Children Come First: A Report to Parliament Reviewing the Provisions and Operation of the Federal Child Support Guidelines - Volume 1
I. FEDERAL CHILD SUPPORT GUIDELINES: A COMPREHENSIVE REVIEW
Section 28 of the Divorce Act
The Minister of Justice shall undertake a comprehensive review of the provisions and operation of the Federal Child Support Guidelines and the determination of child support under this Act and shall cause a report on the review to be laid before each House of Parliament within five years after the coming into force of this section.
When they were implemented in 1997, the Federal Child Support Guidelines significantly changed the way Canadian courts determined child support amounts. Five years later, it is clear that the Guidelines are working well. Child support amounts are predictable and consistent, and the vast majority of parents are setting child support amounts without going to court.
Still, there is room for improvement-in terms of what the law says and how it works. This volume reviews various aspects of the Guidelines and recommends reforms. For analysis of particular provisions of the Guidelines and the Divorce Act, readers should consult the section-by-section reviews in Volume 2.
This part of the report also describes how the federal Department of Justice has worked since 1997 with its provincial and territorial counterparts to implement the Guidelines across Canada. These varied activities include funding family law services in all provinces and territories; conducting public awareness and information campaigns for parents, judges, and lawyers; carrying out a comprehensive research program; and working with the provinces and territories to improve the enforcement of child support orders.
In the late 1980s, many separating and divorcing parents, family law professionals, and others were looking for better ways to determine the amount of financial support parents pay for their children.
Critics said that the system in place at that time for determining child support was producing amounts that were too low, inconsistent, and unpredictable. The lack of predictability was a particular concern, since it tended to encourage parents to go to court over child support, which increased the costs of separation and divorce, and increased conflict and the demands on the family law system.
In 1990, the federal, provincial, and territorial ministers of justice and attorneys general directed the Federal-Provincial-Territorial Family Law Committee to examine these concerns and recommend improvements to the family law system.
The Family Law Committee's work is documented in a series of reports and studies published between 1991 and 1995, including two public consultation documents: Child Support: Public Discussion Paper (June 1991) and The Financial Implications of Child Support Guidelines (May 1992).
In its Report and Recommendations on Child Support (January 1995), the Committee proposed that child support guidelines be established under the Divorce Act for parents, judges, and lawyers to use to determine child support. Such guidelines would set the amount of child support based on the number of children concerned and the income of the parent who would be paying the support.
At this time, Canadians were also criticizing the way the tax system dealt with support payments. Many said it was unfair that parents paying child support could deduct the payments from their taxable income, while parents receiving child support had to pay tax on what they received. The deduction-inclusion tax rules for child support provided a tax benefit when the support-paying parent was in a higher tax bracket than the custodial parent because the tax savings from the deduction exceeded the tax paid due to inclusion. It was seen as unfair that whether or not there was a tax benefit available to a family depended solely on the income discrepancy of the two parents, and not at all on the needs of the children.
In addition, many parents disliked the cumbersome process of managing payments and deductions throughout the tax year. Moreover, judges, lawyers, and parents found that the tax calculations involved were so complex that they made determining child support amounts very difficult.
A third area of concern was enforcement. Many parents had found there was no way for them to ensure that they received their support payments in full and on time. The Government of Canada had already helped the provinces and territories with enforcement by putting a law into place that allowed federal employees' wages to be garnisheed if the employees were not making their support payments. Another law allowed the provinces and territories to use federal databases to trace parents who were not paying their support, and to garnishee federal payments such as income tax refunds and employment insurance. Still, many people felt that governments could do more in the area of enforcement.
In March 1996, the Government of Canada announced its intention to address these concerns by improving the way child support amounts were determined, taxed, and enforced.
- It amended the Divorce Act to introduce child support guidelines to help parents, lawyers, and judges set fair, predictable, and consistent child support amounts in divorce cases.
- It changed the tax treatment of child support payments made under orders or agreements dated on or after May 1, 1997, so they would no longer be taxed as income for the parent who receives them nor be tax deductible for the parent who pays them.
- It introduced new federal measures and enhanced services to help provincial and territorial enforcement agencies ensure that support is paid in full and on time.
The federal Department of Justice, through the Child Support Initiative, introduced the Federal Child Support Guidelines and enhanced family support enforcement measures. The federal Department of Finance and the Canada Customs and Revenue Agency (formerly Revenue Canada) implemented the new tax treatment of support payments, along with an increase in the maximum level of the Working Income Supplement of the Child Tax Benefit, which was announced at the same time (see Appendix 2 for a complete discussion of the tax-related measures).
THE CHILD SUPPORT INITIATIVE
The Child Support Initiative was a five-year program to pursue seven key activities:
- amend the Divorce Act and other legislation to introduce child support guidelines and provide additional enforcement tools to help the provinces and territories;
- strengthen federal assistance for provincial and territorial enforcement procedures to ensure family support obligations are respected;
- improve the public's awareness, knowledge, and understanding of family support obligations through a general communications campaign;
- implement a cooperative education program for provincial and territorial justice officials, justice service providers, and the public;
- provide financial help so that provinces and territories could provide innovative, efficient, and cost-effective services to help parents set up child support orders;
- provide financial help so that provinces and territories could enhance their Maintenance Enforcement Programs; and
- conduct research to monitor the effects of the child support guidelines and the new enforcement measures.
THE GUIDELINES AT A GLANCE
The Federal Child Support Guidelines are a set of rules and tables for determining the amount that a parent paying child support should contribute toward his or her children.They are designed to advance the best interests of children and to ensure that children get an appropriate level of child support from both parents. They also make it faster, easier, and less expensive for parents to arrive at an amount.
