High Income Support Do the Guidelines apply? We get asked this question frequently. Peter Graburn one of our team of high net worth Calgary and Vancouver separation lawyers explains the principles that apply to the vexing question: High Income Support Do the Guidelines apply? Hiring multiple award winning family lawyers who handle high net worth divorce and separations might be the best decision you make in your relationship.
High Income Support Do the Guidelines apply?
It is well established in law (and generally accepted by most separating couples) that a non-custodial parent has an obligation to pay child support to the custodial parent on behalf of the child – the children are dependent on their parents and (usually) unable to support themselves financially.
On the other hand, spousal support is not automatic – the claiming spouse must prove an entitlement (whether on a contractual, need or compensatory basis) to receive financial support before establishing quantum (how much) and duration (how long).
But how do you determine how much financial support should be paid? Financial support (whether child support or spousal support) is based primarily on the income of the payor. But what if the payor has a significantly high income? Do different rules apply? The short answer is – yes.
High Income Support Do the Guidelines apply? 1-877-602-9900
Child support is set by the Federal Child Support Guidelines (FCSGs) and adopted by each individual province. The FCSGs were established by the federal government in 1997 as a way to set minimum levels of (and therefor take the fight out of disputes over) basic child support – parents are free to pay financial support for their children over and above the FCSGs if they wish to. Basically, the FCSGs set out a table of amounts a non-custodial parent must pay in child support based on their total Line 150 income (as set out in their income tax returns and notices of assessment) up to $150,000.00 for the number of children they support. Simple? Sometimes.
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High Income Support Do the Guidelines apply?- Child Support
But what if the payor’s income is over $150,000.00? How do you determine child support then? The FCSGs then provide a mathematical formula for determining child support payable on income over $150,000.00. However, Section 4 of the FCSGs provides that for incomes over $150,000.00, a judge has the discretion to either:
- set the child support at the FCSGs formula figure for the income over $150,000.00, or:
- set the child support at the FCSGs formula figure plus or minus any amount required to take into account the needs of the child and the financial ability of each parent to support the child (so as not to create an additional transfer of wealth between the parents) – rarely does a judge exercise the discretion to reduce the level of child support from the FCSGs mathematical formula for income over $150,000.00 except in exceptional circumstances (ie. income over $1M).
High Income Support Do the Guidelines apply? Spousal Support
Is spousal support determined the same way? Yes and no. If the parties cannot agree on an amount of spousal support, they (or the Court) may look to the Spousal Support Advisory Guidelines (SSAGs) to give them some idea of the range of support that might be paid. Unlike the FCSGs (which are law), the SSAGs are truly only advisory guidelines, developed by the federal Department of Justice and some family law lawyers in 2008 to give some parameters (ie. “goal posts”) for determining the reasonable sharing of a separated couple’s total incomes (quantum), and for how long (duration). While not law, the SSAGs are closely followed by the Court.
However, one proviso (contained in Part 11) of the SSAGs is that they should not strictly apply to high-income earners of over $350,000.00. Again, what if the payor’s income is over $350,000.00? How do you determine spousal support then? Part 11 of the SSAGs provides two (2) recommendations for determining spousal support in this situation, being the:
- “Minimum Plus” approach – use the SAAGs to establish a minimum amount of spousal support to the $350,000.00 income level, and then use discretion to “top-up” this amount for the higher income, and the:
- “Pure Discretion” approach – come up with a spousal support figure without using the SSAGs to set either a minimum or maximum amount – the Court would come up with its own spousal support figure on a purely case by case basis.
As one can see, when answering the query: High Income Support Do the Guidelines Apply?, setting financial support for high-income earners ($150,000+ for child support; $350,000+ for spousal support) is highly discretionary – while guidelines have been established for both (FCSGs for child support; SSAGs for spousal support), they are not very specific for high-income earners, resulting in the situation that these cases are often determined on a case by case basis on the specific facts of the case – not much certainty there unless you contact us.
Calgary high-income support Lawyers and Vancouver high net worth divorce lawyers help their clients understand the special rules that apply to high-income earners in determining child support and spousal support payments, as well as the special facts and arguments that must be presented to be successful in navigating this very specific area of family law.
