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Spousal Support Advisory Guidelines:
A Draft Proposal

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Where income sharing is used to determine the amount of spousal support, any guidelines must address the question of ceilings and floors. The ceiling is the income level for the paying spouse above which any formula gives way to discretion. The floor is the income level for the payor below which zero support is to be paid.

In the case of the Federal Child Support Guidelines, to take a familiar example, once the payor’s income is over $150,000, s. 4 provides that the amount of child support is the table amount for the first $150,000 plus any additional discretionary amount on the balance of the payor’s income above $150,000. In practice courts have been prepared to follow the table formula for child support up to much higher income levels. At the other end, the floor for child support under the table formula is an income of about $7,000, based upon the personal tax exemption for a single person. This is a true floor in that the paying parent is deemed unable to pay any child support below that income level.

Ceilings and floors are trickier to establish for any spousal support formula. We propose that the ceiling be set at a gross annual income for the payor of $350,000 and that the floor be set at $20,000, but these proposals are somewhat tentative. We recognize that there are important practical issues here at both ends of the income spectrum. In practical terms, ceilings and floors attempt to define the upper and lower bounds of the typical case, for which guideline formulas can generate acceptable results.

7.1 Ceilings

The shorthand term “ceiling” may be misleading. Under the Federal Child Support Guidelines, there is no absolute ceiling, just an income level above which the standard fixed-percentage-of-income formula can be varied, to generate a lesser percentage of income above that level. We propose the same approach here.

Under these spousal support advisory guidelines, a ceiling could be based on the payor’s income, or the monthly amount of support paid, or the recipient’s income, or some form of standard of living test. Our preference is to use the payor’s gross income as the basis for our proposed ceiling.

In thinking about the ceiling it is important to keep in mind that there are already many possible means of adjusting under these advisory guidelines as incomes go higher First, the formulas themselves offer ranges of percentages and, as incomes go up the scale, it is possible to move towards the lower end of the range. Second, where the incomes of both payor and recipient are higher, questions of entitlement to spousal support may resolve these issues. Third, these are advisory guidelines, so that a ceiling has less telling consequences than with a child support formula, as case-by-case departures always remain possible. The ceiling operates in addition to these.

The ceiling we propose is a gross annual income of $350,000. After the payor’s gross income reaches the ceiling of $350,000, any formulas should no longer be applied to divide income beyond that threshold.

We have considered and experimented with lower numbers such as $250,000 or $300,000. In the end, we opted for a higher figure, taking the view that it is important to maintain the predictability and consistency of the formulas as far up the income spectrum as is practically possible. We are also concerned about creating cliffs, i.e., points where there are dramatic increases or decreases in support amounts, with all the incentives to litigate that can accompany such cliffs.

The examples below illustrate the operation of the ceiling.

Example 7.1

In a long-marriage case, assume one spouse earns $350,000 gross per year and the other has no income, after 25 years of marriage. Under the without child support formula, a 25-year marriage would call for sharing between 37.5 to 50 percent of the gross income difference, i.e., annual spousal support in the range of $131,250 to $175,000 (or $10,937 to $14,583 monthly).

If the payor earned more, say $450,000, a court could leave spousal support in that same range or, in its discretion, a court might go higher, but no formula would push the court to do so and it would be an individualized decision. These are large numbers for support in this case, but keep in mind that this is the very top end of the formula, with both a long marriage and a high income.

Example 7.2

In a 10-year marriage, assume the higher income spouse earns $350,000 gross per year and the other earns $100,000, also a healthy income.

Entitlement could be an issue in this case, with such high incomes. If entitlement were established, the without child support formula would suggest sharing 15 to 20 percent of the gross income difference: a range for spousal support of $37,500 to $50,000 annually (or $3,125 to $4,166 monthly) for a maximum duration of 5 to 10 years. If the payor earned more than $350,000, a court could go higher, or not, depending upon the facts of the case.

Example 7.3

Take the same facts as Example 7.1 above, with the payor earning $350,000 gross per year and the recipient having no income, but add two teenage children living with the recipient. Assume that child support would follow the table formula, with child support of $3,841 per month (using the Ontario tables).

Spousal support would be determined under the with child support formula, based upon sharing 40 to 46 percent of individual net disposable income: a range for spousal support from $8,050 to $9,630 per month.

If the payor earns more than $350,000, a court can decide to go higher or not. Under the with child support formula the operation of the ceiling is complicated by the fact that child support increases as incomes rise above the ceiling. We can suggest two possible approaches for these very high income cases using the with child support formula. The first approach uses the formula to determine a minimum amount for spousal support, an approach we can call “minimum plus”. A notional calculation would be required to calculate spousal support at the $350,000 ceiling, using the child support payable at the ceiling. This would determine the “minimum” spousal support range. In Example 7.3, that range would be $8,050 to $9,630. There would be discretion to add to that minimum for incomes over $350,000, after taking into account the actual amount of child support being paid by the payor at that higher income level. This approach might make more sense where the payor’s income is closer to the ceiling. The second approach would be one of pure discretion. Once the payor’s income exceeded the ceiling, then there would be no “minimum” for spousal support, just a dollar figure that would take into account the actual amount of child support paid, an amount which can be very large for cases well above the ceiling.

