For separating or divorcing couples with children
“Child support” is the money that one parent pays to another to support their children financially after a separation or divorce.
It is a monthly payment for the benefit of dependent children. Since it is considered the “right” of the child, any deviation from the guidelines is seldom warranted. If there is a dispute, it is usually in the determination of income.
The Federal child support and spousal support guidelines set out what is required to be paid. Some guidelines fall under federal law, while others are under provincial or territorial law.
The amount of child support paid depends on:
Typically, when it comes to child support, there is little to no room to negotiate.
Where negotiations and debate often happen is in determining the incomes that are used to drive payments. If income is reasonably straight-forward as in an employee T4, then determining the child support amount is quite easy.
If, however, income varies due to commissions, investment returns, employee stock option, self-employment or smaller business incomes, then determining the number to use to calculate child support can be complicated. In this way, it is important to ensure you are using a number that makes sense given the specifics. It used to be that using previous years’ income to determine next years was the go-to method, however with the changing economy across Canada, there is less stability and therefore many are choosing to use present incomes.
Our child support software and reference tables determine payments based on if you are sharing the parenting responsibilities or if one party has the children more than the other. In cases where parents are sharing their time equally, then both parties' incomes are used to calculate the support payments. Basically how it works is that the higher payor deducts what the lower-earning parent has to pay and then covers the difference.
NO – so do not waste time arguing this point.
Extraordinary expenses are sometimes referred to as section 7 expenses. Special or extraordinary expenses are above and beyond child support. These expenses are shared, based on a pro rata calculation between the party’s income. For example, if one spouse earns $200,000 and the other spouse earns $100,000, then expenses are split 2:1. These expenses are typically agreed to in advance before incurred. Couples will come up with a process for reconciling the payments after they have been incurred. Some couples reconcile monthly, and other couples reconcile quarterly. Couples can either set out the extraordinary expenses for the coming year or set out the extraordinary expenses for several coming years. They can also set out how they plan on sharing the expenses based on their yearly income. There is an ability to mediate some variation in a pro rata sharing.
If the court ever must intervene, there will be a determination with regards to the necessity of the expense based on both experience and abilities to pay.
The best scenario is to work together to come up with a plan that includes activities, lessons, camps, school, childcare, and any other expense that does not fall under basic child-support.
It is essential to understand that the definition of extraordinary expense is based on what is extraordinary considering the parties joint income. In other words, what may be considered extraordinary for one family may not be extraordinary for another. In the case of a private school for example, for a wealthy family, it may be not be considered an extraordinary expense whereas a less wealthy family it would likely be considered extraordinary. So this will either be shared pro rata or decided it is no longer affordable, and that public school is the best option.
Our team of experts works with the parties to ensure accurate income numbers for purposes of calculating child support and appropriate sharing and decision making around extraordinary expenses. At Fairway across Canada we:
Fairway can help you recalculate your payments yearly or set up an ongoing formula so you can do it on your own.