Amount & Duration of Spousal Support

If a court finds that spousal support should be paid the court must then look at the amount that should be paid and how long it should be paid for. There are guidelines the court can use to determine this but they are not required to use them.

Spousal support amounts may vary widely based on many of the same factors used to determine whether a support order is appropriate in the first place. There are, however, Spousal Support Advisory Guidelines (SSAG) in place that may help the court or parties themselves to simplify the determination or at least provide an appropriate starting point. Unlike the Child Support Guidelines, spousal support guidelines are advisory only, not mandatory. They include formulas that use factors such as whether there are children of the relationship, the income of both spouses and the length of the relationship to calculate the suggested amount of spousal support.

The guidelines will not help determine whether a spouse is entitled to spousal support. They are intended to provide a starting point to help determine the amount once entitlement has been established by the court or agreed to by the spouses. The calculations in the spousal support guidelines are quite complicated and factor in income tax implications. In most cases special software is required to do the calculations. It is important to establish entitlement to spousal support before going ahead and attempting to come up with an amount using the guidelines. The overview set out below will give you a very general idea of how the guidelines work only and is not intended to allow you to do any calculations yourself.

This formula is used for couples who do not have children or whose children are now grown. In very general terms, between 1.5% and 2% of the difference between the spouse’s before-tax income is multiplied by the number of years the couple has been together, up to a maximum of 50%. Relationships of 25 years or more are capped at between 37-50%.

EXAMPLE Spouse “A” has a gross income of $55,000 and spouse “B’ has a gross income of $21,000. They have been in a spousal relationship for 14 years. Their difference in incomes equals $34,000. $34,000 x .015 x 14 = $7,140 ($595 per month) for the lower range; $34,000 x .02 x 14 = $9,520 ($794 per month) for the higher range.

This formula is used for couples who have children as defined by the Divorce Act or The Family Maintenance Act. The formula looks at the net disposable income of each spouse in order to leave the lower-income spouse with between 40-46% of their combined net disposable income. The calculations are complex, taking into account taxes, deductions, and children’s costs, and vary depending on parenting arrangements. Special software is required to complete the calculations using the with child formula.

Spousal support may be paid in a lump sum or as periodic payments. Periodic payments can be ordered or agreed to for an indefinite period of time (no end date) or a definite period of time (such as three years), or until a specified event occurs (such as full-time employment).

When a court is asked to decide the duration of spousal support they will consider a number of factors that could affect the receiving spouse’s ability to become self-supporting. These factors may include things like the spouse’s age, health, educational background, and the age of children still at home. Generally speaking, spouses leaving long-term relationships later in life will receive support for longer, if not indefinitely, than a younger spouse leaving a relationship of a shorter duration.

The advisory guidelines for spousal support can also be used to help determine a range for the duration of spousal support.

In very general terms, the duration for spousal support using the without child formula ranges from .5 to 1 year for each year of the marriage or spousal relationship. However, under the advisory guidelines the duration will be indefinite if the relationship lasted 20 or more years. It will also be indefinite if the spousal relationship or marriage lasted 5 years or more and the age of the spouse at the time of separation plus the length of the relationship equals 65 or more.

Using the with child formula is somewhat less straightforward. At the lower end of the range the suggested duration is generally the longer of (a) ½ the length of the marriage or (b) the date when the youngest child starts school full-time. At the upper-end of the range the suggested duration is generally the longer of (a) the length of the marriage or (b) the date when the youngest child finishes high school.

Spousal support that is paid periodically is taxable income to the spouse receiving it and is tax-deductible for the spouse paying it. The spouse receiving spousal support must claim the support received as taxable income. Court orders or written agreements dealing with spousal support must be registered with the Canada Revenue Agency (CRA).

In order for the paying spouse to claim a tax deduction, the spousal support order or agreement must clearly indicate that the payments are for spousal support and are to be made periodically. If this distinction is not clear, the support payments will be treated as child support for tax purposes. In this case the payments are not tax deductible for the paying spouse and not taxable for the spouse receiving the payments.

It is also important to note that a spouse who must make child support payments and spousal support payments cannot claim a deduction for the spousal support payments unless they are up-to-date on all child support payments.

Spousal support that is paid as a lump sum is not taxable for the spouse receiving it nor is it tax-deductible for the spouse paying it.

It is important to ensure that agreements and court orders take these tax implications into account so that each party understands their support payments and can avoid unexpected surprises at tax time.