The Guidelines (and the Divorce Act, of which the Guidelines are a part) apply to legally married parents who separate and then seek a divorce, as well as to parents who are already divorced.
Tables containing child support amounts for each province and territory are generated using the Federal Child Support Guidelines formula. Each table sets out the amounts based on two elements: the income of the parent who will pay child support (called the paying parent) and the number of children involved.
The tables are useful for parents whose situations are relatively straightforward. However, when there are special circumstances, the Guidelines provide flexibility. For example, parents can adjust the table amounts to account for special expenses such as day care, situations of undue hardship, shared or split custody arrangements, exceptionally high income, and children the age of majority or over.
The word guidelines may suggest that the rules and child support tables are only for reference. This is not the case. In fact, judges must use the Guidelines in almost every case. (The Divorce Act allows a few exceptions, such as situations in which both parents agree to an arrangement that the judge finds reasonable.) This can be helpful for couples who wish to make their child support arrangements without going to court. Parents can look at the child support tables to see what a judge would order, and this may help them agree on a child support amount.
PROVINCIAL AND TERRITORIAL GUIDELINES
Since 1997, most provinces and territories have implemented child support guidelines in law. Alberta, the one exception, has implemented them in practice. A thorough review of the provincial and territorial child support guidelines can be found in Volume 2.
TAXATION OF CHILD SUPPORT
When the Government of Canada amended the Divorce Act to introduce the Federal Child Support Guidelines, it also amended the Income Tax Act to change the way child support payments are treated for tax purposes.
The child support reform package was announced in the 1996 federal budget. This package included new rules for taxing child support and enriched the Child Tax Benefit. Before child support reform, if you paid child support you could deduct the payments from your income for tax purposes, but if you received child support you had to treat the payments as income for tax purposes.
A SOLID STEP FORWARD
Since 1997, when the Guidelines came into effect, the federal Department of Justice has been keeping track of how Canadians have used the Guidelines to determine child support. Doing so has helped the Government gather valuable information it is now using to update and improve the Guidelines.
Figure 1: How the Award was Determined
One way to measure the success of the Guidelines is to look at how often Canadians use them to determine child support (Figure 1). A particularly valuable source of information about the Guidelines is the Survey of Child Support Awards, a database of information on 23,688 divorce cases involving children from across Canada (except Quebec and Nunavut) as of February 2001.
In 14,524 of these cases, there is a record of the method used to determine child support. The vast majority of these cases (87 percent) used the Guidelines. In the remaining cases a "different amount" was awarded as allowed under sections 11, 15, and 17 of the Divorce Act.
One can also use the Guidelines' objectives to see how well the Guidelines are helping Canadian children and parents (and others, such as lawyers, judges, and mediators) deal with child support issues. These objectives are intended to be a guide for parents, judges, and lawyers as they interpret the Federal Child Support Guidelines (see section 1). The objectives are as follows:
- to establish a fair standard of support for children that ensures they continue to benefit from the financial means of both spouses after separation;
- to reduce conflict and tension between spouses by making the calculation of child support orders more objective;
- to improve the efficiency of the legal process by giving courts and spouses guidance in setting the levels of child support orders and by encouraging settlement; and
- to ensure consistent treatment of spouses and children who are in similar circumstances.
With the help of the provinces and territories, the federal Department of Justice commissioned research that used these objectives to monitor how the Guidelines were working. This research looked at a number of issues related to each of the four objectives. Researchers collected child support information from divorce cases and studied surveys of such interested parties as parents, lawyers, and family justice services providers (such as mediators).
TO ESTABLISH A FAIR STANDARD OF SUPPORT FOR CHILDREN THAT ENSURES THEY CONTINUE TO BENEFIT FROM THE FINANCIAL MEANS OF BOTH SPOUSES AFTER SEPARATION
Research in this area answered four questions.
- Do parents and professionals see the Guidelines as fair?
- Is there any indication that the intent of the Guidelines to ensure fair support from both parents has been circumvented in any systematic way?
- How do the child support amounts awarded under the Guidelines compare to pre-Guidelines amounts?
- Have the child support tables, which were published in 1997, become outdated as a result of subsequent changes to federal, provincial and territorial tax structures and parameters?
Do parents and professionals see the Guidelines as fair?
In a November 1998 survey of clients registered with the Family Maintenance Enforcement Program in British Columbia, parents who had child support orders made under the Guidelines were asked whether they thought the amount was fair.
Among the 280 parents receiving child support who responded, 56 percent agreed that the amounts were fair, compared to 41 percent of the 279 paying parents in the sample. When those who felt the child support amounts were unfair were asked why, the most common responses among receiving parents were that the
"amount does not cover costs" (69 percent) and that the paying parent
"could afford more" (23 percent). Paying parents who found the amounts unfair often said that they could not afford them (34 percent), that they have obligations to another family (11 percent), and that the amount is simply too high (11 percent).
In 1999, Alberta parents who had attended Parenting After Separation seminars were asked to assess the fairness of the Guidelines, based on their experience in arriving at an arrangement for payment of child support. Seventy percent of the 547 respondents who had used the Guidelines agreed or strongly agreed that the Guidelines
"set a fair standard of support for children that makes sure they benefit from the financial means of both parents." Although women were more likely to give a high rating for fairness (74 percent) than were men (65 percent), there was a high level of satisfaction overall.
