The Purpose Of Spousal Support
Spousal support can be a difficult topic to settle between separating spouses. Sometimes the paying spouse feels that the other spouse doesn’t deserve spousal support or doesn’t truly need spousal support and should be able to get by on their own. Usually, this is because the purpose of spousal support is not fully understood. So, what is the purpose of spousal support?
The Divorce Act states that the objectives of a spousal support order are to:
- Recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
- Apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;
- Relieve any economic hardship of the spouses arising from the breakdown of the marriage; and
- In so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.
The Supreme Court of Canada has also provided direction in relation to the purposes of spousal support stating that the Divorce Act requires a “fair and equitable distribution of resources to alleviate the economic consequences of the marriage or marriage breakdown for both spouses” and that the purpose is to “relieve the economic hardship that results from the marriage or its breakdown.”
The Supreme Court of Canada also stated that the purpose is to share the financial benefits and the effects of the marriage “impairing or improving each party’s economic consequences.”
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So what does this all mean?
Essentially the purpose of spousal support is to enable both parties to leave the relationship on relatively equal footing financially and to ensure that one party does not leave with all of the financial benefits earned during the relationship.
During the relationship the spouses were working together to get to their current financial level. When they separate, spousal support is there to ensure that one spouse doesn’t retain all of the financial rewards gained during the relationship. Finally, spousal support is also there to help both parties move on from the relationship and become self-sufficient again.
Whether spousal support will be payable and the amount of spousal support that is appropriate will depend on the unique circumstances of the parties. If you have a question about spousal support, make sure to speak to a lawyer.
Our divorce lawyers at ClearWay Law have experience addressing spousal support matters. Contact us today to set up an initial consultation.
Spousal support and child support are subject to specific tax principles under Canadian law. When assessing tax implications of a support payment, the spouse looking to report the support on their income tax returns will first want to establish the payment falls into the category of support payments.
To be considered a support payment by CRA, a payment must be:
- Made when the parties are living separate and apart;
- Considered an allowance payable on a periodic basis;
- Made for the maintenance of the ex-spouse or the children of the relationship;
- Able to be used by the recipient at their sole discretion; and
- Made directly to the recipient spouse.
In addition to the above features, spousal support payments must also be made under the following circumstances:
- The parties must be living separate and apart by reason of the breakdown of their relationship; and
- The payment must be made pursuant to an order of a court, tribunal, or arbitrator, or made pursuant to a written agreement
A payment made to an ex-spouse may be established as a support payment. They will then be subject to different tax principles depending on whether it is spousal support or child support.
For the paying spouse, payments of spousal support made in a calendar year will be deductible in determining their taxable income. For the recipient spouse, spousal support payments will be taxable as income on their income tax returns.
Child support paid pursuant to orders or agreements are not deductible to the paying parent. In addition, they are not taxable income for the recipient parent.
A support payment may affect the taxable income of the payor or the recipient. It depends on the type of payment and the wording of the court order or agreement. If you have questions, make sure to consult a professional regarding your support payments.
Please note that as lawyers we are unable to give advice in relation to your taxes, make sure to speak to an accountant if you have further questions regarding filing your tax returns. However, if you have questions regarding your support order or agreement, we are happy to assist. Our lawyers in the Toronto office of ClearWay Law have experience addressing claims for child support and spousal support.
Still have questions about the purpose of spousal support?
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Changing your spousal support order
You’ve been promoted at work. Congratulations!
You’ve shared the good news on Facebook and LinkedIn. Told everyone you know. Now you open your mail to find a letter from your ex-wife’s lawyer.
It seems “Sheila” has also been following you on social media and talking to mutual friends. She’s found out about your promotion. Congrats is the furthest thing from her mind. What she wants is more spousal support. There goes your raise.
The purpose of spousal support is to put your spouse in a similar position that they would be in if you were still married.
It could happen to you
Sheila and “Dylan” were married for over two decades when their tumultuous relationship ended in divorce in 2013. The Ontario Superior Court of Justice (ONSC) judge who decided on the original spousal support noted Dylan made over $130,000 a year, while Sheila made around $18,000. With such a vast gap in their incomes, Sheila would have a hard time making it on her own.
Along with monthly spousal support of $3,561, the judge awarded Sheila a lump sum of $24,000. Sheila had income tax liabilities tied to her spousal support. Dylan was ordered to pay the judgment, plus three per cent annual interest, over 66 months by giving Sheila post-dated cheques of $400 monthly. Although borrowing the $24,000 while she awaited payment obviously cost Sheila more than three per cent interest, that was what the court provided.
What happens if court orders aren’t followed?
