The Federal Child Support Guidelines apply to children whose parents are in the process of getting divorced. Provincial and territorial child support guidelines apply to 1) unmarried parents that are separating and 2) married parents that are not getting divorced. In Ontario, the provincial Child Support Guidelines “mirror” the Federal Child Support Guidelines and are interpreted in the same way by family courts.
The Department of Justice in Ontario has provided the public with an easy and useful online child support calculator their child support obligation under the Child Support Guidelines.
The Child Support Guidelines in Canada set up a fair standard of financial support for children after their parents separate and supply consistency around the financial support level. They are legally binding on parents and cannot be “negotiated away” (i.e., an agreement that one parent will have no contact with a child and therefore not have to pay child support is legally unenforceable). Child support is the “right of the child” and not the right of the parent receiving child support (i.e., commonly referred to as the “recipient” of child support) even if it is the parent coming to court to claim child support.
The Child Support Guidelines apply not only to the biological parents of children but also individuals who stand “in loco parentis” (meaning “in the place of” a parent). There can be multiple payors of child support for the same child (e.g., the biological parent, a step-parent, etc.).
The “Presumptive Rule”
Child(ren) under the age of 18 in Ontario who live with a parent (at least 60% of the time over the course of the year) are entitled to child support from the other parent based on a “Table” that sets a monthly amount of child support based on annual gross income and the number of children.
Where child support must be provided to the child(ren) over the age of 18 (because they are pursuing post-secondary education, are disabled, etc.), the Child Support Guidelines apply (or if a court considers that Table amount inappropriate, another amount that takes into account the “condition, means, needs and other circumstances” of the child and the financial ability of the parents).
The Table amounts set out in the Child Support Guidelines are updated every few years to reflect the increased living cost. Since 1997, child support in the Tables have increased on May 1, 2006, December 31, 2011, and November 22, 2017.
The Department of Justice has a useful online tool to calculate child support obligations in simple situations where the child(ren) reside primarily with one parent (i.e., over 60% of the time over the course of a year).
Income over $150,000
Section 4 of the Child Support Guidelines provide that a court can calculate child support for a parent who earns over $150,000 by:
a) either applying the Table amount, or
b) if that’s “inappropriate,” another amount based on the circumstances of the child(ren) and the parent’s financial resources and any section 7 expenses.
The Supreme Court of Canada in Francis v. Baker, 1999 CanLII 659 (SCC) held that there is a presumption that the Table in the Child Support Guidelines is appropriate to calculate child support even where the payor’s income is over $150,000 and the burden of proof to convince a court otherwise is on the payor of child support. The court was more concerned with whether the amount in the Table was so more than a child’s reasonable needs that it no longer qualified as child support. In this case, the Supreme Court of Canada upheld the Trial Judge’s decision to order the payor pay Table child support of $10,034 for two children based on his income of $945,538. Even where a payor is earning almost a million dollars, the Table amount of child support is presumptively appropriate to use, although it is well over $150,000!
Undue Hardship – Paying Less than the Table Amount
A payor may pay less than the Table amount if they can prove that they (or a spouse or a child) would: 1) suffer “undue hardship” and 2) that the payor’s household would not have a higher standard of living than the household where the other parent and child resides.
There is no ‘complete list’ of circumstances that would cause a payor parent, spouse or child ‘undue hardship’ if they were to pay the Table amount. Some circumstances where “undue hardship” may occur are: a parent or spouse having unusually high debt that was reasonably incurred (e.g., to support the parents or spouses or their children or to earn a living), extraordinarily high expenses to exercise parenting time with a child (e.g., because of transportation costs to travel to the child), a parent or spouse having a legal obligation to support another person (e.g., elderly parents), a parent having a legal duty to support another child outside of the relationship that broke down, and a spouse having a legal obligation to support a person who is unable to “obtain the necessaries of life due to an illness or disability”. Section 10 of the Child Support Guidelines outlines the obligations.
If payor can establish they are suffering “undue hardship” then there has to be an analysis of the household standard of living between their home and that of the child’s before one can determine whether it is appropriate to pay less than the Table amount of child support.
