Earn Over $350,000 A Year? – Here’s What You Need to Know About Spousal Support
As regular readers of this Blog will know, when it comes to a court setting the amount of post-separation/post-divorce spousal support you must pay to your spouse, there are several factors to be considered, and established principles to be applied.
These include the looking at your respective means, needs, and ability-to-pay, now that the relationship is over and you are embarking toward separate futures. Regardless of your income, the amounts set by the courts in spousal support determinations always aim to address the financial disadvantages that came out of failed marriages, as well as certain policy objectives fostered by the law.
In setting these situation-specific amounts, Canadian Family Courts find guidance in the government-endorsed Spousal Support Advisory Guidelines (SSAGs) – which as the name suggests – are only “advisory” in nature. The SSAGs prescribe set amounts on a graduated basis, according to factors such as the incomes of each of you as now-former spouses.
And while courts are naturally free to deviate from this stricture when the facts justify it, the equation typically goes like this: The higher your income, the higher your spousal support obligations.
What few support-payors may know (or find relevant to them) is that if you are separated or divorcing and earn over $350,000 in gross annual income, then there are slightly different rules for you.
Here are those rules, in brief:
- If you earn over the $350,000 “ceiling” the SSAGs do not apply in a mandatory sense to dictate your support obligations. In other words, they do not apply presumptively or automatically to your situation.
- Rather, the court will use the SSAGs as a “starting point” to help set a range of spousal support that you should pay.
- The $350,000 ceiling is not a hard “cap” on support – rather It is merely a starting point for the court to make its determination. (However, if you earn more than the ceiling, then very often the support you pay will be likewise be higher).
- Your final spousal support obligation will be set by choosing a figure within the range, once the court makes an individualized, fact-specific analysis.
On that last point, there are two common judicial approaches to determining spousal support in these (very) high-income cases:
- The “minimum plus” approach. This involves the court using the SSAGs to set an initial, minimum amount at the $350,000 income level (taking into account all of the usual factors), and then using its discretion to top-up that initial amount as is appropriate in the circumstances.
- The “pure discretion” approach. This does not involve any sort of initial minimum; rather, the court merely sets a dollar amount that takes into account all the usual circumstances (such as means, needs, and ability to pay), including the amount of actual child support that you are paying (which in high-income cases is often a large amount).
Now let’s continue to explore some more of these happy hypothetical questions of especial concern to those who earn very well:
- What happens if you are merely “close” to the $350,000 ceiling?
- And what if you are far, far above it?
The answers:
1) Having an income near the ceiling does not mean that the court cannot merely stick to the SSAG amounts if it sees fit to do so in the circumstances. This will usually be the result if your income is not too much higher than the ceiling – i.e. in the $500,000 to $700,000 range.
2) Conversely, if your annual income is very, very high above the ceiling – i.e. in the multiple millions – then the amount will usually be on the low end of the SSAG range for that income level. In other words, your spousal support obligations do not necessarily rise commensurately with what may be an exorbitantly high-income level.
It bears repeating: As with any decision involving a spousal support determination – regardless of income – the court has discretion, but must consider all of the unique circumstances when exercising it.
For a copy of the Spousal Support Advisory Guidelines, see:
Spousal Support Advisory Guidelines (Department of Justice, Canada) https://www.justice.gc.ca/eng/rp-pr/fl-lf/spousal-epoux/spag/index.html
For the full text of the decision containing a summary of the law relating to incomes over $350,000 see:
J.E.H. v. P.L.H., 2014 BCCA 310, leave to appeal to SCC refused [2014] S.C.C.A. No. 412
