7 THE WITHOUT CHILD SUPPORT FORMULA
7.1 The Basic Structure of the Without Child Support Formula
The without child support formula is set out in the box below in its most basic form. The formula is in fact two formulas—one for amount and one for duration. The formula generates ranges for amount and duration, rather than fixed numbers.
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Support obligations to children or spouses from prior relationships are dealt with as exceptions under both formulas; see Chapter 11.
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Some medium length marriages with dependent children in which support is initially determined under the with child support formula may cross-over to the without child support formula for a re-determination of amount after child support ceases. Crossover is discussed in Chapter 14, Variation and Review, below.
63 In developing this formula we drew in part on the American Law Institute (ALI) proposals referred to in
Chapter 1, including the concept of merger over time. As we discuss further below, this concept—although not the terminology—is strongly anchored in our current law of spousal support.
There are two crucial factors under the formula:
• the gross income difference between the spouses, and
• the length of the marriage, or more precisely, as will be explained below, the length of the period of cohabitation.
Both amount and duration increase incrementally with the length of marriage.
A simple example illustrating the basic operation of the without child support formula will be helpful at this point before we venture further into its more complex details. The primary purpose of this example is to show the basic calculations required under the formula and to give a sense of the outcomes the formula generates.
Example 7.1
Arthur and Ellen have separated after a 20-year marriage and one child. During the marriage Arthur, who had just finished his commerce degree when the two met, worked for a bank, rising through the ranks and eventually becoming a branch manager. He was transferred several times during the course of the marriage. His gross annual income is now $90,000. Ellen worked for a few years early in the marriage as a bank teller, then stayed home until their son was in school full time. She worked part time as a store clerk until he finished high school. Their son is now independent. Ellen now works full time as a
receptionist earning $30,000 gross per year. Both Arthur and Ellen are in their mid forties.
Assuming entitlement has been established in this case, here is how support would be determined under the without child support formula.
To determine the amount of support:
• Determine the gross income difference between the parties: $90,000 - $30,000 = $60,000
The Without Child Support Formula
Amount ranges from 1.5 to 2 percent of the difference between the spouses’ gross incomes (the gross income difference) for each year of marriage (or more precisely, year of
cohabitation), up to a maximum of 50 percent. The range remains fixed for marriages 25 years or longer, at 37.5 to 50 percent of income difference. (The upper end of this maximum range is capped at the amount that would result in equalization of the spouses’ net incomes—the net income cap).
Duration ranges from .5 to 1 year for each year of marriage. However support will be
indefinite (duration not specified) if the marriage is 20 years or longer in duration or, if the marriage has lasted five years or longer, when years of marriage and age of the support
• Determine the applicable percentage by multiplying the length of the marriage by 1.5-2 percent per year:
1.5 X 20 years = 30 percent to
2 X 20 years = 40 percent
• Apply the applicable percentage to the income difference: 30 percent X $60,000 = $18,000/year ($1,500/month) to
40 percent X $60,000 = $24,000/year ($2,000/month)
Duration would be indefinite (duration not specified) in this case because the length of the marriage was 20 years.
Thus, assuming entitlement, spousal support under the formula would be in the range of $1,500 to $2,000 per month for an indefinite (not specified) duration. This formula amount assumes the usual tax consequences, i.e. deductible to the payor and taxable to the recipient. It would also be open to the normal process of variation and review.
An award of $1,500 per month, at the low end of the range, would leave Ellen with a gross annual income of $48,000 and Arthur with one of $72,000. An award of $2,000 per month, at the high end of the range, would leave Ellen with a gross annual income of $54,000 and Arthur with one of $66,000. In Chapter 9 we deal with the factors that determine the setting of a precise amount within that range.
On first glance, this formula no doubt looks like an entirely new approach to spousal support, far removed both from the Divorce Act and its spousal support objectives and factors and from the principles of compensatory and non-compensatory support that the Supreme Court of Canada articulated in Moge and Bracklow. Before we examine the operation and application of this formula in more detail, we explain the concept of “merger over time” that underlies this formula and how it relates to existing theories of spousal support and the current law. We will show that the formula is a “proxy measure” for factors such as economic disadvantage, need, and standard of living that are currently used to determine spousal support outcomes.