A payor seeking to pay less than the Table amount cannot simply rely on establishing “undue hardship” OR that there is a difference in the standard of living between two households – both of these criteria must be met before a court will consider a reduction in the Table amount of child support.
The Child Support Guidelines outlines a 6-step process in Schedule II, s. 2 to calculate and compare the household income ratios to compare household standards of living:
Step 1: Calculate the annual income for comparison purposes of each person in each household
(a) Establish the real annual income of each person (not the taxable income) by taking the total taxable income as shown on the T1 General form and adjusting it according to Schedule III and sections 15 to 20 of the Guidelines. (These adjustments include the adding back into income such items as certain employment expenses, support payments, non-taxable portions of dividends and capital gains, non-arm’s length payments. See Schedule III.)
(b) Deduct “the federal and provincial taxes payable on the person’s taxable income” to make the annual income net of income tax.
(c) Deduct ‘‘the person’s source deduction for premiums paid under the Employment insurance Act and contributions made to the Canada Pension Plan and the Québec Pension Plan.”
Step 2: “Adjust the annual income of each person in each household by:
(a) deducting the following amounts, net of any applicable income tax based on that person’s average tax rate, calculated on an annual basis:
(i) any amount relied on by the court as a factor that resulted in a determination of undue hardship,
(ii) the amount that would otherwise be payable by the person under these Guidelines if the pleading of undue hardship was not made, and
(iii) unless already deducted under subparagraph (1), any amount of support that is paid by the person under a judgment, order or written separation agreement; and
(b) adding the following amounts, net of any applicable income tax based on that person’s average tax rate, on an annual basis:
(i) the amount that would otherwise be receivable by the person under these Guidelines if the pleading of undue hardship was not made, and
(ii) any amount of child support that the person has received for any child under a judgment, order or written separation agreement”: Federal Child Support Guidelines, Schedule II, s. 2, Step 2.
Step 3: Determine the total household income for each household by adding together the amounts of adjusted net income for all the persons in each household
Step 4: Consult the Table in Schedule II which gives the low-income measures for households according to the number of adults and children in the household, and choose the low-income measures amount which corresponds to the size of the applicant’s household, and the amount for the size of the other spouse’s household.
Step 5: Divide the total household income amount by the low-income measures amount to get a household income ratio for each household.
Step 6: Compare the household income ratios. The household that has the higher ratio has the higher standard of living.
Family courts have required payor parents meet a very high threshold before deciding that less than the Table amount of child support should be paid.
Split Custody
The Child Support Guidelines provides that if each parent has one or more child primarily under his or her care, the amount of child support is the difference between the amount that each parent would otherwise pay if a child support order were sought against each parent.
For example, if Bert and Ernie have 3 children and 2 of them live with Bert and 1 of them live with Ernie, you would calculate child support as follows:
Bert earns $100,000, if Bert is paying Table child support for the 1 child living with Ernie then his child support obligation is $910 per month. Ernie earns $105,000, if Ernie is paying Table child support for the 2 children living with Bert then his child support obligation is $1,471 per month.
The net difference in their child support obligations results in Ernie paying Bert $561 per month.
Shared Parenting
The Child Support Guidelines provides that when a parent has a child 40% of the time or more over the course of a year that an order for child support must consider:
1) the amounts each parent would pay under the Table;
2) the increased costs of shared custody arrangements (e.g., because it often requires a duplication of children’s furniture, clothing, meals, school supplies, etc.); and
3) the “conditions, means, needs and other circumstances of each spouse and of any child for whom support is sought”
The leading case on child support where there is shared parenting was decided by the Supreme Court of Canada in 2005 in a case called Contino v. Leonelli-Contino. In that case, the court clarified the following principles:
1) there is presumption that the full Table amount is “correct” and that the payor who is seeking a reduction in child support to the recipient parent has to establish that they should fall within an exception like that of “undue hardship”.
2) there is no presumption that there should be an automatic reduction in child support in situations where a parent has a child over 40% of the time over the course of a year.
