Spousal Support Advisory Guidelines: The Revised User's Guide
15 Changing Incomes
Nothing ever stays the same in family law. Spousal incomes will change over time. Above, under “Income”, we discussed the determination of income at the interim and initial stages of spousal support, including the definition of “income”, the timing of income, imputing income, using alternative incomes to estimate ranges, grossing up non-taxable income and some tips and alerts in determining income. In this part, we focus on the impact of changes in income upon spousal support under the Advisory Guidelines. Most of these changes will occur after an initial agreement or order, which then raise issues under “Variation and Review” or “Agreements”.
A word about terminology: we use the generic term “post-separation” in reference to income changes here, as this language is commonly used. Most of these are actually changes in income after an initial order for support, addressed on a variation or a review. Or, changes in income after an agreement has been made, and then the parties renegotiate spousal support or one of them brings an application to court. And, finally, in some cases there can be significant changes in income between the date of separation and the date of an interim or initial application to court for support. In this chapter on “Changing Incomes”, we use the term “post-separation” in this broader, looser sense. When we refer to the earlier income, before the increase, we call it “the initial income”, intended to capture these different settings.
(a) Payor’s income reduced
The SSAG formulas can readily adjust in those cases where the payor spouse’s income is reduced after separation or after an initial order or agreement, as the range for amount can be adjusted downwards (see SSAG 14.2). There may be issues around material change, voluntary un/under-employment, etc. If the payor’s income is reduced significantly, ability to pay under the with child support formula may become an issue and the SSAG range even reduce to zeros across the board, due to the priority given to child support (which might later mean invoking the s. 15.3 exception, see “Exceptions” above).
Where the payor’s income is not reduced permanently, the court may attach additional terms for the payor about disclosure of future re-employment and income changes to the recipient. Or the court might even impose a review term, where the “genuine and material uncertainty” will be a possible restoration of income in the near future.
(b) Recipient’s income increased
Similarly, the SSAG formula ranges adjust easily to an increase in the recipient spouse’s income, as the recipient returns to the paid labour market, part-time or full-time, or receives promotions or wage hikes (SSAG 14.2). This can be an actual increase in income, or an imputed increase where the recipient fails to make reasonable efforts to become self-sufficient: see “Self-suffiency” below.
Like a payor income reduction, a recipient income increase will move the SSAG ranges for amount downwards, with a likely reduction in the amount of support.
In some agreements and orders, there will be a clause allowing a recipient to earn up to a fixed, usually low-ish amount, without a reduction of spousal support, as an incentive to work towards self-sufficiency. In effect, such a clause forestalls a variation, review or initial support application (in the case of an agreement), impliedly “imputing” an income to the recipient.
(c) Both incomes increased
Over time, if both parties are already working, it is likely that both their incomes will rise, especially if they work on some sort of pay scale or get cost-of-living increases or are members of unions engaged in collective bargaining at intervals. If both incomes rise commensurately, then the SSAG range is unlikely to shift much, and that overlap of ranges will make it unlikely that support will change. Whether on a variation, review or initial application (in the case of an agreement), courts look to maintain greater stability for spousal support orders, and are thus prepared to accept some changes in incomes, sometimes significant, without modifying amounts.
Under the without child support formula, changes in spousal incomes that leave roughly the same gross income difference will not produce much difference in the SSAG ranges. Some insist that the initial income for the payor should continue to be used under this formula, such that the payor’s income remains fixed thereafter and thus any increase on the part of the recipient means a reduction in spousal support, but this is simplistic. There will be issues about sharing of the payor’s post-separation income increase, discussed in the following section, where the increase is significant. But small, steady increases should probably be taken into account on both ends of the formula when calculating SSAG ranges for at least a few years later, in the interests of stability, certainty, reliance, and reducing litigation.
Under the with child support formula, since it is so sensitive to small shifts in net income over and above child support, even commensurate changes in both incomes can lead to a noticeable increase in the SSAG range. This reflects the limits of ability to pay under this formula, as well as a tendency to go higher in the range for compensatory and need reasons. In these cases, as will be shown below, it is more likely that any post-separation income increase of the payor will be fully shared and an upward adjustment is more likely.
