1. Entitlement Comes Before Amount

2. What Factors Affect the Amount of Spousal Support?

3. How Do the Spousal Support Advisory Guidelines Work?

4. Why Is There a Low, Mid and High Range?

5. Does the Length of the Relationship Affect the Amount?

6. How Does Income Affect Spousal Support?

7. What If Someone Is Intentionally Earning Less?

8. Does Child Support Reduce Spousal Support?

9. Can Spousal Support Be Paid as a Lump Sum?

10. Is Spousal Support Taxable?

11. Can the Amount Change Later?

12. An Online Calculator Is Only a Starting Point

13. How Bridgestone Law Can Help

Introduction

Once it has been determined that a spouse is entitled to spousal support, the next question is usually: How much will be paid?

Unlike child support, there is no simple table that determines a single mandatory amount of spousal support based only on the paying spouse's income.

Instead, lawyers and courts frequently use the Spousal Support Advisory Guidelines, commonly called the SSAGs, to help determine an appropriate range for the amount and duration of support.

The SSAGs are not legislation and do not create an automatic right to support. However, they are widely used by family lawyers and courts when a spouse has established entitlement. Rather than producing one required figure, the Guidelines generally produce a low, mid and high range that can provide a starting point for negotiation or a court's determination.

The appropriate amount within that range will depend on the circumstances of the spouses.

Factors such as income, the length of the relationship, whether there are dependent children, child support obligations, the roles performed during the relationship and the financial circumstances of each spouse can all affect the final amount.

Entitlement Comes Before Amount

Before calculating how much spousal support may be payable, it is important to determine whether the spouse seeking support is actually entitled to receive it.

A large difference in income does not, by itself, automatically establish entitlement.

A spouse may establish entitlement on a compensatory, non-compensatory or contractual basis. Once entitlement has been established, the SSAGs can be used to help determine an appropriate amount and duration.

This distinction is important when using online spousal support calculators.

Entering two incomes into a calculator may generate numbers, but those numbers do not determine whether the lower-income spouse actually has a legal entitlement to support. The Department of Justice specifically notes that the SSAGs address amount and duration for spouses who are entitled to support; they do not determine entitlement itself.

What Factors Affect the Amount of Spousal Support?

For married spouses proceeding under the Divorce Act, the court considers the condition, means, needs and other circumstances of each spouse. This includes the length of cohabitation, the functions performed by each spouse during the relationship and existing support arrangements.

When determining an appropriate amount, relevant circumstances may include:

• each spouse's income;

• the length of the relationship;

• whether there are dependent children;

• child support obligations;

• childcare responsibilities;

• the spouses' ages;

• employment and earning capacity;

• financial need;

• economic disadvantages arising from the relationship;

• the recipient's ability to become financially self-sufficient; and

• existing support agreements or court orders.

This means two families with the same income difference may not necessarily have the same spousal support outcome.

How Do the Spousal Support Advisory Guidelines Work?

The SSAGs use different formulas depending on whether the spouses have dependent children.

The two principal approaches are commonly referred to as the:

Without Child Support Formula

and

With Child Support Formula

The formulas take different factors into account because the financial circumstances of spouses who are also supporting children can be significantly different from those of spouses without dependent children.

The Without Child Support Formula

The without child support formula generally applies where there are no dependent children.

Under this formula, the length of the relationship is particularly important. As the length of the relationship increases, the percentage of income sharing and potentially the duration of support generally increase.

For example, consider a couple who lived together for 15 years.

One spouse earns $150,000 per year and the other earns $60,000.

If the lower-income spouse establishes entitlement, the income difference and length of the relationship will be important components of the SSAG calculation.

The Guidelines may generate a range rather than a single figure. The spouses may then negotiate within that range, or a court may determine an appropriate amount after considering their circumstances.

The With Child Support Formula

A different calculation generally applies where the spouses have dependent children and child support is also being paid.

This is because child support has priority and affects the amount of income available to each spouse.

The with child support formula considers the financial position of the spouses after taking child support and certain other financial obligations into account.

As a result, it is important to calculate child support correctly before determining the appropriate amount of spousal support.

Why Is There a Low, Mid and High Range?

The SSAGs intentionally produce ranges rather than one mandatory amount.

A calculation might show that monthly support falls somewhere between a lower and higher figure. The existence of a range allows the circumstances of the particular relationship to be considered. The Department of Justice describes these ranges as a starting point that permits individualized decision-making based on the objectives and factors applicable to spousal support.

Where within the range support should fall can depend on the facts.

For example, a spouse who experienced substantial career disadvantages after spending many years outside the workforce caring for children may have different considerations from a spouse who maintained uninterrupted full-time employment throughout the relationship.

The appropriate result may therefore fall toward the lower, middle or higher portion of the calculated range.

Does the Length of the Relationship Affect the Amount?

Yes.

The length of cohabitation can significantly affect spousal support, particularly under the without child support formula.

Importantly, the SSAGs generally look at the length of cohabitation, not simply the number of years the parties were legally married. This can include a period of living together before marriage and generally ends at separation.

