Spousal support is calculated using various factors such as the duration of the marriage, the difference in earnings between spouses, and the financial needs and circumstances of each spouse. If an individual meets the requirements and entitlement, calculating the amount to be paid depends on two categories: quantum (how much) and duration (how long).
In Canada, tools like the SSAG (Spousal Support Advisory Guidelines) provide a structured method to estimate support payments. By considering details such as income, living expenses, and any existing child support obligations, these tools offer a baseline for negotiations. While these calculators can provide useful estimates, it’s important to consult with an experienced family lawyer to ensure accuracy and fairness in your specific situation.
Calculators like MySupportCalculator.ca, can give a rough estimate on what to expect for a basic spousal support situation. However, the actual calculation and estimation of spousal support is a complicated process; there are many factors (income of both spouses, child support, tax credits, length of marriage, etc.) that impact the amount of support that is to be paid, if any.
Calculations of spousal support follow one of two basic formulas: with and without child support. These two formulas can produce different overall duration and quantum for spousal support. Keep in mind that every situation is different, and the following formulas may not accurately predict your situation; however, generally speaking, spousal support is calculated following these formulas.
With Child Support
For situations involving children, the child support obligations are prioritized over spousal support. Child support is calculated first, reducing the resources available for spousal support. This calculation uses the Net Disposable Income (NDI) for each party.
The NDI amount:
- Payor: Guidelines Income – child support – taxes and deductions + government benefits and credits
- Recipient: Guidelines Income – notional child support – taxes and deductions + government benefits and credits
Once the NDI is established, spousal support is adjusted so the lower-income spouse reaches 40-46% of the combined NDI. Software programs are used for these calculations.
Example Scenario:
A couple with two children separates after 23 years of marriage. The husband earns $85,000, the wife earns $35,000, and the children live with the wife. The suggested support payments might be:
- Child Support: $1,232
- Spousal Support:
- Low range: $0
- Midpoint: $282
- High range: $697
Without Child Support
Determining spousal support without child support relies heavily on the relationship’s length. As the relationship lengthens, both the amount and duration of support increase.
The amount of spousal support generally ranges from 1.5% to 2% of the income difference between spouses for each year of marriage or cohabitation. This amount can reach up to 50%, representing an equalization of income.
The duration of support can vary from half a year to one year for each year of marriage or cohabitation. For relationships lasting over 20 years, support may become indefinite. Additionally, when the combined years of marriage and the recipient’s age at separation total 65 or more, support may also be indefinite.
Example Scenario:
A couple separates after 23 years of marriage. At that time, the husband is 48 years old, and the wife is 43. If the husband’s income is $85,000 and the wife’s income is $35,000, the suggested support payments might be:
- Low range: $1,438
- Midpoint: $1,677
- High range: $1,917
Rules for High and Low Income Earners
When the payor’s annual income exceeds $350,000, the standard formulas don’t apply automatically as they may yield uneven outcomes. If you are dealing with a situation where a person earns more than $350,000.00 whether as the payor or recipient), you should get legal advice to have specific advice about your situation.
Shared Parenting Time
In shared parenting arrangements where each parent has the children at least 40% of the time, an adjustment to the “with child” formula is necessary. This doesn’t automatically lower spousal support, but adjustments are made to reflect a fair amount.
Custodial Payor
Sometimes, child support and spousal support flow in different directions. For instance, a parent with primary care of a child might have to pay spousal support. This situation requires a unique formula to accommodate the circumstances accurately.
Lump Sum vs Periodic Payments
Periodic spousal support is paid out on a consistent basis, usually monthly, for a determined period until the obligation for spousal support is satisfied.
Lump sum spousal support is a one-time payment that satisfies the obligation for spousal support.
Periodic spousal support is used more commonly, although both periodic and lump sum have their own benefits for both payor and recipient.
Benefits of Periodic
- Spreads financial burden/strain on the payor out rather than focusing it on one payment
- Creates consistency for payor and recipient
- Periodic support is tax deductible for the payor; it is, however, taxable for the recipient
- Financial support is set and continuous; this is especially beneficial for recipients who have less financial know-how and may not invest/manage a lump sum appropriately
Benefits of Lump Sum
- Can lead to faster severing of ties between the parties; this can be especially beneficial in difficult and high-conflict separations
- No ongoing financial stress for payor
- Removes any potential collection issues for the recipient
- Lump sum can allow financially savvy recipients to benefit from the larger payment; allows for investment, purchasing a house etc
- Lump sum payments are not taxable for the recipient; the are also not tax deductible for the payor and are often adjusted and made lower to reflect this reality of taxation
Frequently Asked Questions
Under what conditions can spousal support be denied in Canada?
Spousal support can be denied if the spouse requesting support has a significant ability to support themselves. It can also be denied if the marriage was short and the spouse already is or can become self-sufficient.
Is there a cap on the amount one can claim for spousal support in Canada?
There is no strict cap on spousal support amounts, but the amounts are guided by the income of both spouses and the standard of living during the marriage. The court aims to reach a fair amount based on these and other relevant factors.
What factors influence the calculation of spousal support payments?
Factors include the length of the marriage, each spouse’s income and earning capacity, child custody arrangements, and any economic disadvantages arising from the marriage or its breakdown. Courts also consider the standard of living during the marriage.
