High Income Earners & Child Support
In 1997, the federal government introduced a whole new way of determining child support. In an attempt to make things fairer for all involved, discretion and subjectivity were essentially removed from the equation. The amount of support would now to be based on the Federal Child Support Guidelines.
Under the Guidelines there are two steps for determining the amount of child support that is payable in a situation where children have their primary residence with one party.
1. Determine the table amount based on the payer’s income and the number of children.
2. Add all or a portion of the special expenses (e.g. child care expenses, medical and dental insurance premiums).
Where the income of the spouse, against whom a child support order is sought, is more than $150,000, the amount of a child support order is the table amount plus special expenses. However, if the court considers that amount to be inappropriate, it may, in respect to the amount over the first $150,000, order an amount that it considers appropriate.
This rule has led to some controversy since the result can be high child support payments. The issue was addressed last year by the Supreme Court of Canada in the case of Francis v. Baker.
Francis v. Baker – The Facts
The father was ordered to pay child support in the amount of $10,034 per month for two children based on a strict interpretation of the Guidelines. The father unsuccessfully appealed to the Ontario Court of Appeal. The Court found that the interpretation of the word “inappropriate” in the Guidelines did not give the Court discretion to vary the amount of support downward from the table amount, only upward, if the table amount was “inappropriate”.
Supreme Court of Canada Decision
Mr. Baker succeeded in convincing the Supreme Court of Canada that the Ontario Court Appeal had erred in its interpretation of the word “inappropriate”. As a result it is now clear the court has jurisdiction to either increase or decrease the table amount in the case of a high income earner (i.e. over $150,000 per year) payer, if the table amount is found to be inappropriate.
Unfortunately for Mr. Baker, his appeal was dismissed as the Supreme Court did not think his child support payments were inappropriate based on his income, which at the time was $1million.
The Court indicated that “the purpose of the Guidelines is to establish fair levels of support for children, from both parents, upon marriage breakdown in a predictable, consistent and efficient manner.” It stated that these objectives had to be balanced with fairness, flexibility and recognition of the actual condition, means, needs and other circumstances of the children.
Although courts have the discretion to lower child support in these circumstances, there remains a presumption in favour of the Table amount.
Simon v. Simon – The Facts
Earlier this year, the Ontario Court of Appeal had the opportunity to apply the guidance provided by the Supreme Court of Canada, in a case involving Washington Capitals hockey player, Chris Simon, who was earning more than $1 million a year.
Upon learning of her ex-husband’s substantial salary increase, Ms. Simon applied for a variation in the amount of child support. She sought to have the child support increased to $9,215 a month, the Guideline amount. The trial judge agreed to increase the amount, but only to $5,000.
Ms. Simon appealed the decision. In allowing the appeal, the Court found that Mr. Simon had failed to rebut the presumption against the Table amount and that the trial judge had made a number of errors. The crucial error was the imposition of a heavy burden on Ms. Simon to justify her child care budget. In fact, the burden is on the paying spouse to demonstrate that the Table amount is inappropriate.
In addition, the trial judge failed to consider the financial ability of each spouse to contribute to the support of the child. Instead he got sidetracked into irrelevant factors regarding Mr. Simon’s career. Based on the current evidence, Mr. Simon had the ability to pay the Table amount and it should not have effectively been varied in advance by a judge speculating about his future income. The Court stated that “The son’s needs, and Mr. Simon’s income and ability to pay, are the only factors relevant in an analysis under section 4 of the Guidelines.”
There is a presumption in favour of the Table amounts even if those amounts seem astronomical. If you have questions about the amount of child support that you are either paying or receiving, please contact Nicola Savin or Jacqueline Peeters.
Please visit our Family Law specialty site at www.familylawtoronto.caShare