(d) Change from imputed income
The situations discussed above involved changes from previously declared and proved incomes. Where a court has previously imputed income, the analysis of changed income will become more complicated. Imputed incomes are becoming more common in SSAG cases, as income determination is a critical step when income-based guidelines are used.
In two recent cases, courts have undertaken a much more careful analysis where a payor alleges an income that has changed downward since the previously-imputed income, especially where there was non-participation or inadequate disclosure by the party on the prior occasion: Trang v.Trang, 2013 ONSC 1980 and Power v. Power, 2015 NSSC 234. Two more questions must be asked, stated Pazaratz J. in Trang:
- Why did income have to be imputed in the first instance? Have those circumstances changed? Is it still appropriate or necessary to impute income to achieve a fair result?
- How exactly did the court quantify the imputed income? What were the calculations, and are they still applicable?
It is not enough for the party to say, “here is my current declared income” at the next hearing. More evidence is needed, to quote Justice Pazaratz again, to show:
- It’s no longer necessary or appropriate to impute income and the payor’s representations as to income should now be accepted, even if they weren’t before; or
- Even if income should still be imputed, a different amount is more appropriate, given changed circumstances.
There are many reasons to impute income, as discussed above under “Income”. If income was imputed for non-disclosure, then full disclosure will be required at the next hearing, both as to the current income and the income on the previous occasion. In Power, income was imputed on grounds of non-disclosure, and also diverted income, unreasonable expenses and dividend income. Evidence was required from the payor on all four bases for imputing, which was not provided in sufficient detail on his variation application (for child support).
e) Post-separation income of payor increased
Many spouses will see small, regular increases in their incomes over the years, thanks to wage and salary increases for inflation and increased seniority. If both spousal incomes rise like this, there will not be much change in the formula ranges for spousal support, as we noted above under “Both incomes increased”. These small, regular increases on the part of the payor would ordinarily be shared at intervals without too much controversy. Especially in non-compensatory cases involving long-term or indefinite support, these smaller increases effectively reflect the rise in the cost of living for the recipient: for a recent example of this thinking, see R.L. v. L.A.B., 2013 PESC 24 (initial application, delayed claim, 15-year relationship with no children, entitlement only non-compensatory, husband’s income at separation used with upward adjustment for inflation, not full sharing of post-separation increase). In some jurisdictions, like Ontario, there was an attempt to recognize this kind of increase by means of indexing spousal support orders for the cost of living.
Under this heading, we are addressing larger increases in the payor’s income. Where the payor’s income increases significantly, a hard question arises: should the payor share all, some or none of the income increase with the recipient in the calculation of spousal support? The answer presents a mix of entitlement and quantum issues. It has now become a prominent issue in the case law, as the income-based formulas of the SSAG are used more consistently and more widely. It is also a sign of greater sophistication in the use of the SSAG.
This income increase issue usually comes up at the variation and review stages, after an initial order. At the interim and initial stages, current incomes are most often used, as explained above under “Income”. But, as we noted there, even at these early stages, the post-separation increase issue can sometimes arise, where there is a significant increase in income or where there is a long post-separation delay before the support claim is made.
In the SSAG (at 14.3), we stated in summary form, in a short section on the topic:
Some rough notion of causation is applied to post-separation income increases for the payor, in determining whether the income increase should be reflected in increased spousal support and, if it should, by how much. It all depends on the length of the marriage, the roles adopted during the marriage, the time elapsed between the date of separation and the subsequent income increase, and the reason for the income increase (new job vs. promotion with same employer, or career continuation vs. new venture).
That word “causation” has often been read without the preceding words “some rough notion of causation”. It would be better to describe it as a “link” or “connection”, between the marriage and the increase after separation. That has certainly been the approach of most courts, especially those in B.C. and Ontario.
In some early Alberta cases, notably Sawchuk v. Sawchuk, 2010 ABQB 5, the courts took a more demanding approach, looking for something like a “causal” connection between the post-separation income increase and the contributions during the marriage by the recipient spouse. More recently, with greater and more consistent use of the SSAG there, the Alberta cases have been less demanding, and have become more like decisions in the rest of Canada. The looser test of connection is more consistent with the evolution of spousal support law in Canada since Moge, i.e. the recognition of a broad range of spousal support objectives and the rejection of any narrow “causal connection” test for entitlement.
