Ontario Spousal Support 101: Key Issues About How Spousal Support is Determined
Ontario law regards the spousal relationship as an economic partnership. Therefore, in some cases, the spouse earning a higher income may have to pay spousal support to the other spouse in order to allow the spouse with lower income to “get back on their feet.”
At the same time, the spouse who earns less income, or no income at all, has an obligation to take steps to become self-sufficient over time, once the relationship ends.
While the government provides some advisory guidelines for determining an appropriate range of support, these amounts are not set in stone. In fact, before any calculations of spousal support are completed, entitlement to spousal support must first be determined.
Whether a spouse is or is not entitled to support depends on a number of factors and is generally determined on the facts of each case. Some of the factors that will determine entitlement to support, as well as the duration of the support obligation, include:
- The length of the relationship
- The roles played by each spouse throughout the relationship
- The age of the spouses at the time of separation
- The ability of one spouse to support the other
- The ability of the recipient spouse to become self-sufficient
In addition to helping clients secure spousal support payments from their former spouse, we have also helped clients who feel that they should no longer continue paying support.
For example, when a former spouse receives a promotion or raise, enters into a new relationship, or has otherwise had an opportunity to become self-sufficient but has failed to do so, spousal support may no longer be justified.
In these cases, our lawyers can advocate for the termination of the support obligation on your behalf.
How much time do you have to make a claim for support? The Divorce Act does not place a limitation period on making a claim for spousal support.
Therefore, even if you have already separated from your spouse, or obtained a divorce, you may still be eligible to claim spousal support.
Some Common Spousal Support Questions
1. What is spousal support?
Spousal support — which is sometimes called “alimony” — is money paid from one spouse to the other after the dissolution of the relationship. The obligation to pay spousal support is a legal one, and may arise either from a marriage, or from a common-law relationship.
2. What is the legal basis for obtaining spousal support?
The obligation for one spouse to pay spousal support to the other does not arise automatically from the fact that the parties had a relationship together (whether formally married or common law). Rather, the spouse who is claiming spousal support must prove an entitlement to it.
3. What factors dictate the duration and amount of spousal support?
The determination of how much support a spouse should receive, and for how long, is a complex equation.
In some cases one spouse may have suffered a financial loss or disadvantage as result of joint career and lifestyle decisions made during the marriage or relationship (for example the decision to move the family so that a spouse can take a new job, or that the mother will give up her career to stay home and raise the children). A disadvantaged spouse will be entitled to support to compensate him or her for that setback.
4. How does the spouse’s behaviour affect spousal support entitlement?
Generally speaking, the entitlement to spousal support is not dependent on the spouse’s pre- or post-separation behaviour, morality, or ethical conduct. In other words, a spouse who is otherwise entitled to spousal support after the dissolution of a marriage will not become disentitled because he or she was violent, or because it is later discovered that he or she had an extra-marital affair during the marriage.
5. What happens if there is a change in circumstances?
As indicated above, the notion of one spouse receiving spousal support from the other is rooted in several concepts and principles.
The amount or duration of spousal support may have to be adjusted if there is significant change in the financial circumstances of either party. This change must be significant, and must not have been foreseen when the separation agreement or the court-ordered spousal support award was made.
Spousal Support Advisory Guidelines and Disclosure Obligations
Whenever spouses separate, the often-long process of untangling their financial affairs begins. Questions frequently arise as to the nature and scope of the financial disclosure that needs to be made as part of that process. It’s important to put it into the context of how it relates to a court’s calculation of any spousal support obligations between the parties.
Spousal Support Advisory Guidelines
First, a little background: Historically, the various Ontario courts’ approaches to calculating the spousal support that was owed from one party to the other had been a bit erratic, in that there was no uniform methodology of formula to be applied. But several years ago, both the federal and provincial governments enacted Child Support
Guidelines, which established a formulaic approach to the calculation of child support, based on several factors including the paying parent’s income level. After it was introduced, courts began using the income determined for the purposes of calculating child support as the baseline income for spousal support awards as well. This was followed by the introduction of the Spousal Support Advisory Guidelines which – although not compulsory in nature – added some structure to the process, and added a focus on the income of the respective parties as a starting-point for the calculation of the precise amount of support that should flow from one to the other.
