Understanding Spousal Support in British Columbia: Part 2
Welcome to Part 2 of our series on understanding Spousal Support in British Columbia. Having established the grounds for entitlement to spousal support and explored the concepts of compensatory and non-compensatory spousal support in Part 1, we now delve deeper into the intricacies of the amount and duration of spousal support. We will explore the Spousal Support Advisory Guidelines, and look at how these calculations change based on different circumstances, such as whether or not there are children involved. Finally, we will provide some valuable tips to help avoid common mistakes when dealing with spousal support matters. Let's get started.
Factors Influencing Duration and Amount of Spousal Support
Once entitlement is established, the same factors that create entitlement will dictate both duration and support. The length of the spousal relationship, the roles performed by each spouse during the relationship, the living conditions of the spouses following separation, and their relative economic strengths and needs following separation, will all influence the amount and duration of support. No single factor will prevail to the exclusion of the others.
Introduction and Impact of Spousal Support Advisory Guidelines (SSAG) in Canada
For many years, lawyers, judges and family law litigants had criticized Canadian law for creating too much discretion for judges when making spousal support orders. That discretion caused significant uncertainty, unpredictability, and expense for spouses going through separation and divorce. In 2001 the federal Department of Justice sponsored a program to reduce this discretion by providing guidelines to advise the courts. The Spousal Support Advisory Guidelines (the “SSAG”) were completed in 2008.
Demystifying the SSAG Formulas for Spousal Support Calculation
The SSAGs introduced a mathematical formula based on the mean of data in Canadian spousal support cases, including incomes, number of children, relationship length, and special and extraordinary expenses. The SSAG have become a useful tool for the Courts in British Columbia, and judges routinely refer to and apply them, in both interim orders and final orders made after trial. The SSAGs provide two distinct formulas for calculating spousal support:
- The “without child support formula” applies when there are no dependent children.
- The “with child support formula” applies when there are dependent children.
Payors with incomes of less than $20,000 will not pay spousal support under the SSAGs. When the income of a spouse is $350,000 or higher, courts have discretion to award a different amount than indicated by the SSAGs based on an “individualized fact-specific determination.”
The 'Without Child Support Formula' - Spousal Support without Dependent Children
Where the spouses have not had children or the children have grown up and are on their own, the without child support formula will apply. The without child formula assesses both the length of the spousal relationship and the income gap between the parties. This formula is relatively simple and calculations can be done using a calculator. Short spousal unions result in minimal support awards. As a relationship lengthens, spouses merge their economic and non-economic lives more deeply, often encompassing elements of both compensatory and non-compensatory entitlement. The longer the union, the more the lower-income spouse should be protected against a dramatically lower standard of living.
How the 'Without Child Support Formula' Determines Spousal Support Amounts
The without child formula amount ranges from 1.5 to 2 percent of the difference between the spouses’ gross incomes (the gross income difference) for each year of marriage/cohabitation, up to a maximum of 50 percent. The range remains fixed for marriages 25 years or longer, at 37.5 to 50 percent of income difference. (The upper end of this maximum range is capped at the amount that would result in equalization of the spouses’ net incomes — the net income cap).
To determine the amount of support, determine the gross income difference between the parties. Then, multiply the length of the marriage by 1.5-2 percent per year to determine the applicable percentage. Apply the applicable percentage to the income difference.
Duration of Spousal Support with the 'Without Child Support Formula'
The length of time that spousal support will last ranges from .5 to 1 year for each year of marriage. However, support will be indefinite (duration not specified) if the marriage is 20 years or longer in duration or, if the marriage has lasted five years or longer, when years of marriage and age of the support recipient (at separation) added together total 65 or more (the rule of 65). In reality, upon the retirement of one or both of the spouses covered by the rule of 65, there will likely be significant changes in the amount of support ordered.
The 'With Child Support Formula' - Spousal Support Calculation with Dependent Children
Where separated spouses have dependent children, the With Child support formula will apply. The With Child formula is primarily compensatory and is based on economic disadvantage that flows from the assumption of responsibility for children, both before and after separation.