The basis of entitlement has a significant impact upon the degree of sharing of increases, with compensatory claims more likely to result in sharing than non-compensatory claims, but not exclusively so. There can be sharing—partial, or even full—in non-compensatory cases too, especially after long marriages.
A quick word about method, before delving into the case law: the SSAG formulas can be used to establish the outer boundaries of support amounts. In every case, at least two calculations should be done: one for the initial income of the payor, and the other for the more recent, increased income of the payor. Examples of this are provided in the SSAG. It would also be wise for the parties to do calculations for a few intermediate payor incomes, between those extremes, as partial sharing is quite common in these cases.
The case law on post-separation income increases has evolved since the early days of the SSAG. In Fisher v. Fisher, 2008 ONCA 11, the Ontario Court of Appeal provided some limited sharing of the post-separation income increase, by taking a four-year average income for both spouses, including the year of separation when the husband’s income started to increase significantly. This partial sharing was not explained further, but it would appear to have reflected the length of the marriage (19 years), the immediacy of the increase (the year of separation) and the non-compensatory basis for support (a less compelling argument for sharing).
The earlier B.C. and Ontario cases took a less demanding view of the links between the marriage and the post-separation increase, especially in longer marriages. For example, in Hartshorne, 2009 BCSC 698 (upheld 2010 BCCA 327), the Court found “a clear temporal link between their marriage and this increase with no intervening change in Mr. Hartshorne’s career, or any other event, that could explain the increase”. At para 111, the court reviewed the case law and identified what might qualify as “intervening changes”. In Chapman v. Chapman,  O.J. No. 5994 (S.C.J.), after separation, the banker husband had changed from one big bank employer to another, with more incentive-based remuneration, but his full increased income was considered after a 23-year marriage and the husband’s long history in the banking business.
By contrast, the older Alberta cases demanded much more, something like a “causal connection” between the specific post-separation increase and the contributions of the recipient spouse during the marriage. For example, Sawchuk v. Sawchuk, 2010 ABQB 5,held that the recipient spouse “must show that he or she has contributed to the acquisition of the other spouse’s skills or credentials, thus contributing to the ability to earn the increased income”. No such specific contribution by the wife was found. In Sawchuk, it was not enough that the marriage lasted 24 years, that the support was compensatory, that the husband acquired his skills during the marriage, or that he continued to work as an electrician. He had changed employers and he was working longer hours. Although the court stated that the increase was not to be shared, the SSAG were not used and, in the end, the amount ordered was higher than the SSAG range for the separation date incomes, an amount that shared about 25 per cent of the increase. Older Alberta cases should be read with caution, as they did not use the SSAG and, as in Sawchuk, rejected sharing post-separation increases, only to settle on an amount that did involve some sharing of the increase, e.g. Chalifoux v. Chalifoux, 2008 ABCA 70.
An older case like Sawchuk continues to turn up in the more recent cases, notably in the Ontario decision in Thompson v. Thompson, 2013 ONSC 5500. In that decision, Justice Chappel set out, at para 103, thirteen principles which are frequently quoted in subsequent cases. The tenth principle, in sub-paragraph (i), relies entirely upon the too-demanding test in Sawchuk, when it says: “Assuming primary responsibility for child care and household duties, without any evidence of having sacrificed personal educational or career plans, will likely not be sufficient to ground an entitlement to benefit from post-separation income increases.” This statement does not reflect the law generally, and not even Alberta law any more. For some Alberta cases to the contrary, see O’Grady v. O’Grady, 2010 ABCA 109; S.D.Z. v. T.W.Z., 2011 ABQB 496; Mulick v. Mulick, 2012 ABQB 592; and Bujak v. Bujak, 2012 ABQB 458. It should be noted that Thompson itself was a custodial payor and then hybrid custody case, where the husband’s support claim was non-compensatory and the payor wife’s income had increased only modestly.