In assessing this ceiling and these examples, keep in mind that the formulas have to operate across a wide range of typical incomes. Here we are operating at one of the extremes. At issue is the ceiling, the point at which the formulas’ ranges cease to generate reasonable outcomes. Is the $350,000 ceiling about right? Or should it be lower, perhaps $250,000 or $300,000? Only a small number of cases will be affected by this choice of a ceiling amount. We know that the larger stakes at these income levels are more likely to lead to litigation and individualized decision making. Still, it is important to fix the ceiling in the right general ballpark.

7.2 Floors

A floor for the advisory guidelines is more significant, if it sets the amount of support at zero below that floor. In our view, that should generally be the effect of the floor. The Federal Child Support Guidelines use a very low floor, about $7,000 gross per year. The floor for spousal support would have to be higher than that, but how much higher?

As with ceilings, the proposed advisory guidelines already offer a number of methods to adjust for the payor’s low income. First, entitlement remains a threshold issue. Where the payor has a low income or where there is a modest differential in incomes at lower income levels, a court can decide (or the parties can agree) that there is no entitlement to support. Second, where there are dependent children, the formula gives priority to child support, consistent with s. 15.3 of the Divorce Act. That priority will often eliminate any ability to pay spousal support at lower income levels, especially at the bottom end of the formula’s range. Third, under the without child support formula, even if there is entitlement, the income differentials may be quite small, producing some very small amounts at the lower end of the formula’s ranges, particularly in short- and medium-duration marriages.

Our initial view is that there should not be any amount of spousal support payable until the payor’s gross income exceeds $20,000 per year. A minimum wage or poverty line income was considered too low, providing too little incentive for the payor to continue working, given prevailing tax rates. A review of the case law suggests that judges almost never order spousal support where payors make less than $20,000, or even slightly more. According to child support database information, where dependent children are involved, if the payor’s income is below $20,000 gross annually, spousal support is only ordered or agreed upon in less than 2 percent of cases and the percentages for incomes of $20,000 to $29,000 are only about 2.5 percent.

The examples below illustrate the operation of the floor.

Example 7.4

To take an example at the lower extreme, assume the higher income spouse earns $20,000 gross per year, after a 25-year marriage, but the other spouse has no income at all.

With a floor of $20,000, there would be zero spousal support payable despite the income difference. The range for spousal support generated by the without child support formula would have been $625 to $833 per month. At the top end of this range, using Ontario figures, the payor would be left with a net disposable income of only $750 per month, a net income that would be lower than that of the recipient (assuming the payor’s income comes from employment). The lower amount of this range would generally be less than social assistance rates anywhere in Canada for the recipient, while still leaving the payor spouse with a net disposable income of only $923 per month.

Example 7.5

Assume the payor earns $20,000 gross per year, the other spouse has no income and they have one child, which would mean a table amount of child support of $163 per month in Ontario.

If we applied the with child support formula here, spousal support would range from $349 to $451 per month. At these levels, the custodial parent and one child would be left at around one half of the already-too-low low-income measure used in Schedule II of the Federal Child Support Guidelines to compare household standards of living, while leaving the paying spouse a net monthly income of just above or just below $900 per month.

These numbers only improve slightly, even in the one-child case, for those earning $25,000 per year. The table amount of child support would be $222 per month. After payment of spousal support in the range of $449 to $575 per month the payor’s net disposable income inches up just below or above $1,100 per month.

For spouses with low incomes, we must be particularly concerned about work incentives, welfare rates and net disposable incomes. There may be compelling arguments for low-income payors to pay child support at very low income levels, but the same arguments cannot be made for support for adult spouses. If anything, we are worried that the $20,000 floor may be too low, creating real hardship for payor spouses and ultimately threatening the credibility of the formulas.

We do have one concern with an absolute floor at $20,000, namely a cliff effect for those payors just above the floor. A way to avoid such a cliff would be to have some smoothing of the formulas over a range of lower incomes, e.g. between $20,000 and $40,000, with the percentages rising towards the standard range (as was done in the construction of the Federal Child Support Guidelines). We would prefer to avoid such complexity at the lower end, at least in this early stage in the development of advisory guidelines. For now, the cliff effect can be best avoided by an exception for cases where the payor spouse’s gross income is more than $20,000 but less than $30,000. For cases within this range, assuming entitlement, consideration should be given to the percentages sought under the applicable formula, the net disposable income left to the payor spouse, and the impact of a spousal support payment upon the work incentives and marginal gains of the payor.

For example, under the without child support formula, a shorter marriage would mean a smaller percentage and hence a smaller bite of the payor’s income, in contrast to a 25‑year marriage. Or, to take another example, for a payor whose income hovers just around or above $20,000 and whose shifts, overtime hours, or seasonal work are changeable, there will be a realistic concern about disincentives to work.

Another exception is probably necessary, this time below the income floor. In general, the formulas for amount and duration will not operate where the payor spouse’s gross income is less than $20,000 per year, as it will be rare that there will be sufficient ability to pay. There may, however, be exceptional cases where spousal support might be paid, e.g. where the payor spouse is living with parents or otherwise has significantly reduced expenses. Formulas will be less helpful in determining amounts in such cases. There is another good reason for allowing exceptions below the income floor: these advisory guidelines address amount and duration, not entitlement. An absolute income floor for amount would effectively create an entitlement rule, something that these guidelines should not do, in light of their informal and advisory nature. The issue of entitlement must always remain open, as a threshold issue, to be defined by the legislation and judicial interpretation of that legislation.