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Posts tagged ‘Support’

Can a Wife’s Contribution to the Welfare of the Family be Worth $1 billion dollars?

Can a Wife’s Contribution to the Welfare of the Family be Worth $1 billion dollars?

This could be one of Britain’s biggest divorce cases exceeding $1 billion Canadian dollars.

The Guardian reports that Tatiana Akhmedova is seeking a claim against her former husband, a Russian billionaire.

The paper reported that she has not received “a penny” and the case is under appeal. The Guardian also reported on the trial decision.

Akhmedov argues “she was due almost half of their £1bn fortune due to her “equal contributions to the welfare of the family” during their marriage”.

The case has similar overtones to the British case Antonio v. Rokos, [2016] EWHC 520 (Fam); Case No. ZCI5P04051, February 15, 2016, High Court of Justice Family Division that considered a mother’s child care budget that included £10,555 a year for wine.

So, what do you think? Does Akhmedov’s argument that her contributions to welfare of the family is worth up to $500 million dollars?

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Should Support Be Extended When the Recipient Spouse Loses Their Job?

In a recent case called Lawder v. Windsor, the court grappled with the issue of whether a support-paying spouse should have to pay for a longer period if the other spouse unexpectedly loses his or her job.

The couple had divorced in 1998 after 16 years of marriage. In 2000, the husband had been ordered by the court to pay $800 in monthly spousal support to the wife. He continued to make those payments until 2012, when he applied to the court for an order terminating his support obligations.

The husband claimed that in the circumstances, 12 years of paying support had been enough: he was now 56 years old and retired (he took an early retirement option as part of his termination due from a long-held job due to downsizing), and was two part-time jobs earning about $10 an hour. He also received a pension.

On the other hand the wife, now aged 51, was also employed and had enjoyed a steady increase to her income in the past five years. Unbeknownst to the husband, her income during that period rose from $38,000 to over $62,000 in 2012.

The glitch, however, was that the wife had recently lost her job due to corporate restructuring. She had received a termination package, but on the grounds that she was now unemployed she wanted the husband to continue paying support. (The court pointed out that she had provided no proof that she was actively looking for work, however).

The court considered the circumstances, and declined to extend support; it terminated the husband’s support obligations effective one month hence.

The court reasoned that spousal support was designed in part to compensate the wife for any economic disadvantage that she had suffered as a result of the marriage or its breakdown. That goal had been achieved through the husband paying support since 2007; the job loss now had nothing to do with the marriage or its breakdown.

Further, it was clear that the wife had achieved economic self-sufficiency: she had gotten a good job with a high degree of responsibility, and her income had increased steadily in the past five years alone. She had also never asked for a review of the support order and had never taken advantage of its built-in indexing of support amount.

In short: The wife’s recent job loss was not a good reason for extending support now; there was nothing to suggest that her temporary unemployment would affect her self-sufficiency in the bigger picture, and any short-term financial setback was something she could address through her own efforts and diligence.

For the full text of the decision, see:

Lawder v. Windsor, 2013 ONSC 5948  http://canlii.ca/t/g0qb3

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at www.RussellAlexander.com.

Two necessary evils — know your obligations re: income tax and spousal/ child support – Video

 

 

Wednesday’s Video Clip: Know your obligations re: income tax and spousal/ child 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.

In this video we review some key points to keep in mind.

The Ins and Outs of “Income”

 income

The Ins and Outs of “Income”

If you are the person obliged to pay child support, you likely know that one of the basic principles of Family Law is that the amount you are required to pay under the Canadian federal Child Support Guidelines is directly related to your income. It sounds simple enough; however there are some important points to know:

• For these purposes, your “income” means annual “total income” which is usually the amount found on the T1 General form as issued by the Canada Revenue Agency.1

• However – as discussed below – in some circumstances this amount may be adjusted by a court, or a different year’s tax return may be used.

• Also, the law recognizes that the amount disclosed on the tax return is not necessarily the same as the income that is calculated using the various listed “sources of income,” as those various categories are set out on the T1 tax return.2 (Usually they are the same, but not always – e.g. if you have not yet filed a return, or if the one you filed is not proper). So it is the latter amount that governs for Guidelines purposes.

