Spousal Support Advisory Guidelines:
A Draft
Proposal
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The draft spousal support advisory guidelines proposed in this
document are intended to bring more certainty and predictability to the
determination of spousal support under the federal Divorce Act.
This Draft Proposal for advisory guidelines is the product of more than
three years of work, elaborated upon in Chapter 2.
As its title indicates, this is truly a draft that invites
application, experimentation, discussion and feedback, with a view to
further revisions.
These advisory guidelines are very different from the Federal
Child Support Guidelines. They are not being legislated by
the federal government. They are informal guidelines that will operate on
an advisory basis only. The proposed advisory guidelines will be
used to determine the amount and duration of spousal support within the
existing legal framework of the Divorce Act and the judicial
decisions interpreting its provisions. The guidelines are not legally
binding and their adoption and use will be voluntary. They are intended as
a practical tool to assist spouses, lawyers, mediators and judges in
typical cases. The basic formulas, variations and exceptions are intended
to build upon current practice, reflecting best practices and emerging
trends across the country.
The proposed advisory guidelines do not deal with
entitlement, just amount and duration once entitlement has been
found. The advisory guidelines do not deal with the effect of a prior
agreement on spousal support. The advisory guidelines have been
developed specifically under the federal Divorce Act.
Provincial/territorial laws differ in important respects and any
use of these guidelines in the provincial/territorial context would have
to take account of these distinctive statutes, especially on matters of
entitlement and agreements.
An overview of the structure of the proposed scheme is found in Chapter 4.
There are two basic formulas in the proposal: the without child
support formula and the with child support formula.
The dividing line between the two is the absence or presence of a
dependent child or children of the marriage, and a concurrent child
support obligation, at the time spousal support is determined. Both
formulas use income sharing as the method for determining the
amount of spousal support, not budgets. The formulas produce ranges
for the amount and duration of support, not just a single number. The
precise number chosen within that range will be a matter for negotiation
or adjudication, depending upon the facts of a particular case.
The without child support formula is built around two
crucial factors: the gross income difference between the spouses
and the length of the marriage. Both the amount and the duration of
support increase incrementally with the length of the marriage, as can be
seen in the summary box below. The idea that explains this formula is
merger over time: as a marriage lengthens, spouses more deeply
merge their economic and non-economic lives, with each spouse making
countless decisions to mould his or her skills, behaviours and finances
around those of the other spouse. The gross income difference measures
their differential loss of the marital standard of living at the end of
the marriage. The formulas for both amount and duration reflect the idea
that the longer the marriage, the more the lower income spouse should be
protected against such a differential loss. Merger over time captures both
the compensatory and non-compensatory spousal support objectives that have
been recognized by our law since Moge and Bracklow.
The Without Child Support
Formula
Amount ranges from 1.5 to
2 percent of the difference between the spouses’ gross incomes
(the gross income difference) for each year of
marriage (or, more precisely, years of cohabitation), up to a
maximum of 50 percent. The range remains fixed for marriages 25
years or longer at 37.5 to 50 percent of income difference.
Duration ranges from .5 to 1 year for
each year of marriage. However, support will be
indefinite if the marriage is 20 years or
longer in duration or, if the marriage has lasted 5
years or longer, when the years of marriage and age of the support
recipient (at separation) added together total 65 or more (the
rule of 65). |
Gross income in this formula uses the same definition of income as
under the Federal Child Support Guidelines, sometimes called
Guidelines income. It is important to note that the percentages are not
percentages of the payor’s income, but percentages of the gross income
difference between the spouses.
Chapter 5
contains examples of the application of the without child support
formula and the ranges it produces for marriages of different lengths and
incomes. A number of factors will affect the precise amount or
duration within those ranges: a strong compensatory claim, the recipient’s
needs, property division, the needs and limited ability to pay on the part
of the payor spouse, and self-sufficiency incentives.
Restructuring allows the amount and duration under the
without child support formula to be traded off against each other,
so long as the overall value of the restructured award remains within the
total or global amounts generated by the formula when amount and duration
are combined. Restructuring can be used in at least three different ways:
(i) to front-end load awards by increasing the amount beyond
the formula’s range and shortening duration; (ii) to extend
duration beyond the formula’s range by lowering the monthly amount; or
(iii) to formulate a lump sum by combining amount and
duration.
Any formula, even with restructuring, will have its limits and there
will always be exceptional cases. Because the guidelines are only
advisory, departures are always possible on a case-by-case basis where the
formula outcomes are inappropriate. Under both this formula and the
with child support formula, the proposed guidelines do offer a
short list of exceptions, intended to identify common categories of
departures: a compensatory exception in short relationships, illness and
disability, debt payment, prior support obligations, and compelling
financial circumstances in the interim period.
