On May 1, 1997, the Federal Government introduced the National Child Support Guidelines and the Province of Nova Scotia subsequently adopted these Guidelines. The Federal Government and the Province of Nova Scotia have revised the Support Guidelines and there are new support amounts applicable as of May 1, 2006.
The first step in determining the appropriate amount of child support is to determine the payor parent’s total annual income, before taxes. Annual income is the money a person earns from employment and self-employment and income from investments. This includes all sources of income in the payor parent’s tax return (for example: salary, wages, commissions, Employment Insurance, Social Assistance).
Each province has their own separate tables and the appropriate table is the province where the payor parent resides. If the payor parent resides outside Canada, then the appropriate table is that provincial table for the province in which the recipient parent resides.
The amount of child support increases with the number of children.
Since the Child Support Guidelines came into effect, child support is no longer a taxable income to the recipient parent, nor is it a tax deduction for the payor parent. Orders or agreements predating the Child Support Guidelines still have the old tax treatment; however, if there is any variation whatsoever in the Order or agreement, child support falls under the new taxing regime.
Special or Extraordinary Expenses
In addition to the table amount of child support as calculated above, the payor parent may be required to pay a proportionate share of certain special or extraordinary expenses. These special or extraordinary expenses include:
- Child care expenses incurred as a result of the recipient parent’s employment, illness, disability or education or training for employment;
- That portion of the medical and dental insurance premiums attributable to the child/children;
- Health related expenses that exceed insurance reimbursement by at least $100.00 annually including orthodontic treatment, professional counselling provided by a psychologist, social worker, psychiatrist or any other person, physiotherapy, occupational therapy, speech therapy and prescription drugs, hearing aids, glasses and contact lenses;
- Extraordinary expenses for primary or secondary school education or for any other educational programs that meet the child’s particular needs;
- Expenses for post-secondary education; and,
- Extraordinary expenses for extracurricular activities.
In order to claim for these expenses, the recipient parent must provide proof of the expense in the form of supporting documentation; for example, childcare receipts.
These expenses are not necessarily shared equally, but based on the proportionate income of the parties. For example, if the recipient parent earns $20,000 per year, and the payor parent earns $80,000 per year, typically the recipient parent will be required to pay 20% of the special or extraordinary expenses, and the payor parent, 80%.
In determining the amount of the special or extraordinary expense, any subsidies, benefits or income tax deductions or credits must be considered. For example, the recipient parent would typically receive a tax deduction for his or her childcare expenses. Also, for example, the payor parent might claim the educational expenses as a deduction on his or her income tax return.
When an application is made for child support, the payor parent is required to provide complete financial disclosure to the recipient parent. If the payor parent is an employee, they must provide the following:
- A copy of every personal income tax return filed by the payor parent for each of the three most recent taxation years;
- A copy of every Notice of Assessment and Re-Assessment issued to the payor parent for each of the three most recent taxation years; and,
- The most recent Statement of Earnings indicating the total earnings paid in the year-to-date, including overtime or, where such a statement is not provided by the employer, a letter from the payor parent’s employer setting out that information including the payor parent’s right of annual salary or remuneration.
In addition, where the payor parent is self-employed, or controls a corporation, they must also provide the financial statements of their business or professional practice, other than a partnership, or corporation and subsidiaries, for the three most recent taxation years. They must also provide a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to, or on behalf of, persons or corporations with whom the payor parent does not deal at arms length. If the payor parent is a partner in a partnership, they must provide confirmation of his or her income and draw from the capital and income of the partnership for the three most recent taxation years.
Also, if the payor parent is a beneficiary under a trust, they must provide a copy of the trust settlement agreement and copies of the trust’s three most recent financial statements. Finally, if the payor parent receives income from Employment Insurance, Social Assistance, pension, Workers’ Compensation, disability payments or any other source, they must provide the most recent statements of income indicating the total amount of income from the applicable source during the current year or if such a statement is not provided, a letter from the appropriate authority stating the required information.
In almost all situations, there is a continuing obligation to provide income information even after the initial agreement or Court Order for child support. Typically, the disclosure as discussed above, is required to be disclosed each and every year by a specified date, usually shortly after the tax season ends. The idea behind this is that the amount of child support should be adjusted on an annual basis to take into account any increases or decreases in the payor parent’s income in the previous year. As referenced earlier, the Guidelines have been revised as of May 1, 2006. If you have a current support agreement or order in place which reflects support amounts set out in the Guidelines dated May 1, 1997, you should consult immediately with an experienced family law lawyer as there may be significant changes in support obligations. You may reference the updated Federal Child Support Guidelines effective May, 2006 at http://canada.justice.gc.ca/en/ps/sup/grl/Pdftab.htm.
To learn about the exceptions and special circumstances in The Child Support Guidelines, please refer to our Lawletter “Special Circumstances: The Child Support Guidelines”.
This information has been provided for general reference only. For advice on an actual matter, you should consult a lawyer. Connect with a member of our team today to schedule your free half hour consultation. To contact a member of our team call us at 902-469-9500 or 1-866-339-3400 or contact us online to make an appointment.