Consider two couples with the same incomes.

One couple lived together for four years.

The other lived together for 25 years.

Even with identical incomes, the potential amount and duration of support can be substantially different because the length and economic integration of the relationships are different.

How Does Income Affect Spousal Support?

Accurately determining income is essential.

For a straightforward T4 employee, income may be relatively easy to identify.

However, determining income can become more complicated when a spouse:

• owns a corporation;

• is self-employed;

• receives bonuses or commissions;

• receives dividends;

• has investment income;

• receives stock options or other employment benefits;

• has fluctuating annual income;

• earns income through multiple businesses; or

• has income that does not appear clearly on a tax return.

In these cases, simply looking at Line 15000 of a tax return may not provide the complete picture.

The appropriate income for support purposes may require a more detailed review of tax returns, Notices of Assessment, corporate financial statements, employment records and other financial disclosure.

Because the SSAG calculation depends heavily on income, an incorrect income figure can significantly affect the resulting support range.

What If Someone Is Intentionally Earning Less?

Another issue can arise where one spouse is unemployed or earning substantially less than they reasonably could.

For example, a spouse may voluntarily reduce their working hours after separation even though full-time employment is reasonably available.

In appropriate circumstances, a court may consider the person's earning capacity rather than simply accepting their reported income.

However, not every period of unemployment or reduced income is voluntary.

Health concerns, childcare responsibilities, age, education, employment history and the availability of suitable work may all need to be considered.

The question is generally whether the person's employment circumstances are reasonable in the context of their situation.

Does Child Support Reduce Spousal Support?

It can.

Where both child support and spousal support are payable, child support receives priority.

The financial impact of child support is incorporated into the with child support SSAG calculations. This means the amount of spousal support may be different from what would have been calculated if the parties did not have dependent children.

This is another reason child support and spousal support should not usually be calculated independently.

Changes in parenting arrangements, child support or section 7 expenses may also affect the spouses' financial circumstances and potentially the spousal support analysis.

Can Spousal Support Be Paid as a Lump Sum?

Yes.

The Divorce Act permits a court to order spousal support as periodic payments, a lump sum, or a combination of both.

Monthly payments are common, but there are circumstances where spouses may negotiate a lump-sum payment instead.

A lump sum can provide greater finality and eliminate ongoing monthly payments. However, determining an appropriate lump sum is more complicated than simply multiplying a monthly payment by the number of months support might otherwise have been paid.

Tax consequences, present value, risk, duration and the circumstances of the parties may need to be considered.

Legal and tax advice can therefore be particularly important before agreeing to lump-sum spousal support.

Is Spousal Support Taxable?

The tax treatment of spousal support can depend on how the support is structured and whether the legal requirements for deductible and taxable support are met.

Periodic spousal support paid under a qualifying court order or written agreement may generally have different tax treatment from a lump-sum payment.

Because the tax consequences can materially affect the actual value of support to both parties, tax treatment should be considered when negotiating an amount rather than looking only at the monthly figure.

Can the Amount Change Later?

Yes.

Spousal support does not necessarily remain at the same amount indefinitely.

Under the Divorce Act, a court considering a variation of an existing spousal support order looks for a change in the condition, means, needs or other circumstances of either former spouse since the previous order.

Changes that may potentially lead to a review or variation can include:

• a significant increase or decrease in income;

• retirement;

• job loss;

• changes in employment;

• changes to child support;

• children becoming independent;

• changes in the recipient's financial circumstances; or

• other significant changes affecting the original support arrangement.

Whether a particular change is sufficient to justify altering support will depend on the circumstances and the wording of the existing agreement or order.

An Online Calculator Is Only a Starting Point

Online spousal support calculators can be useful for obtaining a preliminary estimate, but they should be treated cautiously.

A calculator cannot necessarily determine:

• whether entitlement exists;

• what income should properly be used;

• whether income should be imputed;

• whether an exception applies;

• where within the range support should fall;

• whether a domestic agreement affects support; or

• whether the circumstances justify a different result.

Even the SSAG formulas are advisory rather than mandatory law.

The calculation is therefore an important part of the analysis, but it is not the entire analysis.

How Bridgestone Law Can Help

Determining how much spousal support should be paid requires more than comparing two incomes.

At Bridgestone Law, our Calgary family lawyers can help you understand how the Spousal Support Advisory Guidelines apply to your circumstances and whether the proposed amount of support is reasonable.

We can assist with:

• determining income for spousal support purposes;

• calculating SSAG ranges;

• reviewing self-employment and corporate income;

• considering bonuses, commissions and investment income;

• determining how child support affects spousal support;

• negotiating the appropriate amount within the SSAG range;

• lump-sum and periodic support arrangements;

• reviewing existing support agreements and court orders; and

• applications to establish or vary spousal support.

Whether you are seeking support or being asked to pay it, understanding the calculation can help you make informed decisions before entering into an agreement or proceeding to court.

Bridgestone Law can help you assess the financial circumstances of your relationship, understand the potential spousal support range and determine an appropriate path forward following separation.