Are you wondering about 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 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.”
Want to learn more about the purpose of spousal support? We can connect you with a lawyer.
Purpose of spousal support- 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.
The divorce lawyers have experience addressing spousal support matters. Contact us today to set up an initial consultation with a law firm.
Support Payment CRA
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, 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’s 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 is 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. We can connect you with a lawyer that has experience addressing claims for child support and 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.”
Changing your spousal support order
You’ve been promoted at work. Congratulations!
You’ve shared the good news on Facebook and LinkedIn. You 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 are 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.
Original spousal support
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 percent 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 percent 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 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- Purpose of spousal support
Sheila revived her request for contempt of the 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 proceedings 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 percent 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 of 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 said that 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 the 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.
Spousal Support During Remarriage
Do you have questions about spousal support during remarriage? You have been paying your monthly spousal support diligently. It has been paid monthly as you agreed or were ordered to. You’ve never missed a payment. You try not to complain about it when talking to your ex.
Now you find out he or she is getting remarried in the summer, but they still expect your spousal support payments to come in.
You need to know that if you are functioning under a court order dealing with spousal support, your ex getting remarried does not automatically stop your spousal support payments.
In fact, if you do nothing then your ex can likely have the courts collect support from you until you attend court to deal with the issue.
When a former spouse enters into a new relationship, you will be tempted to go back to court to cut off your spousal support to that spouse as soon as possible.
While this can be effective, you need to remember that common-law relationships can be difficult to prove if they are short and the parties do not combine their personal finances or property.
Of course in the event of your ex getting remarried, this issue can be fairly straightforward. Once your ex is married to a new person you should contact a lawyer about revising your spousal support agreement or bring a motion to vary your spousal support as soon as possible.
While in some cases the court has upheld certain spousal support orders, typically becoming remarried will be a guiding factor to either terminate or lower spousal support orders from the person’s first relationship.
Spousal Support Arrangements
The spouses can formalize their arrangements for spousal support in a separation agreement or prenuptial agreement drafted by a family lawyer. Otherwise, a judge can make one of the following orders regarding the payment of spousal support under the Divorce Act:
- The support is paid via lump sum
- Support is paid monthly
- No support is awarded
- No support is needed
Similarly, if you are getting remarried and receiving spousal support, you need to be aware of what this change in your life will mean for any support orders you may have had from your past relationship.
It is a good idea to talk to your attorney prior to your wedding on ways to deal with the issue of ongoing spousal support so that you aren’t bombarded with court documents the day after your wedding by an angry ex-spouse.
Alimony- The USA term for support
Spousal support is the Canadian term for alimony. In Canada, we do not call it alimony.
Alimony (support) is the amount paid from one person in the relationship to the other. Being married or common law does not automatically entitle you to support.
Three things are critical if you are looking to get alimony from your spouse:
- You must be able to prove that you need it
- That you are entitled to it
- And that your ex-spouse has enough income to pay
The Divorce Act and local provincial family law acts are the two acts that will affect how much support you pay or receive.
Spousal support during remarriage can be very stressful for people. It is best to talk to a family lawyer to see how getting remarried may affect your payments.
How much support do I need to pay?
The family law court will decide how much spousal support the other spouse is entitled to (if any.) It is always better to have a marriage agreement (USA term is prenup) which spells out support from the beginning of the marriage.
The payment plan and terms will change depending on the needs and financial ability of both spouses.
A family law judge often follows the spousal support advisory guidelines. Divorcemate software is used by many lawyers. The same software is used by the family law court.
Different law firms and courts may use different software. Spousal Support Advisory Guidelines create a low end of support, a recommended support amount, and the top level of support.
When your ex-spouse is bankrupt
Your ex-spouse is trying to avoid a court order by declaring bankruptcy. Can you enforce the order? Or are you out of luck?
A couple we’ll call Sam and Freda, who separated after 10 years, tested the Bankruptcy and Insolvency Act. Following lengthy court appearances and an appeal over child custody and access, Sam was awarded $400,000 in costs.
But during a review of the couple’s access rights to their three teen and pre-teen daughters, the wife declared bankruptcy. Collecting the award was another story.
Court hearings can go on for years
The access agreement was the result of years of litigation. It gave Freda custody and Sam generous access to visit with their daughters. It soon fell apart when Freda refused to comply.
Sam returned to court, where his daughters said they were afraid of and disliked him. The court found their emotions were caused by their mother’s feelings towards her ex-spouse.
The Ontario Superior Court of Justice sided with Sam by finding Freda in contempt of the access order.
She kept custody of the girls but was sentenced to six months probation and required to follow the access order. A review of custody and access was scheduled for six months later.