In a later general population telephone survey, parents who had experience in using the Guidelines were asked to rate them in terms of fairness. For this survey, respondents were specifically asked to rate the Guidelines on a scale of 0 to 10 in terms of fairness to the paying parent, fairness to the recipient, and fairness to the children.
Paying parents gave the Guidelines a rating of 5 out of 10 in terms of fairness to themselves. In contrast, receiving parents gave a score of 8 out of 10 in terms of fairness to paying parents. On the other hand, when parents were asked to rate the Guidelines in terms of their fairness to children, both paying and receiving parents rated the Guidelines at about 7 out of 10 (Figure 2).
Figure 2: Parents' Views on the Federal Child Support Guidelines' fairness to children.
Lawyers and mediators who have completed questionnaires at conferences  and continuing legal education sessions rate the Guidelines highly in terms of fairness to children and parents, and in terms of the predictability they have brought to child support amounts.
Is there any indication that the intent of the Guidelines to ensure fair support from both parents has been circumvented in any systematic way?
Early in the implementation of the Guidelines, there was some concern that the table amounts might not set a "floor" (or minimum acceptable amount) for child support payments, as was intended by the Family Law Committee, but rather a "ceiling."
Another concern was that the child support arrangements of parents who had a consent order or a written agreement might be exempt from the usual judicial scrutiny required by the Divorce Act. Although the Divorce Act makes it clear that judges must use the Guidelines when making original orders for child support, interim orders, and variations, judges may award a different amount in certain circumstances.
Sole custody cases from the Survey of Child Support Awards were divided into two types (consent/uncontested cases and contested cases) to determine the extent to which the awards conformed to the applicable table amounts in each case. Figure 3 shows that, for both types of cases, the proportions of cases in which the child support amounts were "less than," "equal to," or "greater than" the table amounts were virtually identical. The amounts were less than the table amounts in between 5 and 6 percent of the cases. Two thirds of both types of cases had amounts that were equal to the table amounts and 30 percent had awards that were greater than the table amounts.
Based on this analysis and a review of related case law, it is clear that parents, judges, and lawyers view the table amounts as the minimal acceptable amount in the vast majority of consent and contested cases alike. (For more information, see the review in Volume 2 of sections 11, 15.1, 15.3, and 17 of the Divorce Act.)
Figure 3: Relationship of the Award to the Table Amount, by Disposition of the Order
Anecdotal evidence gathered soon after the Guidelines went into effect suggested that some paying parents were agreeing to generous tax-deductible spousal support orders to avoid paying taxable child support awards or to significantly reduce the amount of child support. A spousal support amount was included in 11 percent of the cases in the database.
Figure 4 compares sole custody cases with and without spousal support amounts. It shows that there is little or no difference between the two groups in the proportion of cases with child support award amounts that are less than, equal to, or greater than the applicable table amounts.
In approximately 70 percent of the cases that included spousal support, the child support portion of the order was equal to the table amounts, compared to 66 percent of the cases without a spousal support component. More importantly, cases that included a spousal support amount were slightly less likely to have child support amounts that were below the applicable table amount (4 percent of cases) than if spousal support was not included (6 percent of cases).
How do the child support amounts awarded under the Guidelines compare to pre-Guidelines amounts?
Many concerned observers have asked how the child support amounts ordered under the Guidelines compare with those made in the pre-Guidelines era. The federal Department of Justice compared post-Guidelines amounts (as recorded in the Survey of Child Support Awards database) with information in the 1992 Current Awards database, which was collected while the Guidelines were being developed.
Extensive testing and comparison of the two databases has shown that, generally speaking, post-Guidelines amounts were much more consistent at each payer income level than were pre-Guidelines amounts. The post-Guidelines amounts were generally higher than the pre-Guidelines amounts. These effects had been intended. 
Because there had been a particular concern about the impact of the Guidelines on low-income families, the federal Department of Justice analyzed cases in which both parents had incomes of $20,000 or less. This analysis showed that for one- and two-child families, median and mean amounts were considerably higher in post-Guidelines cases than in pre-Guidelines cases. In addition, post-Guidelines amounts were generally higher than the table amounts, even in cases without special expenses. This evidence shows that low-income parents are receiving higher award amounts than they were before the Guidelines were developed.
Have the child support tables, which were published in 1997, become outdated as a result of subsequent changes to federal, provincial and territorial tax structures?
Ongoing research has ensured that changing federal, provincial and territorial tax regimes have not had a large impact on the table amounts generated by the formula.
Thus far the formula has been found to be robust. The significant changes to federal, provincial and territorial income tax regimes since 1997 have had minimal impact on the table amounts. When the child support tables are regenerated using the most recent tax information available, there is as yet no appreciable difference from the published 1997 table amounts.
The federal Department of Justice recommends that the child support tables be updated every five years, or sooner when changes in federal, provincial, or territorial tax regimes would have a significant impact on table amounts.
Most professionals who have been asked to comment on the Guidelines say that the Guidelines establish a fair amount of support for children. There is strong evidence that the table amounts have been viewed as a "floor" in virtually all cases, whether the child support arrangements were contested or arrived at by consent.
TO REDUCE CONFLICT AND TENSION BETWEEN SPOUSES BY MAKING THE CALCULATION OF CHILD SUPPORT ORDERS MORE OBJECTIVE
Research in this area answered five questions.
- Do parents and professionals see the Guidelines as reducing conflict and tension between parents?
- Has the overall proportion of cases that result in litigation been reduced?
- Has there been any change in the proportion of cases that result in litigation when child support is the only issue being dealt with by the court?
