Anatomy of Incorporation: Part 2February 22, 2016
Avoiding the Breakup Earthquake of DivorceApril 13, 2016
It seems as though every week in Alberta brings additional negative economic news. Almost all of us know a friend or relative who has been laid off, or whose hours or wages have been cut back, or who have had to relocate to find or maintain employment. Many of us have been unfortunate enough to be the person who has is no longer employed or has made concessions to keep a job. This is very difficult for all families, but it can be especially difficult if the wage earner in a family is required by Court Order to pay child support.
What can a payor do if they are paying child support based on a wage that they are no longer earning? A change in circumstances of the payor, the recipient or the child is a cause for a change or variation in child support. There are three ways that child support can be varied in Alberta:
- The first is by agreement between the parents. The parents can exchange current pay stubs, or something else that shows what the new income will be (perhaps a letter showing the new income from the employer). Once that information has been exchanged, the parties can calculate the new appropriate child support. We always recommend the new amount be out into a Court order. The Maintenance Enforcement Program will only enforce a Court Order, and people will often disagree about what they each thought they had agreed to, if there is a falling out at a later date;
- The second way is to apply to the Child Support Recalculation Program. This is an economic way to have the child support recalculated as long as:
- your current Court Order does not indicate that an income of either parent has been imputed; and
- the child support ordered is not a deviation from the straight Federal Child Support Guidelines; and
- both of the parents are straight employment wage earners (neither of them earns income through a corporation or declares dividend income).
The drawback to this Program is that it will recalculate the child support only one time per year and the recalculation will be determined on the most recent income tax return, so any child support reduction takes a considerable time.
- The third way is to bring a Court Application and have a Court make a decision granting a new amount of child support to be paid.
Section 2(3) of the Federal Child Support Guidelines indicates that where a child support amount is to be determined on the basis of specified information, the most current information must be used. So when determining the payor’s income for the purposes of child support, it is appropriate to look at the most recent income information. It is important to determine all of the sources of income that a payor has, including income from employment, corporate income, employment insurance, social assistance, a pension, worker’s compensation, disability payments, a trust and a partnership. All of these sources of income must be considered when determining the appropriate income upon which to base child support.
It is appropriate (and actually an obligation) for the payor to advise the recipient of child support when the payor’s income increases, so that child support can increase and is based on the actual income being earned by the payor. In the same way, it is appropriate for child support to be based on the actual income being earned by the payor, if that income deceases. In situations where the income of the payor has changed, it is appropriate for the child support to change with it.