SPOUSAL SUPPORT ADVISORY GUIDELINES:
REPORT ON REVISIONS

In January 2005, the federal Department of Justice released the "Spousal Support Advisory Guidelines: A Draft Proposal". With the release of the Draft Proposal, the next stage of the Advisory Guidelines project began — one of discussion, experimentation, feedback and revision. Since then, the Advisory Guidelines have been widely used by spouses, lawyers, mediators and judges in thousands of spousal support cases. The Guidelines have been considered in over 350 reported decisions. As the project directors, we have toured the country twice since the release of the Draft Proposal, once to inform and educate various audiences, and then again to obtain detailed feedback in small group sessions. We have also received a steady stream of submissions, comments and suggestions from members of the public, lawyers and mediators. Finally, the federal Advisory Working Group on Family Law met a number of times over the past three years, to assist us in reflecting upon the feedback received and possible revisions.

The final revised version of the Spousal Support Advisory Guidelines has now been released, replacing the Draft Proposal as the basic reference document on the Advisory Guidelines. It is a completely-rewritten and reorganized version of the earlier Draft Proposal. This Report on Revisions is being released together with the final version. The purpose of this Report is to highlight the major changes between the Draft Proposal and the final revised version. In this Report, we will also explain some of the background to the changes.

We have organized this brief Report in four parts. First, we review what has not changed in the final version. Much of the basic structure of the Advisory Guidelines remains unchanged. Second, we rewrote or reorganized much of the material from the Draft Proposal, both to clarify meaning and to focus attention on aspects that are often ignored. We highlight the most important revisions to the Advisory Guidelines in Part III, and we give separate treatment in Part IV to the important changes to the "Exceptions".

I. What Has NOT Changed in the Final Version

Before detailing the revisions, it is first important to emphasize what has NOT changed.

1. The Guidelines are Still Advisory, and Not Legislated

The Advisory Guidelines have been revised and refined, but they remain voluntary, informal and advisory. They are not legislated. The Advisory Guidelines do not deal with entitlement, but only the amount and duration of spousal support.

2. No Change to the Basic Formulas

No change has been made to the basic structure of the formulas: the without child support formula and the with child support formula.

The ranges for amount have by and large proven to fit the decided and negotiated outcomes across Canada , based upon reported decisions and feedback from our sessions. In some parts of the country, amounts tend to fall in the lower end of the ranges, while in other areas amounts end up at the higher end. Most lawyers, mediators and judges did tell us that the ranges were "right" or "about right" for their area or province or territory.

There were comments about particular fact situations and specific sub-categories of cases where the ranges seemed "high" or "low", compared to expected outcomes, even after the use of restructuring and the proposed exceptions. As a result of this feedback, we did make some minor adjustments to the formulas and we did add some new exceptions. Two recent revisions deserve mention here and will be described in more detail later.

Under the without child support formula, there is sometimes a problem with the ranges for amount in shorter marriages of less than 6 or 7 years, where the recipient spouse has little or no income and the scope for restructuring is limited. We did not wish to change the structure of the formula itself for this one sub-set of cases. Instead, we added an exception, the basic needs/hardship exception for short marriages. This exception is also available under the custodial payor formula.

Under the with child support formula, the issue was not amount, but duration, mostly for shorter marriages with young children. We had already established a maximum duration under this formula in the Draft Proposal, and we have added a minimum duration in the final version.

No changes have been made to the ceilings or floors for the operation of the formulas. The ceiling continues as a gross payor income of $350,000 per year, above which support is to be determined on an individual case-by-case basis. The floor continues as a gross payor income of $20,000 per year, below which spousal support is only granted in exceptional cases. There is also greater flexibility to go below the range for gross payor incomes just above the floor, from $20,000 to $30,000 per year.