- Has there been any change in the proportion of cases that result in litigation when custody is the only issue being dealt with by the court?
- What impact, if any, has the new "40 percent" time threshold for shared custody had on levels of litigation?
Do parents and professionals see the Guidelines as reducing conflict and tension between parents?
Family Maintenance Enforcement Program clients in British Columbia were asked to rate the amount of conflict they experienced while they or the judge determined the child support amount. The clients used a seven-point scale, with 1 meaning "no conflict at all" and 7 meaning "a great deal of conflict."
For child support recipients, the Guidelines have not affected the amount of conflict; their average rating for level of conflict before and after the Guidelines were introduced is about 5 out of 7. There is a slight difference in paying parents' assessment of the conflict. The average score for paying parents after the Guidelines was 4.5 out of 7, compared with 4.1 out of 7 for paying parents before the Guidelines.
In contrast, 62 percent of 545 parents at a Parenting After Separation seminar in Alberta either agreed or strongly agreed that
"the Guidelines reduce conflict and tension between partners." Women were more likely to agree with this statement (64 percent) than were men (59 percent).
An even higher proportion (70 percent) of legal professionals said in 1998 that the Guidelines have reduced conflict and tension between parents, although some said the Guidelines increase conflict when the case is complex or has discretionary items.
In the federal Department of Justice's 1998 surveys of lawyers attending continuing legal education courses, 64 percent agreed or strongly agreed that the Guidelines have successfully reduced conflict and tension between parents by making the calculation of child support orders or agreements more objective. In 1999, mediators were also asked whether the Guidelines had reduced the amount of conflict between separating and divorcing parents. Fifty-four percent said there has been less conflict since the Guidelines were implemented, and 39 percent said that more cases are being settled solely by mediation since the Guidelines were implemented.
Has the overall proportion of cases that result in litigation been reduced?
The Guidelines were developed in hopes of reducing the number of cases that result in litigation. This was also a goal of the numerous family justice services that the federal, provincial, and territorial governments offered to parents as the Guidelines were being implemented. Examples of such services include those offering child support workbooks for parents, parenting after separation courses, and increased access to mediation services.
Undoubtedly, the high cost of going to court was an important deterrent to litigation in child support cases. At the same time, parents involved in litigation frequently seem more likely to harden their positions about outstanding issues, to increase conflict and tension, and to parent less cooperatively.
There is a common perception among legal professionals and mediators that the number of child support cases settled without litigation has increased since the Guidelines were implemented, although there is no information about how many pre-Guidelines cases went to trial. Lawyers surveyed at three continuing legal education seminars in 1998 estimated that, on average, 59 percent of their separation and divorce cases were settled by consent before the Guidelines were implemented, compared to 72 percent afterwards.
The Survey of Child Support Awards database confirms that the vast majority of cases involving child support under the Divorce Act are settled by consent: from 86 percent of all cases in 1997-98 to 88 percent in 1999 and 93 percent in 2000 (see Appendix 4). There are some important differences among the cases, however, depending on specific characteristics. For example, about 31 percent of all variation orders were contested, as compared to only 8 percent of original divorce orders or judgments.
Has there been any change in the proportion of cases that result in litigation when child support is the only issue involved?
Cases in which child support is the only issue are much more likely to be contested than other cases. Nevertheless, as can be seen in Figure 5, even among these cases there has been a steady reduction in the proportion of those that are contested, from 40 percent in 1998 to 22 percent in 2000.
Figure 5: Proportion of Contested Cases Decreases Over Time
Figure 6 illustrates that, although variations are still more likely to be contested than original divorce orders, the proportion of cases being contested has declined by almost 20 percent for both types of cases since 1998.
Figure 6: Proportion of Original Orders, Judgments, and of Variations that were contested, by year of judgment
The total number of cases for Figure 5 and Figure 6 differ because a number of contested cases could not be distinguished as original orders or variations.
Has there been any change in the proportion of cases that result in litigation when custody is the only issue being dealt with by the courts?
Mediators were asked whether the Guidelines had affected mediation of custody and access issues. While 36 percent of respondents said that it is harder to mediate custody and access since the Guidelines were passed, the majority of respondents (53 percent) said they found no difference or that it is easier now.
The Survey of Child Support Awards database contains a relatively small number of cases in which custody alone, access alone, or custody and access were the only issues to be settled at the time of the divorce or variation order (see Tables B and C in Appendix 4). The proportion of cases in this subgroup that were settled by consent or were uncontested increased from 94 percent in 1998 to 99 percent in 2000.
What impact, if any, has the new "40 percent" time threshold for shared custody had on levels of litigation?
The time threshold for determining the difference between sole custody and shared custody arrangements is 40 percent. For shared custody, the children must spend at least 40 percent of the time with each parent.
The Guidelines state that when a parent exercises access to, or has physical custody of, a child for 40 percent or more of the year, the court may order a support amount different from the amount prescribed by the Guidelines. In doing so, the judge considers the table value for each parent, the extra costs of shared custody, and the condition, means, needs, and other circumstances of each parent and any child for whom support is sought.
Although the proportion of shared custody arrangements is very small, the Survey of Child Support Awards data show that there has been a slight increase in such arrangements (from 4.7 percent of cases in 1998 to 5.4 percent in 1999 and 6.6 percent in 2000).
One legal commentator reports the following:
Claims for shared parenting are increasing. Whether it's the hope of paying reduced child support pursuant to [section 9 of the Guidelines], or that they want to stay more actively involved in their children's lives after family breakdown, an increasing number of fathers are seeking shared parenting.