What happens when you don’t comply
Although the review six months later was only 23 days long, it took nine months to conclude. This time, Freda had followed the access order. But their daughters were still alienated. They refused to interact with their father.
Sam complained they were rude and disrespectful to him and his new wife. As a result, the court gave custody to Sam. Freda could have access, but only during weekly sessions with the girls’ therapist present.
The court was sympathetic to the mother. Freda could regain custody if she showed she could “promote a loving relationship” between their daughters and both parents. Costs of $400,000 were awarded to her ex-husband.
Deciding what assets are available
Freda appealed. Since she had complied with the access order, the contempt finding was set aside and another custody and access review scheduled in four months. The costs awarded to Sam were reduced to $200,000.
Anxious to collect and arguing that she intended to thwart his efforts to collect costs, Sam petitioned the court to obtain the award or ensure it would be paid out before another review hearing occurred.
The court refused to delay the review, but made a temporary order:
- Freda was required to provide banking and investment statements for her personal and business finances;
- she had to produce financial and accounting records for her business;
- the court set a timetable for the documents to be examined;
- and she has prevented her from disposing of her RRSPs and diluting her other assets.
In her defence, Freda filed evidence that she planned to pay Sam’s award. She also denied her ex-husband’s claim that she intended to file for bankruptcy after the custody and access review.
When bankruptcy is declared
The review hearing ensued. During the review, Sam asked the court to enforce the costs by garnisheeing his ex-wife’s registered assets. She retorted that her RRSPs were a trust. The motion was moot. Freda promptly declared bankruptcy while the review hearing was underway.
Her exempt assets (those not available to creditors) were $295,600, she said. Her home was fully mortgaged and worth $275,000. The shares in her business were valued at $1. She had increased her debts by $41,192 between the time she filed the documents the court required and filed for bankruptcy.
Spousal Support During Remarriage. What to do now?
The legal effect of Freda declaring bankruptcy was to prevent Sam from enforcing the $200,000 award, before or after her bankruptcy was discharged.
And his former partner could keep her RRSPs. Sam’s next step was to ask the court to annul the bankruptcy or “lift” the stay of proceedings created by the Bankruptcy and Insolvency Act.
Lifting the stay would allow Sam to enforce the award against her registered assets before Freda’s other creditors reached a settlement with her. Fortunately, case law and the Act were on his side.
Bankruptcy affected ex-husband “prejudicially”
The judge ruled that the Act allowed for stays if a creditor would be “materially prejudiced”. In other words, if the size of the debt and the expected loss from not collecting it were significant. Looking to case law, she found other instances where stays were lifted to allow claims to be enforced (Schreyer v Schreyer, 2011 SCC 35 (CanLII),  2 S.C.R. 605).
Finally, she found Freda had paid nothing towards Sam’s award and gone back on her commitment not to declare bankruptcy during the review hearing. Worse yet, during the eight years the litigation had gone on, the ex-wife had alienated the couple’s children from Sam, the court stated.
The purpose of spousal support is complex, so get legal help.
Spousal Support During Remarriage
All in all, Sam was likely to receive nothing if the bankruptcy proceedings continued or her bankruptcy was discharged. The judge concluded a stay was in order. She disagreed with Freda’s claim that her former spouse could line up with other creditors to collect his award or that her home might increase in value in future.
She ruled there was no guarantee the ex-husband would receive anything in either case. Any potential increase in the home’s equity was “speculative.” Freda appealed, unsuccessfully. The dispute cost her another $25,000, in Sam’s favour.
Collecting on a court order can be burdensome. We can connect you with family lawyers that can help you enforce an order you already have or obtain one if you have custody and access issues.
What you need to know about custody and access
- The Family Law Act gives children and youth the right to be heard by the court. Although your children generally won’t attend court, the judge considers their needs and relationship with you. You may pay a social worker, psychologist or psychiatrist to provide an assessment or the court may order one. This assessment will make recommendations to the judge.
- The Ontario Children’s Lawyer (OCL) may be asked to provide recommendations. An OCL representative will meet with both parents, your children and anyone else who is important in their lives. The judge may ask the OCL to assign a lawyer to represent your children’s interests.
- Your responsibilities for your children depend on who they normally live with. If you have custody, you will pay for their day-to-day needs and care. Your ex-partner will contribute child support to assist you with this. The amount is determined by the Ontario Child Support Guidelines, although this can be adjusted by the court. You may have to pay for special expenses, such as orthodontics or child care.
- If your income changes, a lawyer, mediator, arbitrator or the court can increase or, if you have undue hardship due to job loss or other expenses, decrease the amount of child (or spousal) support you pay.
If you are still confused about the purpose of spousal support, speak to a law firm. We can connect you with one.
Author: Alistair Vigier is the CEO of ClearWay Law