3. No Changes on Variation, Review, Remarriage or Second Families

The formulas are intended to apply to initial orders and agreements. Where there is an entitlement to spousal support, the formulas generate ranges for amount and duration, both at the interim stage and at the time of divorce or final hearing. Spousal support orders or agreements are usually subject to variation or review thereafter. In the Draft Proposal, we identified certain situations where the Advisory Guidelines would apply, including increases in the recipient's income and decreases in the payor's income. In other situations, more complex issues of entitlement make it harder to apply the formulas on variation and review, notably post-separation increases in the payor's income, post-separation decreases in the recipient's income, the recipient's remarriage or repartnering, and subsequent children (second families).

Three years after the release of the Draft Proposal, it has not been possible to develop more formulaic solutions to guide resolution of these more complex issues. Sometimes the Advisory Guidelines can be of some assistance, as in assessing the ranges of support for different incomes on variation or review where the payor's income has increased substantially. But, for the most part, we have left these issues to case-by-case negotiation and decision-making, until the law develops further.

II. Rewriting and Reorganization:
Renewed Emphasis on Entitlement, Using the Ranges, Restructuring, Exceptions, Self-Sufficiency

We have completely rewritten and reorganized the final version. There are many points in the text where we have expanded or clarified the analysis and presentation, based upon the comments, questions and feedback we received over the past three years. This Report does not focus on these sorts of changes. However, we would like to flag one change, a renewed emphasis in the final version on aspects of the Advisory Guidelines other than the formulas: entitlement, using the ranges, restructuring, exceptions and self-sufficiency.

One of the early problems with the Advisory Guidelines has been their unsophisticated use. Spouses, lawyers and judges often look only at the formula ranges, treating the Advisory Guidelines as if they were just the formulas. Important issues like entitlement, location of outcomes within the ranges, restructuring, exceptions and self-sufficiency were just ignored. Too often, the computer software screens were the beginning and the end of the analysis.

We have noticed that this problem is easing over time, especially in those jurisdictions and areas where the Advisory Guidelines are used in every spousal support case. Lawyers and judges become more sophisticated in their use and more accustomed to looking at these additional steps in the analysis.

In the final version of the Advisory Guidelines, we have emphasised these topics by reorganizing the material into distinct chapters for each of these topics. We have also encouraged the software suppliers to add prompts and lists to their programs, to highlight these additional steps.

III. Important Revisions to the Advisory Guidelines, Other Than Exceptions

In this Part, we identify and explain the important revisions to the Advisory Guidelines. The revisions and additions to the exceptions are sufficiently significant that we have devoted a separate part, Part IV, to their treatment.

1. The Definition of Income: Social Assistance, UCCB, Non-Taxable Income

The starting point for the determination of income under the Spousal Support Advisory Guidelines is the definition of income under the Federal Child Support Guidelines. Here we address some specific modifications, all made since the Draft Proposal.

First, social assistance is not income for spousal support purposes, for either the recipient or the payor. Under the Federal Child Support Guidelines, social assistance is treated as income, but only "the amount attributable to the spouse" and not any child-related amounts: Schedule III, s. 4. Traditionally, the law has treated a recipient on social assistance as a person with zero income. A payor on social assistance is by definition unable to support himself or herself and thus has no ability to pay. We issued this clarification early on after the release of the Draft Proposal.

Second, the Universal Child Care Benefit (UCCB) came into effect in July 2006, after the release of the Draft Proposal. Under the UCCB, parents receive a taxable benefit of $100 per month for each child under the age of 6, an additional source of taxable income for a custodial or primary parent. The UCCB required amendments to the Federal Child Support Guidelines, effective March 2007. Consistent with our treatment of the Child Tax Benefit under the without child support formula, the UCCB for a child who is a child of the marriage will also be included in the income of the custodial or primary parent in determining spousal support.

Third, where a payor spouse has an income entirely or mostly from legitimately non-taxable sources, then a new exception has been created, under both formulas. This exception recognizes that the payor's inability to deduct spousal support for income tax purposes may in some cases cause problems under the formulas. The exception is discussed in Part IV below.