When all cases in the Survey of Child Support Awards are grouped by type of custody arrangement, there is very little difference in the proportion of cases in each custody category that were contested. According to these data, shared custody cases were the least likely to be contested seven percent of 1,185 cases (Figure 7).
By comparison, 12 percent of the 1,006 split custody cases were contested, 11 percent of the 15,621 sole-mother custody cases were contested, and 8 percent of the 1,787 sole-father custody cases were contested.
Figure 7: Proportion of Contested Cases by Type of Custody
It was not possible to directly, objectively measure levels of conflict between parents before and after the Guidelines. Nonetheless, professionals with experience working on child support cases feel that conflict has decreased under the Guidelines. In addition, the proportion of child support cases under the Divorce Act that have had to be settled in court decreased sharply from 1998 to February 2000.
TO IMPROVE THE EFFICIENCY OF THE LEGAL PROCESS BY GIVING COURTS AND PARENTS GUIDANCE IN SETTING THE LEVELS OF CHILD SUPPORT ORDERS AND BY ENCOURAGING SETTLEMENT
Statistical information on family court case flow is not available, so it is not possible to demonstrate definitively that the Guidelines have made processing of child support cases more timely or less costly to parents and the courts. Even if such court processing data were available, several factors would make it difficult to come up with unassailable empirical evidence that the Guidelines themselves have improved the efficiency of the legal process.
For example, when the Guidelines were brought in, many courts set up or expanded services intended to improve the efficiency of the legal process. These services would provide information about the Guidelines, help people file required documents related to child support, and help people calculate child support amounts based on income and other information.
We have evaluated court-based services for separating and divorcing parents in Newfoundland and Labrador, Prince Edward Island, Nova Scotia, Manitoba, Alberta, and British Columbia. Although virtually all the evaluations concluded that clients and professionals working in the vicinity received the additional services positively, none of the evaluations were able to distinguish between the impact, if any, of increased court service levels and the impact of the Guidelines themselves.
Do parents and professionals feel that the Guidelines have improved the efficiency of the legal process?
In a follow-up survey of participants in Alberta's Parenting After Separation seminars, 80 percent of the 547 respondents agreed or strongly agreed that
"the Guidelines make the legal process more efficient by giving courts and spouses guidance in setting levels of child support." Male (78 percent) and female (82 percent) respondents made this very positive assessment almost equally.
There is a strong perception among legal professionals that the Guidelines have improved the efficiency of the legal process. Three-quarters of all respondents surveyed at a conference and at continuing legal education courses in 1998 agreed or strongly agreed that the Guidelines were improving efficiency. Similarly, 73 percent of mediators said that the process of mediating a child support agreement has improved under the Guidelines.
When asked specifically about the speed with which cases are being resolved under the Guidelines, 72 to 79 percent of lawyers agreed or strongly agreed that cases are being resolved more quickly. In the survey of mediators, 66 percent of respondents said that agreements are reached more quickly under the Guidelines, 16 percent said there has been no change, and six percent said that the process takes longer. 
Despite the lack of case processing statistics, the perceptions of parents, lawyers, and mediators alike is that the Guidelines have definitely made the legal process in child support cases more efficient.
TO ENSURE CONSISTENT TREATMENT OF PARENTS AND CHILDREN WHO ARE IN SIMILAR CIRCUMSTANCES
To assess consistency of treatment issues, similar circumstances have been defined in terms of the type of custody arrangement, the number of children, and the paying parent's income. Two major components of the Guidelines were examined for consistency of application:
- the child support table amounts; and
- the discretionary components (the use of the special expenses provisions, the outcome of undue hardship applications, and the calculation of time and support amounts in shared custody cases).
Are the Guidelines table amounts being used as intended in determining child support?
There is compelling evidence from the Survey of Child Support Awards database and from case law reviews that the table amounts are being used consistently as the "floor" or basic amount being awarded in sole custody cases. Lawyers and mediators also share the perception that the Guidelines objective of
"ensuring consistent treatment of spouses and children in similar circumstances" has been met.
Are the discretionary components of the Guidelines being interpreted consistently across the country?
It is more difficult to determine whether consensus is developing about how to interpret the discretionary components of the Guidelines. A significant minority of professionals who responded to questionnaires on this are concerned that there is still too much judicial discretion, both in applying the special expenses and undue hardship provisions, and in determining child support in shared custody situations.
How are family mediators and courts dealing with special expenses?
Family mediators were asked how they dealt with special expenses when arriving at a child support agreement. Respondents were asked whether they always, often, sometimes, rarely, or never used three alternative methods:
- negotiate an agreement on responsibilities for current or impending special expenses and do not include a specific dollar amount or proportion in the agreement;
- negotiate consensus on a global amount that is included in the agreement; and
- apply section 7, including calculations for any or all of the prescribed items (using the guiding principles or proportional income and tax relief when applicable), and include a specified dollar amount or proportion in the agreement.
Two-thirds of respondents used all three methods often. They reported using section 7 (the third option) slightly more frequently (42 percent of respondents used it often) than the other approaches (33 percent and 30 percent, respectively). See Figure 8.
Figure 8: Methods Mediators Use to Deal with Special Expenses in Arriving at an Agreement
When the Survey of Child Support Awards data on sole custody cases are pooled for all provinces, a clear pattern emerges: the higher the income of the paying parent, the more likely the case is to have special expenses. The proportions increase from 13 percent when the paying parent's income is between $1 and $14,999 to 57 percent of cases when income ranges between $75,000 and $149,999.
