Who Pays for the Children? Child Support on Separation or DivorceApril 19, 2010
The Child Support Recalculation ProgramJune 20, 2010
One of the most difficult negotiations that spouses undertake after they separate is around the issue of spousal support. This issue is laden with emotions and the parties’ feelings of entitlement and fairness.
Spousal support is the payment of money from one ex-spouse to the other. The Divorce Act states that spousal support should do the following things:
- recognize the advantages or disadvantages to the spouses as a result of the marriage or its breakdown;
- divide between the spouses the financial consequences arising from the care of any children, over and above the payment of child support;
- relieve any economic hardship arising from the breakdown of the marriage; and
- promote the economic self-sufficiency of each spouse.
When determining what, if any, spousal support should be paid, separating spouses inMedicine Hat must go through a three-step process. The first step is to determine whether or not the spouse who is asking for support is entitled to receive it. In order to decide whether there is entitlement, the spouses must consider, among other things, the following:
- whether either of the spouses has suffered an economic disadvantage or hardship because of the marriage or its breakdown;
- whether either of the spouses has suffered financial consequences arising from caring for children;
- the length of time the spouses cohabited;
- the functions performed by each spouse during cohabitation;
- whether the spouse who is asking for support needs it; and
- whether the other spouse has the means to pay support.
Once the spouses have decided one of them is entitled to support, the next step is to decide how much support should be paid. The spouses will consider the income and the budgets of each of them. It is often difficult to determine the income of the parties, unless both of the spouses are straightforward salaried employees. If either or both of the spouses are self-employed, or are employed through corporations, deciding the amount of their actual incomes can be very difficult.
Since 2005, spouses have had a new tool to assist them in deciding on the amount of support – the Advisory Spousal Support Guidelines. The Guidelines provide a range that the spouses can use to decide how much spousal support should be paid. The Guidelines were established by legal scholars, who reviewed numerous cases from across Canada and found the range within which most of the cases fell. Unlike the Child Support Guidelines, the Spousal Support Guidelines are not mandatory; they are voluntary. Lawyers use them to advise their clients, and Judges will often consider them in deciding on the amount of spousal support to be paid.
The third step that the parties must determine is how long spousal support will be paid. This decision is based on a number of factors. Some of those factors are the length of the marriage and the age of the spouses, the spouse’s ability to become self-sufficient, and whether one person is still providing childcare. On some occasions, the spouses may decide how long spousal support will be paid in terms of a number of months or years. On other occasions, the spousal support might end on the happening of some event, such as when a spouse is remarried or begins to earn a certain amount of income. On yet other occasions, the spouses may decide that they cannot figure out an ending date or event, and may agree that they will review the payment of spousal support after a certain amount of time. These are all different ways of answering the question of the duration of spousal support.
One of the most important things to know about spousal support is that it is treated differently than child support for tax purposes. Spousal support is taxable income in the hands of the recipient and is tax deductible for the payor. Canada Revenue Agency will allow the payor to reduce the amount of income tax taken off their pay cheque monthly. Because the recipient of the spousal support often pays taxes at a lower rate than the person who pays it, it is often the case that there is some significant tax savings when spousal support is paid.
Spousal support is a very complex issue. The negotiations around spousal support are often very tense and difficult. It is recommended that anyone who is entering into discussions about spousal support should seek some legal advice, in order to understand how the broad outline of the law given here applies to their individual situation.