2. Capping the Maximum at 50 per cent of Net Income under the Without Child Support Formula

In long marriages of 25 years or more, the without child support formula generates the maximum range of 37.5 to 50 per cent of the gross income difference. In some cases, the maximum of 50 per cent can leave the recipient spouse with more than 50 per cent of the spouses' net income, notably where the payor is still employed and subject to tax and employment deductions and the recipient has little or no income. This result should never occur.

To avoid this result, we have modified this formula by introducing a net income "cap": the recipient should never receive an amount of spousal support that will leave him or her with more than 50 per cent of the spouses' net disposable income or monthly cash flow.[1]

The software programs can calculate this net income cap with precision and will present the cap as the upper limit of the range. For those without software, or without more precise net income calculations, the net income cap can be estimated crudely by hand, at 48 per cent of the gross income difference. This "48 per cent" method is a second-best, but adequate, alternative.

3. Indefinite Means "Indefinite (Duration Not Specified)"

In using the term "indefinite" in the Draft Proposal, we simply adopted a word that had been used for years in spousal support law to mean "an order for support without a time limit at the time it is made". Indefinite support does not necessarily mean permanent support or infinite support. And it certainly does not mean that support will continue indefinitely at the level set by the formula, as such orders are open to variation as circumstances change over time.

After the release of the Draft Proposal, we were very surprised to learn from our feedback sessions that the term "indefinite" was being misinterpreted by many as permanent support. We realized that we would have to develop a new term, to convey that such orders or agreements are subject to variation and review and, through that process, even to time limits and termination. Wherever the term "indefinite" is used in the formulas, we have added a parenthetical explanation to counter this misinterpretation: "indefinite (duration not specified)".

4. The Creation of a Durational Range under the Basic With Child Support Formula

All orders under the with child support formula are indefinite in form, which now means "indefinite (duration not specified)". In cases involving dependent children, there are often review terms attached to such orders or agreements and, of course, they are subject to variation. In the Draft Proposal, we set out a maximum duration or "outside time limit", to maintain consistency with the without child support formula and to provide some structure for the process of review and variation. The maximum duration was the longer of either one year of support for each year of marriage or until the youngest or last child completed high school.

Absent any lower end of the range, however, the maximum duration was not treated as an outside time limit, but instead as a default time limit, as a period for which a recipient was entitled to receive spousal support. The problem was especially acute in shorter marriages with very young children. This outcome was never our intention and, throughout our feedback sessions, we canvassed lawyers, mediators and judges about how these shorter marriage cases worked out in practice. Lawyers in particular wanted to create a range for duration that would leave room for meaningful negotiation around duration. Over the past three years, we did develop a strong sense of what the lower end of the durational range for this formula could be.

As with the upper end of the durational range, there are two tests for the lower end of the durational range under the with child support formula. We have renamed these tests, to clarify their rationale and operation: the length-of-marriage test and the age-of-children test. Under these tests, the lower end of the range is the longer of either one-half year of support for each year of marriage or until the date after the youngest child starts attending school full-time.

The school date for the age-of-children test will vary from province to province and even from school district to school district, based upon the availability of junior kindergarten, the age rules governing school registration and the program the child takes.

In practice, the age-of-children test will determine the lower end of the durational range for shorter marriages and very young children, while the length-of-marriage test will typically apply to marriages of ten years or more or cases where children are already in school or close to starting full-time school.

It should be kept in mind that this change adds a lower end to the durational range for support and it says nothing about the proper amount of spousal support for this period, nor about continuing entitlement. It does not create a minimum entitlement. Further, the initial order will still be indefinite (duration not specified). Any time limit will only appear after a review or variation hearing, especially in cases involving young children. Finally, under the with child support formula, the rationale for support is compensatory and this should push most cases towards the longer end of the durational range, and away from the lower end of that range.