Child Support Calculation Guidelines
When children spend most of the time with one parent (over 60% of total parenting time) child support is only paid by the parent with less than 40% of the parenting time. In this case child support is based on the guideline income of the parenting paying child support, and the number of children for whom support is payable. These rules are set out at section 3 of the Child Support Guidelines.
If both parents have at least 40% of the parenting time, then parenting time is shared. Section 9 of the Child Support Guidelines and the 2005 Supreme Court of Canada decision in Contino v. Leonelli-Contino together provide the framework for determining child support when parenting is shared:
- The first step is to determine the amount of child support each parent would pay based on their guideline income (“offsetting child support”). This is usually the appropriate amount.
- The court can deviate from guideline support if there are additional expenses arising from shared parenting that fall unfairly on one parent, or the needs and financial means of the parents are significantly different.
If parents have more than one child and each parent has over 60% of parenting time with at least one of those children, each parent should pay child support for the child(ren) with whom they spend less than 40% of parenting time.
What are the Federal Child Support Guidelines?
The Canadian Federal Child Support Guidelines (the “Guidelines”) were first created in 1997 to establish a standard of support for every child whose parents have separated. The Guidelines help to ensure that children continue to benefit from the financial means of both parents.
The guidelines include a formula, contained with tables that set out child support amounts based on the income of the parent paying support, and the number of children that are eligible for child support. This the guideline table amount of child support.
In almost all cases, judges are required to follow the Guidelines to determine the amount of child support. Judges rarely depart from the Guidelines, except where a payor of child support is experiencing financial hardship, or where their income is over $150,000.
Determining Guideline Income for Child Support
Child support and proportionate sharing of Section 7 Expenses is based on the payor’s Guideline Income. If you are paying or receiving child support in British Columbia, you should understand how income is calculated under the Federal Child Support Guidelines to ensure that the amount of support is paid.
The starting point to determine your Guideline income is “total income” set out at line 15000 of your T1 General income tax form. This will generally apply to an employee receiving a standard T4. From here, the Guidelines set out adjustments to income to accurately capture all forms of income for child support purposes.
Section 18 of the Guidelines allows for adjustments to income where the spouse is a shareholder, director, or officer of a corporation. This allows the court to “‘lift the corporate veil’ to ensure that the money received as income by the paying parent fairly reflects all of the money available for the payment of child support”: see Baum v. Baum (1999), 182 D.L.R. (4th) 715. For example, certain corporate income is discretionary and can be retained in a corporation and deferred to another tax year. In certain circumstances, all pre-tax corporate income may be included in a payor spouse’s income. This is not a requirement, however and analysis under section 18 of the Guidelines must allow sufficient cashflow for legitimate corporate needs.
Section 19 of the Guidelines allows the court to add, or “impute” income in certain circumstances, such as where the payor is under-employed or has unreasonably deducted business expenses from income. Income may be imputed in other circumstances, such as where different sources of income are not taxed equally, including capital gains and dividends received from a Canadian corporation. Non-taxable benefits may need to be “grossed up” to reflect the actual benefit to the recipient. Income received in tax jurisdictions with lower or higher income tax rates may need to be adjusted. Investments structured within a limited partnership may permit disproportionate deductions from income.
At Mills Family Law we are experienced in determining Guideline income. We will accurately capture all forms of income for child support purposes. Contact us to schedule your first, free consultation with a lawyer.