The fourth principle in Thompson, in sub-paragraph (d), should be read carefully, when it states: “The recipient spouse may be permitted to share in post-separation increases in earnings if they can demonstrate that they made contributions that can be directly linked to the payor’s post-separation success.” It is clear that a “contribution that can be directly linked” to success will result in sharing, and thus the “may” earlier in the sentence might be better read as “will usually be permitted to share”. Such a “direct link” will ordinarily satisfy the test for sharing.
Further, the second principle in sub-paragraph (b) of Thompson should be treated with caution, in its suggestion that sharing “does not typically arise in cases involving non-compensatory claims”. That is correct, but should not be overstated. There can be strong non-compensatory claims where significant sharing is warranted, notably in long interdependent marriages (even without children) or in disability cases. On this, we take a more expansive view than those expressed in Thompson, in Black v. Black, 2015 NBCA 63, and in an article on the subject, Brian Burke and Joanna Hunt, “Post-Separation Increases in the Payor’s Income as They Bear upon Spousal Support” (2015), 35 Canadian Family Law Quarterly 63.
Finally, the thirteenth principle in Thompson, in sub-paragraph (m), includes as a factor against sharing that “the recipient has not made reasonable steps towards achieving self-sufficiency”. The better way to deal with the self-sufficiency issue is to impute income to the recipient, in light of her or his skill, experience, etc. See “Self-sufficiency” below.
At a practical level, in what circumstances will a court order sharing, or not? These are complex cases, involving a mix of facts and legal factors, with a strong discretionary element to the final judgment. Below, we have tried to catalogue some of the facts or factors that push a court towards greater or lesser sharing, to offer some guidance. At the same time, it is important to recognize that these outcomes are rarely driven by just one factor.
When is full or substantial sharing more likely?
- With child support cases: in most of these cases, the full increase is likely to be shared given the strongly compensatory nature of the claims, subject to ability to pay. The child/children will of course share the full increase via child support, which has priority. These cases are so strong, or so obvious, that the issue is often not even identified. For examples where the issue was addressed, see Hartshorne, above; Ludmer v. Ludmer, 2013 ONSC 784 (upheld 2014 ONCA 827); Remillard v. Remillard, 2014 MBCA 101; H.F. v. M.H., 2014 ONCJ 450; Bujak v. Bujak, 2012 ABQB 458; A.A.M. v. R.P.K., 2010 ONSC 930; S.D.Z. v. T.W.Z., 20122 ABQB 496; and Judd v. Judd, 2010 BCSC 1574 (same employment, promotion included).
- Without child support cases: full sharing is more likely when there is some combination of the following factors:
- long traditional marriages, e.g. Campbell v. Vaughan, 2015 NBQB 110; Anderson v. Sansalone, 2015 BCSC 2; Cork v. Cork, 2014 ONSC 2488;
- medium-length and longer marriages generally, e.g. Farnum v. Farnum, 2010 ONCJ 378 (17 years, both worked throughout, 2 adult children); and Mulick v. Mulick, 2012 ABQB 592.
- strong compensatory claims based on the assumption of primary responsibility for child-rearing
- strong non-compensatory claims, typically in longer marriages
- where prior agreements countenance future increases with income, e.g. O’Grady v. O’Grady, 2010 ABCA 109.
- support/cohabitation during education or training, e.g. Pendleton v. Pendleton, 2010 BCSC 1167 (10 years married, also two moves for his career, no kids).
- payor continuing in same job or line of work after separation, e.g. MacDonald v. Langley, 2014 ONCJ 448.
- claims that were previous constrained by limited ability to pay
- income increases shortly after separation, e.g. H.F. v. M.H., 2014 ONCJ 450.
