Criteria and objectives of child support

• Author: Julien D. Payne - Marilyn A. Payne
• Pages: 1-19

1

CHAPTER 1

CRITERIA AND OBJECTIVES

OF CHILD SUPPORT

A. INTRODUCTION

Before the implementat ion of the Federal Child Support Guidelines in C anada 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 regulatory changes.

ese studies produced changes in the following four key areas. First, child support paid

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

recipient, 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. ird, the federal government has implemented several measures

to promote the payment of support in full and on time. Fourth, some of the savings from

the income tax changes have been applied to assist the children of working poor families.

Fixed schedules for the determination of child support ca n promote (i) simple and inexpen-

sive administrative procedures for assessing the amount of child support; (ii) consistency

2CHILD SUPPORT GUIDELINES IN CANADA, 2017

of amounts in comparable family situations; and (iii) higher child support payments that

more realistically ref‌lec t the actual costs of raising children. ey are u nlikely, however, to

resolve the economic crises of separation and divorce for women and children. e war on

poverty requires more than piecemeal reform of child support rights and obligations, al-

though the Guidelines may reduce the economic plight of custod ial parents 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 agree-

ment specif‌ically provides that the new tax 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 payments made after a specif‌ied date that cannot be earlier than April ,

. e income tax consequences of child support agreements and orders made before

May ,  generated signif‌icant savings for many families encountering divorce and will

continue to do so until they are superseded by new agreements executed or orders granted

after May , . Variation of a pre-Guidelines agreement after May ,  attracts the

new income tax regime and payments falling due after the variations are payable in after-

tax dollars. With the implementation of the Federal Child Support Guidelines, a court is

not authorized to vary an order piecemeal by merely tacking on special or extraordinary

expenses to a pre-existing order. e order, if varied, must be varied in accordance w ith the

Guidelines and this automatically triggers the new tax regime under which child support

 R.S.C.  (th Supp.), c. .

 ibaudeau v. Canada (Minister of Nat ional Revenue), []  S.C.R. .

 Del Puppo v. Del Puppo, [] B.C.J. No.  (S.C.); Hilchie v. Hilchie, [] N.S.J. No.  (Fam. Ct.);

Acorn v. DeRoche, [] P.E.I.J. No.  (T.D.). But see Fung-Sunter v. Fabian, [] B.C.J. No.  (S.C.),

citing Revenue Canad a Pamphlet on Support Payments, P(E) Rev.  at .

 Fontaine v. Fontaine, [] B.C.J. No.  (C.A.); Gordon-Tennant v. Gordon-Tennant, [] O.J. No.

 (Gen. Div.); Richard v. Richa rd, [] S.J. No.  (Q.B.) (unintended inc ome tax consequences of

amended agreement found to c onstitute suf‌f‌icient reason to g rant order for child support in accord ance

with the Federal C hild Support Guidelines); compare Schipper v. Maher, [] M.J. No.  (Q.B.) (ret-

roactive vari ation of child support arrea rs that accrued before and aft er implementation of Federal Child

Support Guidelines). See also Warbinek v. Can ada,  FCA , citing Holbrook v. Canad a,  FCA

; Chadwick v. Cana da,  FCA .

 Baggs v. Baggs, [] O.J. No.  (Gen. Div.); Dixon v. Hinsley, [] O.J. No.  (Ct. J.).

 Kovarik v. Canad a, [] T.C.J. No. ; Callwood v. Canad a, [] F.C.J. No.  (C.A.); W.J.H. v. C.T.C.,

[] A.J. No.  (Q.B.); C. v. S.,  NBQB .