Further analyses compared similarities and differences among the provinces on the extent to which special expenses are used. To do this, all cases in which the paying parent's income was not above $150,000 were grouped into three income groups with an equal number of cases in each. The resulting income ranges were as follows:
- group 1 (less than $27,182),
- group 2 ($27,182 to $44,999), and
- group 3 ($45,000 to $150,000).
Restricting the analysis to the provinces with 100 or more of these cases (Table 1), the overall proportion of cases with special expenses ranges from a low of 22 percent in Nova Scotia to a high of 43 percent in Alberta. In the highest income group, Ontario cases are much more likely to include special expenses (63 percent) than Alberta cases (50 percent), and both provinces have much higher proportions of special expense cases in this income group than do Nova Scotia, New Brunswick, Manitoba, or British Columbia (35 to 37 percent each).
|Province||Total cases with special expenses||Lowest income group (less than $27,182)||Middle income group ($27,182 to $44,999)||Highest income group ($45,000 to $150,000)|
|Nova Scotia||259 (21.7%)||10.4%||23.9%||36.0%|
|New Brunswick||190 (25.9%)||13.8%||31.8%||37.5%|
|Ontario||1 731 (41.1%)||19.9%||39.4%||63.0%|
|Alberta||3 455 (43.1%)||30.7%||46.1%||50.4%|
|British Columbia||174 (28.5%)||21.3%||27.0%||35.2%|
Source : Survey of Child Support Awards database, October 1999–February 2001.
Based on this information, provinces clearly vary in their practices and policies on including special expenses.
Are the undue hardship provisions fair?
Some people are concerned about the overall fairness of the undue hardship provisions and about the consistency with which the standard of living test is applied.
Unfortunately, when a claim for undue hardship is raised and subsequently fails, there may be no record of the application in the case files or reference to the application in the child support order (from which the Survey of Child Support Awards data are extracted). Thus, although the Survey of Child Support Awards contains some data on undue hardship applications (160 cases, or 0.7 percent of the total number of cases), the database does not reliably reflect the total number of cases in which undue hardship is raised.
As mentioned, undue hardship applications were identified in only 0.7 percent of the total cases in the sample of the 160, there was only one cross-application. The paying parent brought most of these applications. Of the 150 undue hardship applications brought by the paying parent, 103 resulted in a decrease of the Guidelines amount, 28 were denied, none resulted in an order amount higher than the Guidelines amount, and 19 applications had unknown or missing outcomes.
Of the nine undue hardship applications made by the receiving parent, one resulted in an increased amount, four were denied, and one resulted in an order that was less than the table amount. The outcome was unknown in three cases.
How are child support amounts negotiated in shared custody cases?
Once parents agree on shared custody, or a judge determines that it is appropriate, the parents must address child support.
Who enters into a shared custody arrangement?
- In the Survey of Child Support Awards, 5.8 percent of all cases had shared custody arrangements.
- Children of parents with shared custody arrangements tended to be younger than those of parents with other types of custody. When the average age of all children in a family was considered, children in shared custody were 9.96 years, compared to 10.2 years for those in sole-mother custody, 12.1 years for those in sole-father custody, and 13.7 years for those in split custody arrangements.
- On average, families with shared custody arrangements had fewer than two children. Families with split custody arrangements had the highest mean number of children (2.47), followed by sole-mother and shared (1.75) and sole-father arrangements (1.70).
- The median incomes for paying ($50,000) and receiving ($30,971) parents are higher in shared custody cases than in sole-mother custody cases ($35,799 and $23,845, respectively) and split custody cases ($42,763 and $20,855, respectively). While the median paying parent income is also lower for sole-father custody cases ($21,120), the median receiving parent income for sole-father cases is higher ($40,000).
Source: Survey of Child Support Awards database, February 2001.
Mediators were asked how they negotiated child support amounts in shared custody cases. Respondents mentioned a variety of means, but the two mentioned most often were, first, using software or family budgets for each household, and, second, calculating the proportion of the table amount for each parent that corresponds to the amount of time he or she has custody of the children. However, respondents also indicated that they found the lack of direction in negotiating support in these cases to be a big disadvantage of the Guidelines.
The presence or absence of a child support order was specified in 1,226 shared custody cases in the Survey of Child Support Awards database. Of these, 56 percent reported an amount (see Table 2). A majority of these were monthly amounts. In the remaining 44 percent of cases, either there was no award or the amount depended on future circumstances.
|Award amount specified||689||56.2|
|No amount specified||537||43.8|
|Amount contingent on future circumstances||5||0.4|
Source: Survey of Child Support Awards database, October 1999–February 2001.
Note: Excludes cases where award status and custody type were unknown.
A discussion of the issues relating to the 40-percent time threshold, and of approaches to determining amounts in shared custody cases under section 9 of the Guidelines, follows under the heading "Shared Custody".
Based on information from the Survey of Child Support Awards, the table amounts are consistently accepted as the "floor" in relevant cases. There are, however, different practices and policies among the provinces and territories for including special expenses.
The Survey of Child Support Awards confirms that the Federal Child Support Guidelines have been used to determine child support orders in the vast majority of divorce cases in the selected courts.
In addition, there seems little doubt that in the vast majority of cases the child support tables have gone a long way toward ensuring that children receive a fair amount of support and toward reducing conflict and tension between parents about child support. In 94 percent of sole custody cases processed under the Guidelines, the child support amount was greater than or equal to the table amount.