There are some additional exceptions and qualifiers to this general rule:

• The Guidelines do not require that “income” is the figure on the last income tax return in every single case. Perhaps you have had an unusual year – your income may be higher or lower for that year due to some unique circumstances. In such cases, the court had the discretion to “consider more than a single number on a tax return”.3

• You and your spouse can also agree to some slight modifications to the general rule. For example:

o You may agree by way of separation agreement to use a prior year’s line 150, rather than the current one; the court may uphold this kind of adjustment if appropriate.4

o With some restrictions you may agree to use a different date from the one otherwise used for the taxation year. 5

• Finally, a court can itself make adjustments to the “income” amount in the right circumstances:

o For example, it can use an average of the past few years, if that is more representative determination of the amount.6

o Similarly, in unusual situations a court may add to your “income” – for example by adding back the amount of voluntary charitable donations you make in a year.7

Note that if for some reason you feel that the line 150 income amount is not the fairest determination of your income, then you have the burden of showing that this is the case.

For the full text of the decisions, see:

1. Bak v. Dobell, 2007 ONCA 304

2. Henry v. Henry (1997), 1997 CarswellOnt 4399 (Ont. Gen. Div.)

3. Clark v. Clark, 2012 ONSC 1026; additional reasons 2012 ONSC 1965

4. Hodge v. Jones, 2011 CarswellOnt 2582, 2011 ONSC 2363 (S.C.J.)

5. Crabtree v. Crabtree, 70 R.F.L. (6th) 371, 2009 CarswellOnt 1918 (S.C.J.)

6. Toon v. Toon, 2011 CarswellSask 511, 2011 SKQB 281 (Q.B.)

7. Zubek v. Nizol, 2011 CarswellBC 1481, 2011 BCSC 776 (S.C.)

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at www.RussellAlexander.com.

Top 5 Tips for Dealing with the Family Responsibility Office

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Top 5 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.

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders.

For more information, visit us at http://www.russellalexander.com/practice/family-responsibility-office-fro-and-default-hearings/

So what do you think?  Do you have any tips or comments for dealing with FRO?

Ontario Child Support: Wednesday’s Video Clip

 

 

Ontario Child Support: Wednesday’s Video Clip

 Shelley, a senior family law clerk at Russell Alexander Family Lawyers, talks about custody and answers questions many people have about child support.

To learn more about child support or our other videos visit us at http://www.russellalexander.com/videos/  or join us on Facebook at http://www.facebook.com/RussellAlexanderFamilyLawyers

Husband Downgrades Job, Then Quits Altogether – But Support Stays the Same

Husband Downgrades Job, Then Quits Altogether – But Support Stays the Same

This was a case which shows that a voluntary change in circumstances – including a significant reduction in income – does not necessarily mean that a parent’s obligation to pay child support will be reduced correspondingly.

The husband and wife met while in college and got married. They had three children, ranging from 12 to 17. At the beginning of the marriage, the husband had a job with General Motors Acceptance Corporation (GMAC) earning about $30,000. The wife never worked. By the end of the marriage, about 15 years later, the husband was earning about $86,000. At that time, the parties agreed as part of their separation that the husband would pay spousal support of $1,500 per month, and $1,350 in monthly child support.

The husband remarried in the summer of 2007, and filed for bankruptcy a few months later. He then voluntarily quit his job with GMAC and moved to his new wife’s hometown in New Brunswick, taking a job at a car dealership which paid $52,000 per year. Prior to this move – and although he was evasive to the court about his new wife’s finances – he indicated that she had been working at GMAC earning “less than $80,000”, but there was further evidence that she was later let go from that GMAC job and had been earning $100,000 elsewhere. Furthermore, he did not provide evidence as to what the new wife was now earning in New Brunswick, but it appeared that she had purchased a very comfortable home there, in which the both of them lived.

Nonetheless, the husband brought a motion to reduce his existing child support obligations to his first wife, and to end his liability to pay her spousal support altogether. Indeed, before the hearing the husband unilaterally stopped paying spousal support completely, and self-adjusted his child support payments to reflect his new $52,000 income. (And note that as part of a related interim hearing, the court ordered the husband to continue paying both child and spousal support at the old levels, which he failed to do.)