No sharing or limited sharing is more likely in these situations:
- Without child support cases involving:
- solely non-compensatory claims based upon loss of the marital standard of living, e.g. R.L. v. L.A.B., 2013 PESC 24 (payor’s income increased for inflation only)
- short-to-medium marriages
- significant changes in career/employment, e.g. Reid v. Gillingham, 2014 NBQB 79 (upheld 2015 NBCA 27)(although in this case we might have expected some limited sharing even on non-compensatory grounds after a long marriage); Tscherner v. Farrell, 2014 ONSC 976 (husband injured, retrained as radiation technologist, working long hours); McDougall v. Alger, 2013 BCSC 1925 (shift from accounting to business, only limited sharing, despite wife’s previous assistance with career); Whitmore v. Whitmore, 2012 BCSC 212; and Patton-Casse v. Casse, 2011 ONSC 4424 (upheld 2012 ONCA 709)(new venture)
- more work or much harder work in foreign or remote locations, e.g. Black v. Black, 2015 NBCA 63 (8 year marriage, non-compensatory, construction business failed after separation, working in Nunavut); L.A.H. v. B.D.H., 2014 BCPC 184; and Coghill v. Michalko, 2010 ABQB 59 (overtime, retention bonuses)
- greater risk-taking, business acumen, e.g. Frank v. Linn, 2014 SKCA 87 (increase due to business reorganization, demanding test applied) and Aelbers v Aelbers, 2010 BCSC 1574
- income increase long after separation.
- with child support cases:
- custodial payor cases where the above factors are at work, e.g. Thompson, above (17 years, custodial payor for much of time, non-compensatory claim by husband, but same reasoning applied where shifted to hybrid custody).
(f) Post-separation income reduction of the recipient
This is an issue that has appeared in the case law more frequently, warranting a new section in this Revised User’s Guide. Should spousal support increase if the recipient experiences a decrease in income post-separation? Should the recipient’s current (reduced) income be used for the SSAG calculation or the higher income at separation or under the prior order? Most often the issue of a recipient’s decrease in income post-separation arises on variation or review, but it may also come up in an initial application.
This is the inverse issue to that of the payor’s increase in income in the preceding section, raising similar issues of entitlement. The test here is also a rough one of a “link” or “connection” to the marriage/relationship. Disability issues frequently complicate the analysis, as we shall see.
There are a number of cases where the recipient quits a job or becomes voluntarily under-employed after separation. In these cases, a court simply imputes the recipient’s pre-separation income and then determines the SSAG range: Wright v. Lavoie, 2014 ONSC 6690 (wife loses job after separation due to her misconduct); Hutchen v. Hutchen, 2014 BCSC 729 (wife quits job, moves to U.S. for new partner, wife accepts imputing of previous income); and McDougall v. Alger, 2013 BCSC 1925 (wife quits job, unsuccessful business). Or a court can impute some intermediate amount, as in Abernethy v. Peacock, 2012 ONCJ 145 (upheld 2013 ONSC 2045)(wife’s move to London ON a mistake, but within reason, minimum wage imputed, 13-year traditional marriage).
There is an archetypical fact situation where support can increase, or even be resurrected: where the recipient suffers a significant compensatory disadvantage from the roles adopted during the marriage, finds employment before or shortly after separation, and then loses her or his employment subsequently as a junior employee. The recipient’s lack of seniority reflects her or his late arrival in the paid labour market. There are not many of these cases reported.
Where the recipient’s post-separation job loss is involuntary, issues of the connection to the marriage can arise, requiring consideration of factors such as the basis of entitlement and the length of time that has passed since the separation; see Rezel v. Rezel,  O.J. No. 1460 (S.C.J.) (initial application, 5 year marriage, no children, both spouses employed at time of separation, wife loses job 6 years after separation and applies for spousal support, no entitlement) and Lawder v. Windsor, 2013 ONSC 5948 (16-year marriage, no children, wife had become self-sufficient 16 years after separation and then lost job, no further entitlement, support terminated).
More often, the reason that the recipient suffers a big drop in income after separation is illness or disability. It is difficult to separate out the post-separation income decrease issue from the more dominant disability issues: see “Exceptions” above. One of the leading cases would be Fyfe v. Jouppien, 2011 ONSC 5462, a custodial payor case where the husband became ill after separation and was entitled to support, but the wife had no ability to pay. In that decision, Justice Chappel identified, at para 54, six helpful principles that can be applied to non-compensatory claims arising after separation. Central to this analysis are mutuality and interdependence during marriage and after separation, the interval of time to the post-separation disability or need, and the length of the relationship. Where a disability arises after separation, there will be arguments about entitlement and the balancing of these factors can lead to different outcomes: M.E.K. v. M.K.K., 2014 BCSC 2037 (entitled); Tscherner v. Farrell, 2014 ONSC 976 (entitled, but court recognizes that some would disagree); or Peters v. Peters, 2015 ONSC 4006 (not entitled, but entitlement could well have been found on the facts).