The tables have also made the legal processing of cases more efficient and have helped ensure that parents and children in similar circumstances are treated consistently. This is a particularly impressive finding given that the Guidelines were introduced less than five years ago.
In more complex cases involving shared custody arrangements, or special expenses and undue hardship applications, the Guidelines allow for greater discretion in making arrangements. In these cases patterns are less clear and are probably still evolving. The federal Department of Justice is proposing changes to sections of the Guidelines that deal with special or extraordinary expenses and shared custody. These are detailed in the following section.
LOOKING TO THE FUTURE: CHILD SUPPORT RECOMMENDATIONS
The results of all the consultation and research efforts described in the previous sections lead to one conclusion: the Federal Child Support Guidelines have been fully implemented and have achieved their intended effects. Parents are working out their own arrangements or, when parents do go to court, the issues are more clearly defined than before.
While the Guidelines have been successful, parents, the courts, and others have identified issues that require further work to improve the Guidelines and make them fairer. Some of these issues will require fine-tuning the Guidelines to provide greater clarity while maintaining flexibility. Other issues will require continued monitoring.
Most agreed that the Guidelines, although needing clarification or modification in at least several respects, were, even at this early date, proving their worth and were achieving most of the goals established for them. By replacing the previous case-by-case litigation framework, it was recognized that the Guidelines have introduced a degree of objectivity into the process of settling child support issues, although there was some disagreement about the degree to which individual cases were actually easier to settle.
Source: The Federal Child Support Guidelines—Interim Report of the Senate Standing Committee on Social Affairs, Science and Technology, June 1998, p. 5.
Taking into account the results of the 2001 consultation, as well as previous consultations on other issues, research results, and case law analysis, the following is recommended.
No change is recommended to the "40 percent rule."
The Guidelines state that when a parent exercises access to, or has physical custody of, a child for 40 percent or more of the year, the court may order a support amount different from the amount prescribed in the Guidelines. In making such a decision, the judge considers factors including the table value for each parent, the extra costs of shared custody and the condition, means, needs and other circumstances of each parent and any child for whom support is sought.
Although the use of a threshold based on time has been criticized because of the direct link between child contact and support, no alternative has been found that demonstrably improves the test. Although many other proposals have merit, none simplifies the court process and each represents a radical departure from the status quo. Using anything other than time for the threshold test would likely result in significant uncertainty and increased litigation, contrary to the objectives of the Guidelines.
Selecting a higher time threshold such as "substantially equal" has some advantages. However, these advantages may be offset by other factors, including the potential for increased litigation over the meaning of the term, unfairness to parents with high access time, and uncertainty as to whether this would actually weaken the link between child contact time and child support. In addition, there is an established body of case law interpreting the section; parents and legal professionals are familiar with it. Nevertheless, the case law on this particular issue will continue to be monitored.
It is recommended that the current factors used to determine the amount of support in shared custody situations be replaced by the use of a presumptive formula. A judge would determine the support amount by applying a prescribed formula. The formula amount would be the difference between the table values for each parent given the total number of children in the shared custody arrangement.
A formula would increase predictability and certainty. The fact that it could be rebutted would maintain judicial discretion to order another amount in the appropriate circumstances. To decide whether to depart from the formula amount, the court could consider any relevant factor; the way spouses shared the child's expenses would be especially relevant. This approach was chosen to account for the increased cost of maintaining two residences for a child, rather than the split custody provision, where the table values only account for the number of children in each parent's care and not the total number of children.
SPECIAL OR EXTRAORDINARY EXPENSES
The term extraordinary should be defined to better guide parents and the court and to improve consistency across the country among families in similar circumstances.
Section 7 of the Guidelines provides that six categories of special child-related expenses can be included in the child support amount if they are reasonable and necessary in light of the child's needs, the parents' means, and any family spending pattern before the separation. Included in those categories are "extraordinary expenses" for education and extracurricular activities.
The term extraordinary has been interpreted differently across the country, creating some confusion and inconsistency and resulting in calls to clarify the term. Section 7 should therefore be amended to add a definition of extraordinary. Parents and courts will be directed to determine whether the expense is extraordinary, given the income of the parent requesting and paying for the expense. If this does not help, parents and the court will be directed to consider other factors in addition to income:
- the number and nature of the programs and activities;
- the overall cost of the programs and activities;
- any special needs and talents of the child; and
- any other similar factor the court considers relevant.
The recommended approach is consistent with the original intent of the section and with the interpretation adopted by several appeal courts. It is also the approach Manitoba took when it amended its guidelines effective July 2001. This approach would help ensure that guidelines across the country continue to be harmonized as much as possible.
Recipients of support for a child the age of majority or over should be required to disclose information about the child's ongoing eligibility for support. This would help reduce conflict and tension between the parents.
Many people have argued that older children getting support should be accountable and provide financial and other information to demonstrate that they are still entitled to support. Others say this is an unnecessary breach of the older child's privacy that, effectively, involves the child in the parents' litigation.
The Guidelines should be amended to require disclosure of information relevant to the child's entitlement to support. The amendment would require the recipient parent, not the child, to provide the information on the written request of the paying parent, thus insulating the child from direct involvement in the litigation. This requirement would apply in all cases where support is to be paid for children at the age of majority or over, not just in those that include special expenses.
Special expenses, such as tuition for post-secondary education, are those not covered by the child support table amount. Under the Guidelines, a section already requires parents to produce information about any special expenses. However, this provision does not require parents to produce information about ongoing eligibility and other expenses that may be paid with the table amount or another amount paid for older children.
