Criteria and objectives of child support

• Author: Julien D. Payne; Marilyn A. Payne
• Pages: 1-17

1

CHAPTER 1

CRITERIA AND OBJECTIVES OF

CHILDSUPPORT

A. INTRODUCTION

Before the implementat ion of the Federal Child Support Guidelines in Ca nada on  May ,

empirical data in Canada indicate that a divorced custodial parent was unlikely to receive

more than  percent of the net income of the paying spouse and parent as spousa l and/or

child support. It is not surprising, therefore, that single mothers and their children repre-

sented a disproportionate percentage of the poverty classes. is societal problem, which

has not been conf‌ined to Canada, led to the implementation of mandatory child support

guidelines in Engla nd, Australia, New Zealand, the United States, as well a s in Canada. e

Guidelines are premised on objectively based numerical indicators of the specif‌ic amount

of child support that an individual should normally pay by agreement or court order on

marriage breakdown or divorce or to a single parent. As of  May , child support rights

and obligations under the Divorce Act underwent a radical change. e previous child sup-

port regime applying under the Divorce Act, which was premised on the exercise of an un-

fettered judicial discretion, was rejected by the government as unpredictable, inconsistent,

costly, and unfair to chi ldren. Recognition of these limitations of the judicial discretionar y

regime led to major research studies being undertaken by the Federal/Provincial/Territor-

ial Family Law Comm ittee for several years prior to the legislative and regu latory changes.

ese studies produced changes in the following key areas. First, child support paid under

orders or agreements made on or after  May  is no longer taxed as income to the re-

cipient, nor is it tax deductible by the payor. Second, the Federal Child Support Guidelines

provide f‌ixed table amounts of monthly child support t hat help parents, lawyers, and judges

to set fair and consistent child support in divorce cases. e table amounts take the new

tax rules into account. Fixed s chedules for the determination of child support can promote

(i)simple and inexpensive administrative procedures for assessing t he amount of child sup-

port; (ii) consistency of amounts in comparable fam ily situations; and (iii) higher child sup-

port payments that more realistically ref‌lect the actual costs of raising children. ey are

unlikely, however, to resolve the economic crises of separation and divorce for women and

2CHILD SUPPORT GUIDELINES IN CANADA, 2020

children. e war on poverty requ ires more than piecemeal reform of child support rights

and obligations, although the Guidelines may reduce the economic plight of custodial par-

ents to some degree.

B. RELEVANCE OF INCOME TAX

Prior to  May , periodic child support payments made pursuant to a court order or

written agreement after marriage breakdown were deductible from the taxable income of

the payor under sections (b), (c), and . of the Income Tax Act and were taxable as

income in the hands of the payee under sections ()(b) and (c), provided that such pay-

ments were made to the custodial parent and not to the child ren directly. As of  May ,

Canada shifted to an income tax system whereby the payor no longer receives a deduction

for payments made and the receiving parent no longer pays tax on child support received

under any new order or agreement or pursuant to any variation made after  April  of

a pre-exist ing order or agreement.

e new tax rules do not apply to orders or agreements made before  May  unless (a)

a court order or agreement made on or after  May  changes the amount of child support

payable under an existing agreement or court order; (b) the court order or agreement spe-

cif‌ically provides that the new ta x rules apply to payments made after a specif‌ied date which

cannot be earlier than  April ; or (c) the payor and the recipient have both signed and

f‌iled a form with the Canada Revenue Agency stating that the new tax rules apply to pay-

ments made after a specif‌ied date that ca nnot be earlier than  April . e tax changes

do not apply to periodic spousal support payments, which continue to be deductible from

the income of the payor and constitute taxable income in the hand s of the payee.

Before  May , lawyers and courts sometimes arr anged or ordered a global amount

of spousal and child support without apportioning the amount payable to each category of

dependant. Such global amounts were commonly used by lawyers and cour ts when dealing

with interim support. is practice should be abandoned as a consequence of the new tax

rules respecting child support because an amount in a written agreement or court order

that is not identif‌ied as being solely for the support of a spouse will be treated as child

support for income tax purposes. Similarly, where a written agreement or court order pro-

vides that certain expenses are to be paid directly to a third party, such as mortgage pay-

ments, any such expenses that are not clearly identif‌ied as bein g solely for the benef‌it of the

 RSC  (th Supp), c .

 ibaudeau v Canada (Ministe r of National Revenue), []  SCR .

 Del Puppo v Del Puppo, [] BCJ No  (SC); Hilchie v Hilchie, [] NSJ No  (Fam Ct); Acorn v

DeRoche, [] PEIJ No  (TD). But see Fung-Sunter v Fabian, [] BCJ No  (SC), citing Revenue

Canada Pamphle t on Support Payments, P(E) Rev  at .

 Fontaine v Fontaine, [] BCJ No  (CA); Gordon-Tennant v Gordon-Tennant, [] OJ No 

(Gen Div); Richard v Richard, [] SJ No  (QB) (unintended income tax conse quences of amended

agreement found to const itute suf‌f‌icient reason to gra nt order for child support in accordance w ith

the Federal Child Supp ort Guidelines); compare Schipper v Maher, [] MJ No  (QB) (retroactive

variation of chi ld support arrears that acc rued before and after implement ation of Federal Child Sup-

port Guidelines). See also Warbinek v C anada,  FCA , citing Holbrook v C anada,  FCA ;

Chadwick v Cana da,  FCA .

 Williams v Williams, [] BCJ No  (SC); see also SAJM v DDM, [] MJ No  (CA) (trial judge’s

order for reduction in amount of s pousal support not justi f‌ied, having regard to f‌ina ncial disparit y

between old and new orders).