The recipient’s post-separation disability often leads to a finding of entitlement and an award of spousal support, but sometimes a lower amount than the SSAG formula range: G.W.C. v. K.C.C., 2015 BCSC 1802 (19-year traditional marriage, wife working at separation, suffered accidents afterwards, non-compensatory support based on husband’s income at separation 9 years earlier); Tscherner v. Farrell, 2014 ONSC 976 (19-year marriage, wife accident post-separation, amount below SSAG range, as her need unrelated to marriage); Fuerst v. Fuerst, 2014 ONSC 1506 (wife cancer surgery, income down from $35,000 to $22,256, low-end SSAG after 28-year cohabitation and marriage); and Firth v. Firth, 2012 BCSC 857 (wife’s medical conditions, “vestige of connection” remains, delayed claim, modest award, lump sum $10,000). In Soschin v. Tabatchnik, 2013 ONSC 1707, after an 11-year relationship with no children, a lump sum of $40,000 was ordered, despite a final settlement agreement, where the wife had experienced catastrophic mental illness after separation. In fixing the lump sum, Mackinnon J. considered various SSAG scenarios and calculations.
As with the post-separation income increase of the payor, you should prepare alternative SSAG calculations in this situation too. The outside boundaries of the debate will be determined by the initial income calculations on one end and the current incomes on the other.
(g) Delayed claims
Another sub-set of unusual cases has turned up recently, cases where the recipient makes an initial claim for spousal support long after separation. In some cases, the reason for the delayed claim is the recipient’s disability after separation, raising the difficult issues mentioned in the preceding section. In others, there are various reasons put forward for the delay, sometimes accepted, sometimes not. Claims for retroactive support after long delays are often rejected, at least in part, discussed further below under “Retroactive Spousal Support”. Here we deal with prospective support claims.
In an earlier case, Van Rythoven v. Van Rythoven,  O.J. No. 3648 (upheld 2010 ONSC 5923 (Div.Ct.)), the court found the SSAG “of little use” in resolving a delayed claim, where the disabled wife was seeking support 13 years after her time-limited support had ended (in the end, the court did order support at the high end of the SSAG range using the spouses’ current incomes).
Delayed claims can raise issues of entitlement, especially if the delay is long enough: see Howe v. Howe, 2012 ONSC 2736 (24-year delay in claim after 13-year marriage, agreement for unequal division of property, other issues too, no entitlement).
If there is entitlement, the SSAG are of some use in delayed claims. But delayed claims do raise tricky income issues: what incomes should be used for the spouses after a long delay? Over time, incomes will change for both payor and recipient. If the delay is long and the claim is non-compensatory, then the separation date incomes may be appropriate. On the other hand, if the claim is compensatory, the current incomes may be a better guide. Again, both sets of calculations should be done, as well as some others to reflect spousal incomes as they changed over the period of the delay. Unfortunately, these income issues are often not addressed in the cases.
In Quackenbush v. Quackenbush, 2013 ONSC 7547, Justice Mackinnon did take the SSAG calculations into account, but ordered spousal support to the disabled wife of $300 per month, about half the low end of the SSAG range. It was a 19-year marriage, but a 1990 separation and a 2001 filing. The extreme delay justified the modest amount, said the court. There was no information in the decision on the payor’s income at separation.
In another delay case involving a disabled recipient, Dingle v. Dingle, 2010 ONCJ 731, the court used the current incomes of the spouses, and fixed support at the high end of the SSAG range, despite a 7 ½ year delay, where it had been a 9-year marriage and a lengthy ISO procedure. See also: G.W.C. v. K.C.C., 2015 BCSC 1802 (9-year delay, separation date income used for payor, post-separation income reduction of recipient wife); and Firth v. Firth, 2012 BCSC 857.
Delayed claims may also raise difficult issues of future duration, depending upon the disposition of any retroactive support issues.
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