Spousal Support Quantum and Retroactive Adjustments

Pursuant to section 15.2(1) of the Divorce Act, "a court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sum, as the court thinks reasonable for the support of the other spouse." 

The factors for making the order are listed in subsection 4, which requires the court to “take into consideration the condition, means, needs and other circumstances of each spouse, including:

  1. the length of time the spouses cohabited;
  2. the functions performed by each spouse during cohabitation; and
  3. any order, agreement or arrangement relating to support of either spouse."

The stated objectives of a spousal support order pursuant to section 15.2(6) of the Divorce Act are to:

  • Recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
  • Apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;
  • Relieve any economic hardship of the spouses arising from the breakdown of the marriage; and
  • Insofar as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

The Spousal Support Advisory Guidelines (SSAG) are a helpful but not mandatory tool to follow in setting the quantum of spousal support. The SSAG use the incomes of each party, the respective obligations for child support, the age of the parties and the length of the marriage as the main considerations. There are, however, several other important considerations in the circumstances of the parties which take the issue of quantum outside the basic SSAG framework. Departure from a strict application of the SSAG may also be appropriate in circumstances of a payor whose income exceeds $350,000.00 per annum. 

The guiding factors and objectives, in tandem with the SSAG, are as stated in ss. 15.2(4) and (6) of the Divorce Act.

Often the recipient’s entitlement to spousal support is self-evident. This is so when it is easily recognized the recipient has suffered an economic disadvantage from the marriage breakdown. The recipient has struggled financially, as compared to the lifestyle which the recipient enjoyed prior to the breakdown of the marriage, particularly where the payor has continued a similar lifestyle following separation. The recipient will have during the marriage, devoted time and effort to supporting the payor’s endeavours and ultimate business success by looking after the household and raising their children, while the payor could focus on earning an income to support the family and building a successful business/career. The recipient may have developed a dependency on the payor from the beginning of their marriage. The recipient may not have been employed at all outside the home after the birth of their children as a result of joint decisions of the spouses.

Following separation, in a reasonable time, it is expected that the recipient make efforts to become at least partly self-supporting by obtaining employment directly or re-training. The recipient should negotiate reasonably to promote the resolution of the matrimonial litigation. The recipient should, when reasonable, after separation, agree to sell the matrimonial home, if the child situation, financial means and the logic to remain in the matrimonial home no longer applies.

As stated in s. 15.2(6)(d) of the Divorce Act, one objective of a support order "in so far as practicable", is to "promote the economic self-sufficiency of each spouse within a reasonable period of time".

If no such efforts have been made by the recipient, it is appropriate for the court to make an adjustment to reduce spousal support in order to promote reasonable efforts at self-sufficiency by the recipient.

It is also necessary to consider the tax implications of a lump sum spousal support adjustment that is made retroactively. Had the payor been paying the full amount of support on a monthly basis the payor would have had the benefit of a tax deduction at a rate approaching 46%. On the other hand, the recipient would have had a corresponding tax obligation on the monthly support order, at a lower rate of approximately 30%. Accordingly, it is necessary to discount the total lump sum retroactive adjustment of spousal support by an amount that takes this into consideration.

April 2015