The Ontario Family Law Rules
Given that this income-based calculation remains the current state of the law in Ontario, the question of how each spouse’s respective bottom-line “income” is calculated remains a key factor in determining spousal support obligations. It should be noted that the approach, guidelines and calculations used for the purposes of reporting income to the Canada Revenue Agency for income tax purposes is not that same as those used for determining support in Family Law. While each spouse may provide providing his or her tax return, but this is just a starting-point for what must be disclosed.
Enter the Ontario Family Law Rules. These Rules impose a general framework for the exchange of financial information between separating spouses, requires each spouse to provide the other with (among other things) a Financial Statement in a regulated form, and mandates that there be full and frank disclosure by each party of their respective information.
The Family Law Rules also encourage early disclosure, and mandate that all documents that are within a party’s control – or which are available to a party at his or her request – are to be listed and produced. A court may also order that an outside party to the litigation be questioned.
There are sanctions for non-disclosure as well: A breach of a court order for disclosure may result in the court imposing various penalties against the offending party, including certain costs sanctions or having his or her pleadings struck. (However, if a party fails to comply with a disclosure order he or she is given an opportunity to show that they exercised due diligence in trying to comply with the order).
So What has to be Produced?
I have written more fully in previous blogs about the kind of information that goes into the preparation of each party’s Financial Statement, and the types of information and documents that must be provided. Is she be noted that the Family Law Rules define the term “documents” to include “information, sound or images recorded by any method.” This means that electronic documents – including e-mail correspondence – are also potentially covered and are subject to the obligation imposed on each party to preserve information. Indeed, the court has certain penalties – all the way up a finding of contempt of court – that it may impose in situations where a party has intentionally destroyed evidence that pertain to a family law proceeding.
The scope of disclosure is very broad; however, this does not mean that it is unlimited. In particular, courts are on the lookout for situations where one party is conducting a “fishing expedition” in connection with the information held by the other party, usually as part of a litigation strategy. Moreover, courts – by way of an overall mandate to deal with cases justly and proportionately to their importance and complexity – are also authorized to curb excessive disclosure on the parties’ part, since this can negatively affect the litigation by adding delay and increasing the costs of the proceedings.
Getting Assistance is Key
When taken together, the Spousal Support Advisory Guidelines provide a framework for calculating spousal support using each spouse’s income as a starting point, while the Family Law Rules provide a framework for putting forth the documentation used to calculate that income. It is accordingly important for separating spouses to understand how these Guidelines and Rules work, and to get competent legal advice on what their obligations may be.
Tax and Support
Income tax: Not a popular concept even at the best of times. But add in the obligations, which arise in the context of paying child or spousal support, and it’s enough to cause heart palpitations in most Canadians.
This is because the Canada Revenue Agency rules relating to how support payments are to be treated are quite complex. To make things more confusing, the federal Income Tax Act has separate rules for spousal support as opposed to child support. Here are the key points:
Spousal support is generally deductible for the person who is paying, and is taxable as income for the recipient. In contrast, child support is neither deductible nor taxable.
This means that a spouse who is receiving regular spousal support must report the payments as income, and the spouse who is paying it can deduct it off the top of his or her income in the same way that RRSP contributions may be deducted. Lump-sum spousal support does not qualify for this, however, nor does spousal support paid indirectly (for example with one separated spouse agreeing to pay the mortgage payments of the other).
Note that this taxability/deductibility of spousal support payments only applies to payments being made pursuant to a written agreement or court order – informal arrangements made between the separating couple are not eligible for a tax deduction by the paying spouse. Any written agreement of this type must state the date of separation, the terms and exact dollar-amount of the support payments that are to be made, and the date the support payments will commence.
Legal Fees and Expenses
The CRA also allows a deduction to the recipient spouse or parent for the costs of obtaining or enforcing a spousal or child support order, which includes legal fees and certain enforcement-related expenses. However, the cost of defending a claim for support, or for the payment of arrears of support, is not deductible.
