Criteria and objectives of child support

• Author: Julien D. Payne/Marilyn A. Payne
• Pages: 1-24

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   

CRITERIA AND OBJECTIVES OF

CHILD SUPPORT

A. INTRODUCTION

Before the implementation of t he Federal Child Support Guideline s in Canada on May ,

, empirical data in Canada indicate that a divorced custodial parent was unlikely to

receive more than t wenty percent of the net i ncome of the paying sp ouse and parent a s

spousal and/or child support. It is not surprising, therefore, that single mothers and their

children repres ented a dispropor tionate percentage of the povert y classes. is societal

problem, which has not been con f‌ined to Canada, led to the implementat ion of mandatory

child support guidelines in England, Australia, New Zealand, the United States, as well as

in Canada. e g uidelines a re premised on object ively based numeric al indicators of t he

specif‌icamountofchildsupportthatanindividualshouldnormallypaybyagreementor

courtorderonmarriagebreakdownordivorceortoasingleparent.

AsofMay,,childsupportrightsandobligationsundertheDivorce Act underwent

a radical cha nge. e previous child support reg ime applying under the Divorce Act,which

was premised on the exercise of an u nfettered jud icial di scretion, was reje cted by the gov-

ernmentas unpredictable,inconsistent, costly and unfair to children. Recognition of these

limitation s of the judicia l discret ionary reg ime led to major resea rch studies bei ng under-

takenbytheFederal/Provincial/TerritorialFamilyLawCommitteeforseveralyearsprior

to the legislative and regulatory changes. ese studies produced changes in the following

four key areas. First, child supp ort paid under orders or ag reements made on or af ter May

,  is no longer taxed as i ncome to the recipient, nor i s it tax deduct ible by the payor.

Second, the Federal Child Support Guidelines provide f‌i xed table amounts of monthly ch ild

support that help pa rents, lawyer s and judges to set fa ir and consi stent child supp ort in

divorce cases. e table amounts take the new tax rules into account. ird, the federal

government has implemented s everal measu res to promote the payment of suppor t in fu ll

and on time. Four th, some of the savings f rom the income tax change s have been applied to

assist the children of working poorfamilies.

Fixed schedules for the determi nation of chi ld support can promot e (i) simple and in-

expensive administrative procedures for assessing the amount of child support; (ii) consist-

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

CHILD SUPPORT GUIDELINES IN CANADA,

thatmorerealisticallyref‌lecttheactualcostsofraisingchildren.eyareunlikely,how-

ever,toresolvetheeconomiccrisesofseparationanddivorceforwomenandchildren.e

war on povert y requires more t han piecemea l reform of child suppor t rights a nd obliga-

tions,although the Guidelines mayreduce theeconomic plightof custodial parents to some

degree.

B. RELEVANCE OF INCOME TAX

Prior to May , , periodic child suppor t payments made pursu ant to a court order or

written ag reement after ma rriage brea kdown were deductible from the t axable income of

the payor under sect ions (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-

mentsweremadetothecustodialparentandnottothechildrendirectly.

As of May, ,

Canada shi fted to an i ncome tax sy stem whereby the payor no longer receives a deduction

for payments made and the re ceiving pa rent no longer pays tax on ch ild support received

underanyneworderoragreementorpursuanttoanyvariationmadeafterApril,

of a pre-existi ng order or agreement.enewtaxrulesdonotapplytoordersoragree-

mentsmadebeforeMay,unless(a)acourtorderoragreementmadeonorafterMay

,  changes the amount of ch ild support payable under an exi sting agre ement or court

order; (b) the court order or agre ement specif‌ical ly 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

Agencystatingthatthenewtaxrulesapplytopaymentsmadeafteraspecif‌ieddatethat

cannot be ea rlier than April , .e income tax consequence s of child support agree-

mentsandordersmadebeforeMay,generatedsignif‌icantsavingsformanyfamilies

encountering divorce and will continue to do so until they are superseded by new agree-

ments execut ed or orders gra nted af ter May , .Variation of a pre-Guidelines ag ree-

ment after May ,  attracts the new income tax regime and payments falling due after

the variation are payable in after-tax dollars.With theimplementation ofthe Federal Child

Support Guidelines,acourtisnotauthorizedtovaryanorderpiecemealbymerelytack-

 R.S.C. (th Supp.),c. .R.S.C.  (th Supp.), c. .

ibaudeau v. Canada (Minis ter of National Revenue),[]S.C.R.;Minister of National Revenue

v. Sproston,[]C.T.C.(Ex.Ct.);Burge ss v. Minister of National Revenue (),R.F.L.(d)

(Fed. T.D.); Aceti v. Minister of National Revenue (),  R.F.L. (d) (T.C.C.); see alsoD el Puppo

v. Del Puppo,[]B.C.J.No.(S.C.);Robin son v. Canada,[]T.C.J.No. ;Marcel v. Canada,

[]T.C.J.No.;Poisson v. Canada,[]F.C.J.No. (C.A.).

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 s ee Fung-Sunter v. Fabian, [] B.C.J.No. (S.C.),

citingRevenueCanadaPamphletonSupportPayments,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. Richard, []S.J. No.   (Q.B.)(unintende d income tax consequences of

amendedagreementfoundtoconstitutesuf‌f‌icientreasontograntorderforchildsupportinaccord-

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

(retroactive var iation of child support arrea rs that accrued before and after i mplementation of Federal

Child Support Guidelines). See a lso Warbinek v. Canada,[]F.C.J.No.(C.A.),citingHolbrook v.

Canada,FCA.

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

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

C.T.C.,[]A.J.No.(Q.B.).