Calculating the costs (of child support).

• Author: Boll, Rosemarie

The Federal Child Support Guidelines have been with us for over a year. Before May 1, 1997, judges had considerable leeway and not much guidance in setting child support amounts. According to Ottawa, the result was inconsistent awards that were usually too low. The federal government set out to make child support fair, predictable, and consistent. It wanted to reduce the conflict and tension between parents by making the calculation of child support more objective. It also wanted to improve the efficiency of the legal process by giving parents and judges guidance in setting child support. A group of senior civil servants scoured the globe and came up with 28 different ways to calculate child support.

The Basic Approach

They settled on an approach that poses the question, "How much more does it cost for every additional person in a household to live as well as one person?" They came up with the "40/30" rule. This means that it costs another 40% to support the second person in a household, then another 30% for every person after that. Applying this rule, a family of four requires 200% or twice as much money as a single person to live at the same standard. Age of the family members makes no difference because the 40/30 rule is averaged over the lifetime of the household.

Consider an example. Sam lives alone and spends all of his disposable income on himself. This gives him a certain standard of living. When he marries Betty it takes another 40% of his disposable income for the two of them to live as comfortably as Sam did by himself. If Betty has a job and brings in more money than 40% of Sam's disposable income, the couple's standard of living goes up. If Betty does not work and two people have to live on Sam's income, the couple's standard of living goes down. When Sam and Betty have a child, it takes another 30% (or a total of 170% of Sam's disposable income) for the family to live at the same level as Sam did by himself on his income. It does not matter if Sam was a low, medium, or high income earner -- the government found that the percentages remain the same at all income levels.

Suppose, then, that Betty moves out with the child. If the goal is to maintain the child's pre-separation standard of living, how do we do that? First, we have to recognize the economies in the new households. Sam still needs a basic amount for himself. Betty will need a basic amount for herself, too, plus 40% for the child because the child is now the second member of her household. So, Sam must contribute to the child's expenses an amount that recognizes the 40/30 rule. These amounts are pre-calculated and set out in the child support tables (often referred to as the table amount). The tables go by province, number of children, and gross annual income of the non-custodial parent.

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