Dylan dutifully paid the monthly support, plus the first year’s installment on the $24,000. But in June 2014, the arrangement fell apart. With no explanation, Dylan’s next series of post-dated cheques failed to arrive. By September, Sheila’s lawyers had written Dylan and, four months later, after he didn’t respond, Sheila applied to garnishee his wages. She asked for interest and legal fees of $8,000. She was successful in obtaining $600, but that’s all.
For his part, Dylan delayed answering the September 2014 letter until January 2015. Dylan promised 24 months of post-dated cheques to bring his account up to date. He stated the $600 garnisheed by Sheila had left $0 in his bank account balance and asked her lawyer to revoke the garnishment. He offered to provide bank statements to prove his financial worth.
There could be consequences
Sheila told the court she never received the offer. Consequently, with no post-dated cheques in hand, in September 2017, she asked ONSC for a contempt of court order. Civil contempt in family law court means you breached or disobeyed a court order. It’s a serious charge that can lead to a fine or jail sentence. The court’s goal is to restore your ex-partner’s right to have the court order satisfied. The contempt order is typically lifted when you follow the court order or the court case is resolved.
Since contempt is not available for breaching support payments (Rule 31 of the Family Court Rules), the court dismissed her motion. The judge ordered Dylan to show the court his financial statements. Dylan argued he had sent Sheila six post-dated cheques around the time of the contempt hearing and would have sent more but he had to order new cheques. Sheila didn’t cash the six cheques, but provided evidence about tax arrears, penalties and interest she owed Canada Revenue Agency because of his defaults. She asked that over $9,000 be added to the $24,000 judgment to compensate her for these.
No contempt if money is owed
Sheila revived her request for a contempt of court order. It was again declined. Dylan admitted he owed Sheila the balance of the judgment ($21,600 after the first 12 installments). But he calculated the interest owed from June 2014, when he provided the last post-dated cheque, to January 2015, when he made his offer to her lawyer. That amounted to $370.94, not the $9,000 Sheila claimed.
The judge rejected both positions. He ruled that even though the original agreement disadvantaged Sheila, she could not use the current proceeedings to renegotiate it. She was bound by the terms and interest rate, except for payment of the defaulted amount. He also found Dylan’s position unfair. Dylan had no explanation for the defaults and had delayed responding to his ex-wife’s lawyer. Further, he continued to default on his payments during the court hearing. That allowed Sheila’s tax liabilities to snowball.
The judge ordered Dylan to pay the $21,600 in default, plus three per cent interest until his debt was fully paid (Dylan offered $10,000 immediately). The Ontario Family Responsibility Office was requested to enforce collection. The judge also ordered Dylan to increase his monthly spousal support payments.
Earning more can cost you more
Since the couple’s 2013 divorce, Dylan’s had gotten that raise. His income had gone up by almost $100,000 annually, to over $229,000. Sheila had stayed at home caring for their children while they were married. How much she contributed to his career was disputed by both parties. Her own education and career had not changed since the divorce and she also raised concerns about her health and ability to work, which Dylan disputed.
With Sheila finding working too physically challenging, she asked the court for more spousal support. The judge agreed. Basing his calculation on Dylan’s average annual income, he increased her support from $3,561 to $5,344 monthly. Although the judge agreed Sheila should make an effort to be self-sufficient. he ruled she should also share in Dylan’s newfound wealth.
Compensating the family caregiver
Sheila stated her ex-husband had worked long hours and travelled while they were married. She, on the other hand, had kept their home and cared for their children. For that, she argued she was due compensatory spousal support.
Compensatory support recognizes spouses who make sacrifices during marriage. They include a husband or wife who stayed home to care for children while their partner went to university or built their career. When a marriage breaks down, the partner who earned less or stayed home can suffer financially. The additional support recognizes that the party who made more or had a career reaped an economic advantage.
Purpose of Spousal Support
The judge ruled for her. The couple was married for a long time. Sheila had set aside her own career and education and moved when Dylan’s job required it. Her ex-husband travelled for his work, leaving her alone with the children. That gave him the freedom to focus on his career and education, allowing him to move up to management. Clearly, the judge ruled, the couple had invested in Dylan’s career at Sheila’s expense. In effect, the judge said, Sheila’s sacrifices had laid the foundation for his executive position.
Regardless of her own efforts, Sheila’s lack of education and health meant her income was unlikely to increase. Besides more monthly support, Dylan was required to provide ongoing proof that he had a $250,000 life insurance policy payable to Sheila. That just left legal costs, to be settled later.
Still confused about the purpose of spousal support? Ask ClearWay Law’s family lawyers if your spousal support agreement is out of date. We’re available toll-free at 844-466-6529 or email info (at) clearwaylaw.com.