The With Child calculations are complex, requiring special software programs, and differs from the Without Child support in several important ways. The With Child formula factors in child support payments, which take priority over spousal support under S. 15.3 of the Divorce Act. The With Child Formula also uses net, rather than gross incomes to account for tax and benefit issues. The With Child formula divides total resources available to both spouses, rather than the difference in their incomes as in the Without Child formula. The length of the marriage does not affect the upper and lower percentages in this With Child support formula.
Calculating Spousal Support Amounts with the 'With Child Support Formula’
The basic With Child formula applies where the higher income spouse is paying both child and spousal support to the lower income spouse who has primary care of the child(ren).
Determine the individual net disposable income (INDI) of each spouse:
- Guidelines Income minus Child Support minus Taxes and Deductions = Payor’s INDI
- Guidelines Income minus Notional Child Support minus Taxes and Deductions plus
- Government Benefits and Credits = Recipient’s INDI
- Add together the individual net disposable incomes. Next, calculate the range of spousal support amounts that would be required to leave the lower-income recipient spouse with between 40 and 46 percent of the combined INDI.
At the low range a spouse with primary care of two or more children should receive at least 50 percent of the family net disposable income. At the high range the primary parent will receive 56 to 58 percent where there are at least two children.
Deciphering the Length of Spousal Support When There Are Dependent Children
In each case, the court will use one of two tests to determine duration of spousal support. These are the length-of-marriage test and the age-of-children test. The test which provides for longer duration of spousal support will apply.
The Role of the 'Length-of-Marriage Test' and 'Age-of-Children Test' in Spousal Support Duration"
This test is generally appropriate for spousal relationships of 10 years or more. At the upper limit of this test, one year of spousal support will be paid for each year of marriage (subject to the Without Child support formula for support after 20 years of marriage). At the lower limit, six months of support will be paid for each year of marriage.
The Importance of Review Dates in Spousal Support Agreements
This test is typically appropriate for spousal relationships of less than 10 years and is used where the length of the marriage is less than the number of years until the youngest child finishes high school. At the upper limit of this test, spousal support is paid until youngest child finishes high school. At the lower limit, spousal support is paid until the youngest child starts attending full-time school, such as kindergarten.
When there are children, courts often order spousal support without setting a termination date. Instead, courts will typically set a later date for review of spousal support. A review is a “de novo” hearing, meaning that the judge in a review hearing is required to assess the evidence as if for the first time. It is important to determine a clear end date to spousal support by spousal agreement to ensure finality and predictability that is not often available through the court process.
The Basics of Shared Custody and Its Impact on Child Support Calculations
Upper End of the Range: the longer of
- the length of marriage, or
- the date the last or youngest child finishes high school
Lower End of the Range: the longer of
- one-half the length of marriage, or
- the date the youngest child starts full-time school
The starting point for calculating child support when spouses both have at least 40% of parenting time is to apply the Federal Child Support Guidelines table amount of child support for each parent. The net difference should be paid by the parent with the higher income.
Avoiding Common Errors in Spousal Support Calculation: A Comprehensive Checklist
- Know the law
- Establish entitlement first
- Use correct incomes
- Use the correct formula (with child or without child)
- Correctly calculate the length of the relationship
- Include special and extraordinary expenses when calculating spousal support! Failure to do so will result in overpayment of spousal support.
- Justify a location in the Spousal Support Guidelines ranges for amount and duration of spousal support.
- Remember duration and try to settle on a formula for when support ends.
- Correctly assess the tax consequences of a lump sum payment of spousal support.
- Do not treat income from social assistance as income when calculating spousal support.
- Be sure to “gross up” non-taxable income.
Navigating the complexities of spousal support can be overwhelming and confusing, particularly during a time of major life transition. As we've explored in this blog, various factors, ranging from the length of the marital relationship to the presence of dependent children, significantly impact the calculation and duration of spousal support.
This understanding, coupled with the knowledge of Spousal Support Advisory Guidelines, can empower you in making informed decisions and avoiding common errors. Whether you're dealing with the 'Without Child Support Formula' or 'With Child Support Formula', the principles laid out here can offer valuable guidance.
However, keep in mind that every situation is unique and the application of these guidelines can vary widely. It's always wise to seek legal counsel to help navigate this complex process and advocate for your best interests.