At one time getting child support paid involved a game of chase through the courts with an uncertain payoff, often costing more in legal fees than the ultimate result obtained. While Champ seems to be satisfied with the prey he has caught in the photo above, that was not true for the vast majority of parents who had to use the courts to chase what they needed to meet their children’s basic needs.
Since 1997 in Canada the Federal Child Support Guidelines provide certainty of child support payable for most people whose income is reported on T4s. The mandatory support tables set out amounts based on income, province of residence, and number of children.
In 2006 the Supreme Court of Canada said that receiving such child support is the right of the child, and parents may not bargain it away. Support obligations arise upon the birth of the child. At one time, parents raising children had to chase the non-residential parents through the courts to obtain income information and often then again to get an order for child support. Enforcing those Orders and actually obtaining the money was another lengthy process, often requiring the help of the government collection agency, Maintenance Enforcement. It was difficult to obtain orders with retroactive effect, so non-residential parents dragging out court proceedings could stave off having to support their children, in some cases for years. But even after the Guidelines came into law in 1997, the issue of retroactive support continued to be legally unclear.
That ended with the decisions of the Supreme Court of Canada in 2006 in the precedent setting cases of D.B.S. v S.R.G.; T.A.R. v. L.J.W.; Daryl Ross Henry v.Celeste Rosanne Henry and Kenneth Hiemstra v. Geraldine Hiemstra, (all released on the same day and generally referred to as the D.B.S. decision).D.B.S. made the law very clear.
When a person knows they have income, and knows that they have a child/ren who do not live with them, they are required to be the payor of support. Payors are obliged by the law to pay support to the parent with whom the child or children reside. The amounts are based on the tables in the Federal Child Support Guidelines. When the child is living with them they are the payee, or recipient. Recipients have a legal obligation to ask for the proper support to be paid for the children. Each parent is obliged by the law to exchange the annual income information listed in section 21 of the Guidelines. Retroactive awards can be ordered by the courts, usually not for more than three years back, but if the courts find that there is blameworthy conduct by a parent who has obviously tried to avoid support obligations, (eg. by failing to provide income information) then a retroactive award can be made for much earlier than three years.
For most salaried employees, their starting point to calculate their “Guideline” income is Line 150 on their CRA T1 General. This is provided for by section 16 of the Guidelines, but that section also says that the Line 150 income is to be “adjusted in accordance with Schedule III”.
Sections 17 to 20 of the Federal Child Support Guidelines set out the manner in which a court may assess an “Imputed” income against a person if the court believes that the Line 150 starting point is not the fairest way to determine Guideline income. Schedule III provides a list of add-backs or adjustments to income in specified circumstances where income is derived from corporations, partnerships or sole proprietorships controlled by the payor, or by people who are not arms length to the payor.
In those situations the Line 150 numbers are not necessarily the numbers a court would find reasonable or fair.
This is the point in the enquiry “what is my Guideline income?” at which legal advice is essential. Since setting a Guideline income is so dependent upon the facts of an individual case, the interplay of the Guidelines and prior decisions of the courts, and since expert valuation advice from accountants must often be obtained, moving forward blindly without legal guidance can and will hurt both the payor and the payee. While Section 15(2) of the Guidelines provides that a payor and a payee can agree on a Guideline income after exchanging Section 21 financial information, the court retains the power to find such agreements to be reasonable, and therefore enforceable by the court, or to find them unreasonable and to refuse to ratify them.
This is the time for legal advice. Being penny wise and pound foolish is not a good idea.