Get Advice Beforehand
Needless to say, this is just the tip of the iceberg in connection with how spousal and child support payments are treated for tax purposes in Canada. Legal advice is a must. But what most partners on the verge of separation or divorce often overlook is that it’s best to obtain competent legal advice before coming to any agreement as to support. Otherwise, you may fail to foresee the tax ramifications of an informal spousal and child support arrangement, which can result in unpleasant surprises at tax time.
Five Things to Know About Varying a Support Orders
By definition, negotiated agreements and court orders are designed to bring certainty to the settlement of legal disputes between separating and divorcing couples. Still, several of my previous posts have involved the question of whether, in light of a pre-existing domestic contract or a court order (for child or spousal support, for example), there has been “material change” in the parties’ circumstances, to the point where the situation is no longer fair.
The “material change” threshold is important: in law, it may justify a court’s interference with the terms of the existing agreement or order, to the point where it can be varied to better suit the new circumstances, or to address a situation that had never been contemplated by the parties or the court in the first place.
In my law practise, the issue comes up most frequently in connection with a desire to change a spousal or child support order, often because the paying former spouse / parent has lost a job, has remarried and taken on new responsibilities, or is under other financial pressures.
Here then are the top five things to know about that threshold in the context of a variation of a support order:
1. Change is relative.
Whether or not a particular change in circumstances is adequate to meet the legal threshold must always be evaluated in light of the particular facts of each case.
2. The change must be of a continuing nature.
In order to justify a variation of support, the change must be something that has an element of continuity to it.
3. “Material” is both quantitative, and qualitative.
Trivial, insignificant, and short-lived changes will not justify a change in the support payable.
4. It must have been unforeseen.
In order to qualify as a “material change” it must be a new circumstances or factor that was not foreseen at the time the original support order was made. In other words, if that new circumstances had been known or contemplated by the parties at the time of the original order, then a different order would have been warranted.
5. The payor has the onus.
The person seeking the new support order is the one who must prove the change in circumstances has met the legal threshold.
The law strives for certainty, but it also remains flexible enough to address change. If you think that your existing support order has become unfair due to intervening circumstances, a job loss, or other factors, give us a call. We can give you input on your situation, and advise you as to any next steps.
What “Material Change” is Not: Some Real-Life (and Perhaps Surprising) Examples
The concept of “material change” in Separation Agreement Rolled into a Court Order – “Material Change of Circumstances” Still Required which involves the notion that a court-imposed order requiring a parent or spouse to pay support may have been fair at the time it was handed down, but subsequently becomes unfair due to unforeseen circumstances. Where a later court finds that such “material change” has taken place, it may have the authority in the right circumstances to vary the initial order accordingly.
This determination of what constitutes “material change” is not always straightforward. Indeed, some scenarios may intuitively seem to qualify on first blush, but on closer examination turn out not to meet the legal standard at all.
Here are a handful of recent and older cases that illustrate this point:
• Early retirement
In Innes v. Innes, the 62-year old support-paying husband decided to take voluntary early retirement, which meant his income would decrease from $200,000 to about $70,000 per year. Finding that he had done so for “lifestyle reasons” related to his new wife and a fondness for golf and vacations (rather than for unexpected health reasons, for example), the court declined to reduce or terminate the $2,000 in monthly support he was obliged to pay his former first wife of 26 years, finding there was no “material change” in the circumstances.
In a case called Brothers v. LeBlanc, the common law husband’s’ bankruptcy was not enough to persuade the court to reduce his obligation, embodied in a separation agreement, to make $1,000 monthly mortgage payments and to pay off a $129,000 mortgage on the former matrimonial home. While accepting that the man’s snow-removal and heavy-equipment operating business had experienced a significant downturn since the agreement was signed four years earlier, the court found that the man was in good health and that the local construction was booming; he should be able to earn close to $90,000 a year if he put his mind to it.