3) there is no mathematical “formula” for child support in a shared parenting situation.
4) the starting point for the child support analysis in a shared parenting situation is a “set-off” of each parents’ obligation under the Table (as opposed to a “prorated” set-off).
5) it is not proper to apply a “multiplier”, i.e., 50% or otherwise to the Table because it makes assumptions about the “additional costs” being incurred by parents.
In Leonelli v. Contino-Leonelli, the parents had a son that resided equally with both of them. The Father had applied to reduce the child support he was paying the mother and a motions judge reduced his child support payment from $583 to $100. The mother appealed this temporary child support order to the Divisional Court that ordered that the father pay the full Table amount of $688. The Father appealed to the Court of Appeal of Ontario that ordered the father to pay child support of $399.61. The mother appealed to the Supreme Court of Canada that ordered the father to pay child support of $500 per month, taking into account that the mother had acquired a home that was based on her expectation of the support she had been receiving from the father. Note: the “set-off” amount between the parents if they were each paying the Table to each other would have resulted in the father paying the mother $275.33 per month.
Despite all this guidance, child support in a shared parenting situation can be difficult to determine because it is “fact-specific” to each family and not a set formula. The analysis in sections 9(b) and (c) in the Child Support Guidelines requires actual evidence on increased costs of shared parenting by way of financial statements and/or children’s expense budgets.
It is important to note that each payor of child support may want to pay the other parent the full table amount as opposed to the “net difference” being paid because it may affect their ability to claim tax credits relating to the child(ren) in his or her care.
For example, section 118(5) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Suppl.), prevents a person from claiming the eligible dependent tax credit for a child for whom they are also paying support to a former spouse. An exception in s. 118(5.1) of the Income Tax Act provides a way for both parents to claim credits in cases of shared parenting where each parent pays child support to the other.
In Harder v. The Queen, 2016 TCC 197 the court ruled the Canada Revenue Agency was entitled to disallow the father’s claim for credits because he was the sole child support payor, as a result of an arrangement with his former spouse that he’d pay her the “offset” between the amounts of child support they owed the other. Thus, the court’s interpretation of s. 118 of the Income Tax Act resulted in parents being unable to simply pay the “offset” amount for convenience and requires that each parent pay the other child support in order to claim tax credits in a shared parenting situation.
Imputation of Income
In some situations, a payor’s tax return or current income may not be the appropriate income to base their child support obligations on. The Child Support Guidelines allow a court to “impute” income to a payor where it is appropriate, meaning that if a payor is earning $15,000 per year and the court believes that it is more appropriate that they pay child support based on $50,000 per year, they can make that child support order.
s. 19(1) of the Child Support Guidelines outlines the circumstances where it may be appropriate to “impute income” to a payor:
(a) the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse;
(b) the spouse is exempt from paying federal or provincial income tax;
(c) the spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;
(d) it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines;
(e) the spouse’s property is not reasonably utilized to generate income;
(f) the spouse has failed to provide income information when under a legal obligation to do so;
(g) the spouse unreasonably deducts expenses from income;
(h) the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and
(i) the spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.
The leading case on imputing income to a payor was decided by the Court of Appeal of Ontario in Drygala v. Pauli. The Court of Appeal held that that the court must consider the following three questions under s. 19(1)(a) of the Child Support Guidelines when someone is claiming that the payor of child support is “intentionally underemployed or unemployed”:
1) is the parent intentionally underemployed or unemployed?
2) if #1 is “yes”, then is the intentional underemployment or unemployment required because of reasonable educational needs?
3) if the answer to #2 is no, what income is appropriate to impute in the circumstances to the payor?
The Court of Appeal decided that the court did not have to find a specific intent to evade child support obligations before income can be imputed (i.e., a “lazy” parent who chooses to work fewer hours can still be imputed income even if he or she wasn’t working less for the purpose of paying less child support). It is important to note that a parent can justifiably work less hours; for example, if they have increased childcare responsibilities that results in less availability for work or are taking educational programs that will lead to greater income earning potential.
