The Formulas

The Advisory Guidelines are constructed around two basic formulas, rather than just one formula: the without child support formula and the with child support formula. The dividing line between the two is the absence or presence of a dependent child or children of the marriage, and a concurrent child support obligation, at the time spousal support is determined.

3.3.2 Determining income

Both formulas use income sharing as the method for determining the amount of spousal support, not budgets. Income-sharing formulas work directly from income, as income levels essentially determine the amount of support to be paid. Under the Advisory

Guidelines, the accurate determination of income becomes a much more significant issue in spousal support cases than it has in the past, and there may be more incentives to dispute income. However, because the Advisory Guidelines generate ranges and not specific amounts, absolute precision in the determination of income may not be as crucial as under the Federal Child Support Guidelines. Many cases will involve combined claims for child and spousal support, where a precise determination of income is already required for child support purposes.

The starting point for the determination of income under both formulas is the definition of income under the Federal Child Support Guidelines, including the Schedule III adjustments. More details on the determination of income are found in Chapter 6.

The Advisory Guidelines do not solve the complex issues of income determination that arise in cases involving self-employment income and other forms of non-employment income. In determining income it may be necessary, as under the Federal Child Support Guidelines, to impute income in situations where a spouse’s actual income does not appropriately reflect his or her earning capacity. In some cases the issue will be imputing income to the payor spouse. On variation and review the issue may be imputing income to the recipient spouse if it is established that the he or she has failed to make appropriate efforts towards self-sufficiency.

3.3.3 The without child support formula

In cases where there are no dependent children, the without child support formula

applies. This formula relies heavily upon length of marriage—or more precisely, the length of relationship, including periods of pre-marital cohabitation—to determine both the amount and duration of support. Both amount and duration increase with the length of the relationship. This formula is constructed around the concept of merger over time which offers a useful tool for implementing both compensatory and non-compensatory support objectives in cases where there are no dependent children in a way that reflects general patterns in the current law.

Under the basic without child support formula:

• The amount of spousal support is 1.5 to 2 percent of the difference between the spouses’ gross incomes for each year of marriage, to a maximum range of 37.5 to 50 per cent of the gross income difference for marriages of 25 years or more (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 is .5 to 1 year of support for each year of marriage, with duration becoming indefinite (duration not specified) after 20 years or, if the marriage has lasted 5 years or longer, when the years of marriage and age of the support recipient (at separation) added together total 65 or more (the “rule of 65”).

The without child support formula is discussed in detail in Chapter 7. 3.3.4 The with child support formula

In cases where there are dependent children, the with child support formula applies. The distinctive treatment of marriages with dependent children and concurrent child support obligations is justified by both theoretical and practical considerations and is reflected in current case law.

On the theoretical front, marriages with dependent children raise strong compensatory claims based on the economic disadvantages flowing from assumption of primary responsibility for child care, not only during the marriage, but also after separation. We have identified this aspect of the compensatory principle as it operates in cases involving dependent children as the parental partnership principle, and have drawn on this concept in structuring the with child support formula. For marriages with dependent

children, length of marriage is not the most important determinant of support outcomes as compared to post-separation child-care responsibilities.

On the practical front, child support must be calculated first and given priority over spousal support. As well, the differential tax treatment of child and spousal support must be taken into account, complicating the calculations. The with child support formula thus works with computer software calculations of net disposable incomes

Under the basic with child support formula:

• Spousal support is an amount that will leave the recipient spouse with between 40 and 46 percent of the spouses’ net incomes after child support has been taken out. (We refer to the spouses’ net income after child support has been taken out as Individual Net Disposable Income or INDI).

• The approach to duration under this formula is more complex and flexible than under the without child support formula; orders are initially indefinite in form (duration not specified) but the formula also establishes durational ranges which are intended to structure the process of review and variation and which limit the cumulative duration of awards under this formula. These durational limits rely upon both length of

marriage and the ages of the children.

The with child support formula is really a cluster of formulas dealing with different custodial arrangements. Shared and split custody situations require slight variations in the computation of individual net disposable income, as the backing out of child support obligations is a bit more complicated. There is also a different, hybrid formula for cases where spousal support is paid by the custodial parent. Under this formula, the spouses’ Guidelines incomes are reduced by the grossed-up amount of child support (actual or notional) and then the without child support formula is applied to determine amount and duration. Finally, there is one more hybrid formula for those spousal support cases where the child support for adult children is determined under section 3(2)(b) of the Child Support Guidelines.

The with child support formula is discussed in detail in Chapter 8. 3.3.5 Length of marriage

Under the Advisory Guidelines length of marriage is a primary determinant of support outcomes in cases without dependent children. Under the without child support formula the percentage of income sharing increases with length of the marriage; the same is true for duration of support.

Length of marriage is much less relevant under the with child support formula, although it still plays a significant role in determining duration under that formula.

Given the relevance of length of marriage under the Advisory Guidelines, it is important to clarify its meaning. While we use the convenient term length of marriage, the more

accurate description is the length of the cohabitation, which includes periods of pre- marital cohabitation, and ends with separation.

3.3.6 Ranges

The Advisory Guidelines do not generate a fixed figure for either amount or duration, but instead produce a range of outcomes that provide a starting point for negotiation or adjudication.

Ranges create scope for more individualized decision-making, allowing for argument about where a particular case should fall within the range in light of the Divorce Act’s multiple support objectives and factors. Ranges can also accommodate some of the variations in current practice, including local variations in spousal support cultures. 3.3.7 Ceilings and floors

As with the Federal Child Support Guidelines, the Spousal Support Advisory Guidelines

establish ceilings and floors in terms of the income levels to which they are applicable. Both the ceiling and the floor have been set by reference to the annual gross income of the payor. The ceiling has been set at a gross annual income for the payor of $350,000 and the floor at a gross annual income of $20,000. Ceiling and floors are dealt with more extensively in Chapter 11.