• Supporting a new family
In Couvillon v. Couvillon, the husband failed in his bid to have his child support obligations under a separation agreement reduced. While it was true that he now had new financial responsibilities arising from his decision to marry a second time, his plans to do so were already in place when the separation agreement was negotiated with his first wife. As such, there was no “change” in the legal sense, since his added responsibilities were actually very foreseeable.
As these cases illustrate, “material change” is not an easy concept to pin down. We can help navigate the law and apply it to your specific situation.
Enforcement of Support in Ontario
Enforcement in Ontario is done through a provincial government office called the Family Responsibility Office (FRO). The court automatically files all support orders made after July 1, 1987 with the FRO. Separation agreements can also be filed there if they have been filed with the court and then mailed to the FRO.
The parent who is to pay support is told to make all support payments to the FRO. When the FRO receives a payment, it sends a cheque to the parent with custody, or deposits the money directly into that parent’s bank account. It only does this after it has received the money from the paying parent.
The FRO uses different ways to get the payments that are owed. It can:
• get the payments directly from the parent who is supposed to pay support
• have the payments automatically deducted from the parent’s wages or other income (other income includes things like sales commissions, Employment Insurance, Workers’ Compensation, income tax refunds, severance pay, and pensions)
• register a charge (a lien) against the personal property or real estate of a parent who fails to pay the support that he or she owes
• garnish (take money from) the bank account of a parent who fails to pay support
• garnish up to 50% of a joint bank account that he or she has with someone else, or
• make an order against another person who is helping a parent hide or shelter income or assets that should go toward support
The FRO can put more pressure on parents who do not make their support payments by:
• suspending their driver’s licences
• reporting them to the credit bureau so that it will be difficult for them to get loans, or
• canceling their passports.
Once the order or agreement is filed with the FRO, then it is the FRO, not the other parent, that is responsible for any actions taken to enforce it.
Tips for Dealing with the Family Responsibility Office
A while ago I wrote about the role of the provincial Family Responsibility Office (FRO) More About The Family Responsibility Office, Some Common Problems Addressed. (For those who aren’t aware: In Ontario, all child support orders are automatically filed with the FRO, which operates under legislation giving it an arsenal of mechanisms by which to encourage and enforce timely payment of support on the part of the paying parent.)
If you are such a payor pursuant to a court-issued Support Order, here are five tips for dealing with the FRO:
1. Always keep the FRO updated on address changes.
Otherwise, you may miss out on receiving the various noticed that the FRO is required by law to give you. These may include a warning that the enforcement mechanisms that can be levied against you are about to be stepped up – for example a notice that your driver’s license is about to be suspended.
2. Keep the FRO apprised of your employment situation.
If you have lost your job, have been laid off work, or have had your income reduced due to disability or a reduction of overtime, then the FRO should be made aware. In such situations your next step may be to obtain a variation of the filed child support order that triggers the FRO’s involvement in the first place, which will in turn affect the FRO’s role and mandate in the enforcement process.
3. Don’t ignore anything you have received from the FRO.
Many of the processes involving the FRO allow for only a few days for you to respond; the FRO may quickly escalate the remedies available to assist with collection and you don’t want to be surprised by any of them. The FRO’s available avenues for encouraging your compliance and payment can include: suspending your driver’s license or passport, a garnishee of your wages (via a “Support Deduction Order” sent to your employer), filing writs or liens against your property, seizing your income tax refunds and HST rebates, seizing your bank accounts and – last but not least – imposing jail time of up to 180 days.
4. Document everything.
This includes not only your correspondence with the FRO, but also the paper trail of any support payments that you have made. Payments to the FRO can be made by way of internet banking or telephone banking and may be the easiest to document; payments by cheque or money order are more cumbersome to track. But regardless of the method, make sure to designate the FRO case number on any payment that you make.
5. Always make the mandated support payments if you can.
As mentioned, the FRO has a wide arsenal of options to deal with delays or non-payment, including jail time if necessary. Naturally, these shorter-term consequences should be avoided if at all possible. But there can be longer-term drawbacks as well: arrears in child support payments will show up negatively on your credit bureau report, which can affect you for years to come.