
these facts. First, we would reduce Gordon’s income by the notional
table amount of child support, $595 per month, grossed up to $936 per
month at his marginal tax rate, or $11,232 on an annual basis.
Gordon’s adjusted or reduced income would thus be $62,268. After a
21-year marriage, Kathleen would receive a range of 31.5 to
42 percent of the adjusted gross income difference of $62,268.
Under our proposed formula, Gordon would pay spousal support
in the range of $1,635 to $2,179 per month.Given the length of the
marriage (21 years), Kathleen’s support would be indefinite,
subject to review or variation.
Example 6.7
Matt earns $100,000 gross per year and has custody of two teenage
children. Anna earns $30,000 gross per year. The spouses separated after
16 years together. There are no s. 7 expenses.
Assume entitlement to spousal support has been established.
First, Matt’s income is reduced by the table amount for two children,
$1,240, grossed-up to $2,192 per month or $26,304 annually. Matt’s
reduced income would thus be $73,696. Anna is required to pay child
support at the table amount of $446 per month, grossed-up to $572
monthly or $6,864 annually. Anna’s reduced income would be $23,136.
After a 16-year marriage, Anna would receive a range of 24 to 32 percent
of the adjusted gross income difference of $50,560.
Under our proposed formula, Matt would pay spousal support in a
range from $1,011 to $1,348 per month, for a duration of 8 to 16
years.
There is one exception we would propose to this custodial payor
formula, highlighted by the Nova Scotia case of Davey v.
Davey.[28] Where the recipient spouse and non-custodial
parent plays an important role in the child’s care and upbringing after
separation, yet the marriage was shorter and the child is younger, the
ranges for amount and duration applied here (from the without child
support formula) may not allow that spouse to continue to fulfil that
parental role. In our view, in such cases, under this parenting exception,
it should be possible to exceed the upper limits on both amount and
duration for that purpose.
For the most part, restructuring as described in Chapter 5
under the without child support formula has less relevance for
marriages with dependent children. Under the basic formula above, many of
the recipient spouses with older dependent children will qualify for
indefinite support. Further, the maximum duration under the second,
shorter marriage, test for duration will be much more uncertain, given the
review process and the softer nature of the maximum duration. It will thus
be more difficult in these cases to establish the global or total amount
of the formula outcome as is required for restructuring.
But there will be some medium-term marriages that will attract the
length-of-marriage time limits under the first, longer-marriage test for
duration. For these cases, restructuring can have some meaning. In some
cases, a recipient spouse may want an amount of support above the upper
end of the range for a shorter period of time, e.g. to pursue a more
expensive educational program. Or, in others, a recipient parent may want
to receive support for a longer period, in an amount reduced below the
lower end of the range, e.g. to bridge a period to the availability of
pension and retirement income.
Further, restructuring will have some obvious application in the
custodial payor situation described immediately above.
As explained in Chapter 5,
exceptions are recognized grounds for departure from the formula outcomes,
our attempt to identify, through a non-exhaustive list, the most common
reasons that would warrant departure. Most of the exceptions that apply
under the without child support formula also apply here. We will
only provide brief comments additional to the general descriptions
provided in Chapter 5.
We have already discussed the parenting exception to the custodial payor
formula above.
6.10.1 Compensatory
exception
The scope for a compensatory exception will be eliminated under the
with child support formula, given the weight given to compensatory
considerations in the construction of this formula and the generous
maximum durations available under the two tests for duration.
6.10.2 Illness and
disability
This exception operates on duration under the without child
support formula, mostly where the marriage is of short-to-medium
duration. Under the basic with child support formula, there will be
much less scope for this exception. There are two settings where this
exception will operate:
- where restructuring is not sufficient to accommodate the duration
concerns raised by illness and disability in cases governed by the
longer-marriage test for duration; and
- where the recipient spouse does not play an important role in the
child’s care and upbringing, perhaps on account of illness or
disability, and thus the parenting exception would not apply under the
custodial payor formula.
6.10.3 Debt
payments
Where the payor spouse has a disproportionate responsibility for debt
payments, some adjustment may be required under the with child
support formula, as explained in Chapter 5.
6.10.4 Prior support
obligations
An obligation to pay support for a prior spouse or prior children will
require a slightly different adjustment under this formula, which works
with net disposable incomes rather than the gross incomes of the
without child support formula. Usually this exception will apply to
the payor spouse. In calculating the payor spouse’s individual net
disposable income, this exception will require that any amounts of support
paid to prior spouses or children be deducted, thereby reducing the size
of the pool of individual net disposable income between the current
spouses and also reducing the payor’s share of that smaller pool. Because
we are working with net income under this formula, there is no need to
gross up any child support amounts and the software can work out the
after-tax value of the gross amount of spousal support.
6.10.5 Interim
support
Where there are compelling financial circumstances at the interim
stage, an exception can be made, as is explained in more detail in Chapter 8
below.
There is one last issue to be considered, that of crossover between the
formulas. The most frequent crossover situation will be in cases where
child support ceases after a medium-to-long marriage, where the children
were older or even university-age at the time of the initial order. At
this point, either spouse could apply to vary, to bring spousal support
under the without child support formula. In most cases, it will be
the recipient spouse making the application, to obtain an increase in
spousal support under the without child support formula, once child
support is no longer payable and the payor’s ability to pay improves as a
result. Specific examples of crossover will be considered in Chapter 10,
which deals with variation, review and other topics.