COMPARISON OF HOUSEHOLD STANDARDS OF LIVING TEST
The Comparison of Household Standards of Living Test should be adjusted to account for certain statutory payroll deductions.
Many observers have correctly noted that the current test does not account for statutory payroll deductions. Parents should be able to deduct Canada/Quebec Pension Plan contributions and employment insurance premiums when completing the standard of living test. These statutory payroll deductions are conditions of employment and the deductions are not funds available to a household.
The income sections should continue to apply as drafted, except for a minor amendment to account for situations where a parent is residing in a country that has higher effective income tax rates than those in Canada.
Under the Federal Child Support Guidelines, it is especially important to correctly establish a parent's income because the child support tables are based on income. The Guidelines use the paying parent's gross income to determine the table amount, which ensures that parents consider child support before any deduction. To ensure fairness for that parent, the formula used to establish the amounts in the tables takes into account provincial, territorial, and federal taxes.
In its interim report on the Guidelines, the Standing Senate Committee on Social Affairs, Science and Technology stated:
The Committee heard some testimony concerning the difficulty of determining income for the purpose of applying the Guidelines. In particular, the problems centered on accurately assessing the income of spouses who are self-employed, a problem, of course, which is equally applicable to both parents. On the other hand, the Committee is aware that difficulties in determining income for self-employed spouses predate the Guidelines. Indeed, one witness pointed out that the Guidelines have merely brought the previous difficulties to light. That same witness felt that, overall, they have been a real improvement in the calculation of income.
A substantial body of jurisprudence on income has developed since the Guidelines were put into effect. Issues that were difficult before that time, such as determining self-employment income, continue to be difficult, as is calculating the income of seasonal workers, farmers, and fishers. The myriad rules (both tax- and Guidelines-related) that apply in these cases can make matters difficult and complicated.
However, the Guidelines and subsequent case law have addressed many questions, such as how to deal with capital cost allowance, carrying charges, and stock options. One such income issue involves deciding what information should be used to determine income amount: the Guidelines clearly state that the most recent information should always be used. This rule has helped the courts interpret the income sections.
The majority of income cases under the Guidelines deal with imputing income, an issue lingering from the pre-Guidelines era. Although a court can impute income when a paying parent lives in a country with lower effective income tax rates than those in Canada, there is no equivalent provision if a paying parent lives in a country with significantly higher rates. This omission will be rectified.
Finally, many people feel that the disclosure requirements in the Guidelines are unfair, because the parent getting support does not usually have to disclose income information (although in certain important circumstances, he or she does). More recently, the disclosure requirements have been seen to be fair and to lessen the procedural burden.
In 1999, as part of the federal Department of Justice's consultations on technical issues, we asked,
"Should the Guidelines require the receiving parent to disclose income information to the other parent in all cases?" Less than half the respondents said that this was a significant concern.
Since May 1, 1997, several of the income sections in the Federal Child Support Guidelines have been amended to clarify them and make them easier to apply. For a detailed explanation of these amendments, see the section-by-section review of the Guidelines in Volume 2. This review reveals that, generally, the income rules are clear, are consistent from a policy perspective, and provide enough flexibility to take into account different situations.
Any difficulties are caused not so much by the rules set out in the Guidelines as by evidentiary conflicts and competing policies, such as issues related to proper and timely financial disclosure, whether unemployment or underemployment is intentional, how much capital should remain in a business, or the fine line between business and personal expenses. If the Government tried to address these countless income scenarios in the income rules, it would unnecessarily complicate the process and there would still be problems with parents intent on thwarting the system.
The provision dealing with unusually high access costs in the undue hardship section should continue to apply as presently drafted.
The undue hardship provision recognizes that, in some circumstances, paying the table amount, or the table amount plus special expenses, can cause a parent or a child to suffer undue hardship. This section permits courts and parents to decide on a different amount, in appropriate cases, to relieve this hardship. The undue hardship provision reflects the Guidelines' objectives of consistency and a fair standard of support, while taking into account the particular circumstances of any given family.
The undue hardship provision has been criticized because it has been restrictively applied to spouses who seek to decrease the support amount, notably when access costs are high for paying parents who reside far from the child. Courts are presently reviewing these situations case by case. For the most part, they are applying the section as intended.
When the paying parent resides far from the child, courts sometimes provide for high transportation costs through a separate order, not as part of the child support order. Normally, such an order would require parents to share these expenses in proportion to the parents' incomes. This compensation is provided after the money has been spent. Because it is difficult to predict transportation costs, child support should not be reduced without knowing whether the amount is reasonable and whether it was actually incurred.
SPOUSE WHO STANDS IN THE PLACE OF A PARENT
The provision dealing with the child support obligation of a spouse who stands in the place of a parent should continue to apply as presently drafted.
The Divorce Act defines a child of the marriage (a child eligible to receive child support) as a child of two spouses or former spouses, including
"any child of whom one is the parent and for whom the other stands in the place of a parent." Once it has been established that a step-parent
"stands in the place of a parent," the step-parent's obligations are similar to those of the natural parent.
The Federal Child Support Guidelines allow courts to set an appropriate child support amount. Courts must take into account the amount set out in the Guidelines and the legal duty of any parent other than the step-parent to support the child.
Courts have adopted a variety of approaches to this issue and, in light of the resulting inconsistencies, some people have argued that the regulations should give judges explicit direction about how to determine the amount of support for step-children. However, allocating child support among natural parents and step-parents is such a complex task that the process is largely driven by the facts of each case. Most respondents worried that a rigid formula could create unfair results. For all of these reasons, this section should not be amended.
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