The “burden of proof” is on the parent that claims that the other parent should be imputed income. The court will look at the payor’s “age, education, experience, skills and health” and possibly their historical income earning record, among other things, in determining how much income to impute.
Special or Extraordinary Expenses
The Child Support Guidelines supplies an obligation for parents to contribute to “special or extraordinary expenses” (in proportion to their income) as set out under section 7:
7 (1) In a child support order the court may, on either spouse’s request, provide for an amount to cover all or any portion of the following expenses, which expenses may be estimated, taking into account the necessity of the expense in relation to the child’s best interests and the reasonableness of the expense in relation to the means of the spouses and those of the child and to the family’s spending pattern prior to the separation:
(a) child care expenses incurred as a result of the custodial parent’s employment, illness, disability or education or training for employment;
(b) that portion of the medical and dental insurance premiums attributable to the child;
(c) health-related expenses that exceed insurance reimbursement by at least $100 annually, including orthodontic treatment, professional counselling provided by a psychologist, social worker, psychiatrist or any other person, physiotherapy, occupational therapy, speech therapy and prescription drugs, hearing aids, glasses and contact lenses;
(d) extraordinary expenses for primary or secondary school education or for any other educational programs that meet the child’s particular needs;
(e) expenses for post-secondary education; and
(f) extraordinary expenses for extracurricular activities.
Definition of “Extraordinary Expenses”
For the purposes of paragraphs (1)(d) and (f), the term extraordinary expenses means
(a) expenses that exceed those that the spouse requesting an amount for the extraordinary expenses can reasonably cover, taking into account that spouse’s income and the amount that the spouse would receive under the applicable Table or, where the court has determined that the table amount is inappropriate, the amount that the court has otherwise determined is appropriate; or
(b) where paragraph (a) is not applicable, expenses that the court considers are extraordinary taking into account
(i) the amount of the expense in relation to the income of the spouse requesting the amount, including the amount that the spouse would receive under the applicable Table or, where the court has determined that the table amount is inappropriate, the amount that the court has otherwise determined is appropriate,
(ii) the nature and number of the educational programs and extracurricular activities,
(iii) any special needs and talents of the child or children,
(iv) the overall cost of the programs and activities, and
(v) any other similar factor that the court considers relevant.
Parents should agree in advance on what the children’s section 7 expenses are before that expense is incurred (especially if it is significant and the parent incurring the expense would like the other parent to contribute).
Clauses (d) (primary or secondary school expenses) and (f) (extracurricular activities) of section 7(1) are both “qualified” such that the expenses claimed must be “extraordinary” expenses associated with that particular category. In contract, the other subsections of s. 7 expenses are not subject to the qualification that they are “extraordinary”. An expense claimed under s. 7 of the Child Support Guidelines must be “necessary” and “reasonable”. The reasonableness of an expense is based on the means of the parents and child, as well as the parties’ pre-separation spending patterns.
The family court expects that children should enjoy similar activities as they did when they were part of an ‘intact family’ whenever that is possible given the financial circumstances of the parents. Also, that parents will follow the recommendations of professionals when it comes to educational, medical and/or dental expenses that for the wellbeing of their children.
Parents contribute to “section 7 expenses” in proportion to their income (i.e., if Parent 1 earns $70,000 and Parent 2 earns $30,000, then Parent 1 contributes 70% and Parent 2 contributes 30% towards section 7 expenses). Parents can take into account any government subsidies, tax credits or insurance reimbursements that apply to a section 7 expense and reimburse the other parent what they are “out of pocket” on in terms of these expenses (for example, if a child needs prescription glasses that cost $500 and the benefits provider covers 50% of the expense, then the parent who incurs the expense is only “out of pocket” $250 and the other parent has to contribute their proportionate share of $250).
The above information is NOT legal advice of any kind, and you should be sure to speak to a qualified family law lawyer about your specific situation. For more information, call us at 905-273-4588 or email us at contact@kainfamilylaw.com to book a free 30 minute consultation with one of our experienced family law lawyers at Kain & Ball Family Law.