Meanwhile, the husband was let go from his employment in New Brunswick due to a change in the company’s ownership; he began collecting Employment Insurance benefits of $485 per week. This prompted him to stop making any child support payments whatsoever, despite him later admitting to the court that he owed $447 per month, based on his new level of E.I.-based income.

Still, the husband came to court to ask to have his child and spousal support obligations reduced to reflect his change in income. At this point, he was actively looking for work, but was limiting his search to Atlantic Canada.

The court refused his request. First of all, Ontario law gives the court the right to impute income where a spouse is “intentionally under-employed”, meaning deliberately choosing to earn less than he or she is capable of. In this case, given that the husband’s employment decision resulted in a significant reduction in child support, it needed to be justifiable in a compelling way.

This requirement was not met here: the husband had considered only his own interests.

First of all, it found that the husband’s decision to quit his employment with GMAC was entirely his own. It said:

Regarding his decision to quit GMAC Mr. Thompson said that he had heard unofficially from friends and managers that his job was in jeopardy. He claimed that his work performance was suffering because the stressors noted above were weighing on him. Without a vehicle he was often arriving late. However, there was no independent evidence from GMAC that Mr. Thompson’s job situation was indeed insecure. Mr. Thompson did not suggest or provide any evidence that he had been subject to discipline. While we heard that there was financial turmoil with General Motors around that time, there was no evidence that anyone at GMAC or its successor lost their jobs. Mr. Thompson had 22 years of seniority at the time he quit.

Next, citing the husband’s understanding that his children needed only to be “minimally covered” by his child support payments, the court found that the husband failed to appreciate that he had a legal obligation to support his children and that he could not avoid that duty by a self-reduction in income. Furthermore, at the time he made his decision to quit, he had no substantial debt, no other dependents, a good-paying job, and was at minimum sharing living arrangements with a new wife who earned well and owned a home mortgage-free.

The husband had unilaterally reduced the child support payments and was found by the court to be intentionally under-employed. As a result, the court imputed an income of about $86,000 to him, which was in accord with his prior earning levels, and ordered him to continue paying both child support and spousal support accordingly (although it did allow a $500 monthly reduction in spousal support due to other factors).

For the full text of the decision, see:

Thompson v. Gilchrist (2012), 2012 ONSC 4137 http://canlii.ca/t/fs2d2

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at www.RussellAlexander.com.

Wednesday’s Video Clip: Top 5 questions about spousal support in Ontario, Canada

 

 

Top 5 questions about spousal support in Ontario, Canada

In this video Russell reviews some of the more common questions about spousal support in Ontario, including:

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.

A court may order spousal support, and will set an amount and duration based on various factors that exist between the parties. The jurisdiction for a court to award spousal support comes from either the federal Divorce Act (as part of a divorce order), or from the Ontario Family Law Act.

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 making a spousal support order courts consider several factors, including:

• the length of the entire relationship (including time living together before marriage);

• the financial circumstances of each spouse, both during the relationship and
after separation;

• the functions performed by each spouse during the relationship;

• the financial repercussions or detrimental financial effect on one or both spouses of caring for each other or for any children of the relationship; and

• each spouse’s ability to support him or herself.

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.

There may also be a limit on the duration of the support that one spouse receives from the other, as means of encouraging the recipient spouse to achieve post-separation financial independence as quickly as possible. Alternatively, the order may contain a built-in review mechanism.

Note that there are certain tax consequences relating to spousal support – both from the payor’s and the recipient’s perspective. In short – and provided it is paid pursuant to either a written separation agreement or a court order – it is considered “taxable income” in the hands of the spouse who receives it, and is deductible from the taxable income of the spouse who pays it. These tax ramifications are taken into account when determining the amount of support.

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.
Having said that, a court’s determination of the amount and duration of spousal support will hinge upon each party providing forthright, comprehensive financial disclosure to each other. If in making the determination the court feels that one spouse has withheld financial information (e.g. has failed to disclose a source of significant income), the court may impute income to the spouse and award the other spouse his or her support accordingly.

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, including:

1) the financial disadvantage or dependence that relationship gave rise to must be redressed post-separation; and

2) the ability of the paying spouse to fund the spousal support award must be taken into account.

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.

We hope you have found this video helpful. If you require further information about spousal support please give us a call or visit our website at www.russellalexander.com