Cases with dependent children and concurrent child support obligations
require a different formula, the with child support formula.
These cases raise different considerations: priority must be given to
child support; there is usually reduced ability to pay; and particular tax
and benefit issues arise. The rationale for spousal support is also
different. Where there are dependent children, the primary rationale is
compensatory, as both Moge and Bracklow made clear. What
drives support is not the length of the marriage, or marital
interdependency, or merger over time, but the presence of dependent
children and the need to provide care and support for those children. This
parental partnership rationale looks at not just past loss, but
also at the continuing economic disadvantage that flows from present and
future child care responsibilities, anchored in s. 15.2(6)(b) of the
Divorce Act.
There are three important differences between the without child
support formula and the with child support formula. First, the
with child support formula uses the net incomes of the
spouses, not their gross incomes. Second, this formula divides the pool of
combined net incomes between the two spouses, not the gross income
difference. Third, the upper and lower percentage limits of net income
division in the with child support formula do not change with
the length of the marriage.
Set out below is a summary version of the basic with child
support formula, used to determine the amount of spousal support
to be paid where the payor spouse pays both child and spousal support to
the lower income recipient 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. |
Net income computations like these will usually require computer
software. 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 each spouse’s child
support obligations. This is done by deducting or backing out their
respective contributions to child support. The details of these
calculations are set out in Chapter 6,
along with several examples.
Duration under this basic with child support formula also
reflects the underlying parental partnership rationale. Initial orders
would be indefinite in form, subject to the usual process of review
or variation. There would, however, be outside time limits on the
cumulative duration of spousal support, which would structure the process
of review and variation. There are two tests for duration and whichever
produces the longer duration will apply:
- First is the longer-marriage test, which is modelled on the
maximum duration under the without child support formula, i.e.
one year of support for every year of marriage, and which will likely
govern for most marriages of ten years or more.
- The second test is the shorter-marriage test, which sets the
outside time limit for support at the time that the last or youngest
child finishes high school and which will typically apply for marriages
under ten years. In these shorter-marriage cases, there will likely be
review conditions attached. Relatively few cases will reach this outside
time limit and those that do will likely involve reduced amounts of
top-up support by that time.
Shared and split custody situations require a slight variation
in the computation of individual net disposable income, as the backing out
of child support obligations is a bit more complicated. There is also a
different formula for cases where spousal support is paid by the
custodial parent. Under this formula, the spouses’ Guidelines incomes
are reduced by the grossed-up amount of child support (actual or notional)
and then the without child support formula is applied to determine
amount and duration.
Restructuring has less scope for application under the with child
support formula, but remains possible in some situations. The list of
exceptions is the same as under the previous formula.
As with the Federal Child Support Guidelines, there is a
ceiling and a floor that sets the range of incomes to which
the formulas apply. The ceiling is the income level for the payor spouse
above which any formula gives way to discretion, set here at a gross
annual income for the payor of $350,000. The floor is the income level
for the payor below which no support is to be paid, here set at
$20,000. To avoid a cliff effect, there is an exception for
cases where the payor spouse’s gross income is more than $20,000 but
less than $30,000, where spousal support may not be awarded or may be
reduced below the low end of the range. An additional exception is
also necessary, to allow an award of spousal support below the income
floor in particular cases.
The advisory guidelines are intended to apply to interim
support, a setting where the formulas can offer a quick, easily
calculated range of amounts. There is an exception for compelling
financial circumstances in the interim period, to recognize that it is
not always possible to adjust family finances quickly, especially for
housing expenses and debt payments.
Quebec has different guidelines for determining child support, which
have an impact on spousal support determinations. The application of the
advisory guidelines to Divorce Act cases in Quebec raises special
issues that are dealt with in Chapter 9.
The formulas are intended to apply to initial orders and to the
negotiation of initial agreements. Given the uncertain state of the
current law, it is not possible to make the advisory guidelines apply to
the full range of issues that can arise on variation and review.
The advisory guidelines can be applied on applications to reduce spousal
support because of changes in income, for example, when the payor spouse’s
income goes down or the recipient spouse’s income goes up (or ought to
have gone up). In some cases, one spouse may wish to apply to vary to
cross over between the two formulas, mostly in longer marriages
where the without child support formula produces higher ranges,
once the children are no longer dependent.
More difficult issues arise where the payor’s post-separation income
increases or the recipient’s income is reduced after separation. The most
the formula can do is to establish an upper limit upon any increase in
spousal support in such cases. At the present time, no formula can be
constructed to resolve issues around the recipient spouse’s remarriage or
re-partnering, or the second family cases. At some later stage, it may be
possible to find formulaic solutions to these categories of variation and
review cases.