By: Ashley Iyathurai
Disclaimer: The information contained in this article is general in nature and does not constitute legal advice. You should contact the Law Office of Jeff Jiehui Li, or another experienced family lawyer if you are concerned about your family law issues.
When spouses split, the higher earning spouse may owe the other spousal support. The amount of spousal support will depend in part on the payor’s income. While this seems like a rather straight forward exercise, often times determining a payor’s income can become a contested issue. The general approach for fixing a payor’s income is found in the Child Support Guidelines. Under the Guidelines, income is based on the “total income” from the payor’s T1 General from the Canada Revenue Agency.
In some situations however, the “total income” number is not appropriate because it does not fairly reflect the payor’s actual income. The Spousal Support Advisory Guidelines (SSAG) establish ‘ceilings and floors’ for income. The ceiling is fixed at $350,000 gross annual income.
What is a ‘ceiling?’ The SSAG is widely used to fix the quantum and duration of spousal support. The spousal support is based in part on the parties’ income. However, where the payor’s income is above $350,000, this formula is not applied in the same way. Instead of automatically applying these formulas, these scenarios are dealt with on a case by case basis, as exceptions to the normal approach. This does not mean however that support will be capped at $350,000. Spousal support can be awarded in excess of the $350,000 ceiling as well.
In Halliwell v Halliwell, the court dealt with the Applicant’s claim for spousal support. At the time, it was unclear what the husband’s income was. Both parties called experts to testify about the husband’s income. The trial judge determined that the husband’s income was $1,000,000 per year.
The trial judge then used the SSAG to fix the amount of monthly spousal support based on the husband’s imputed income. The monthly spousal support came out to $28,978 per month. The court also made an order for $1,106,887 in retroactive spousal support that the husband owed to the wife. The husband appealed this decision.
On appeal, the court imputed an income of $675,000 per year to the husband. The court arrived at this number by using the mid-point number between the ceiling ($350,000) and the husband’s imputed income ($1,000,000). The court noted that this was preferable to simply applying the SSAG to the husband’s income of $1,000,000. Using this approach, the court ordered that spousal support be fixed at $21,000 per month.
This approach decreased the husband’s income for spousal support purposes from $1,000,000 to $675,000. This had the effect of significantly reducing the spousal support amount. The husband was now ordered to pay ongoing spousal support of $20,000 per month, and the retroactive support owed was adjusted as well to take into account the reduced monthly support.
If you are separating, it is important to accurately fix each party’s income for support purposes. This has a significant effect on the support owed. If you want to discuss your entitlement and rights to spousal support, contact the Law Office of Jeff Jiehui Li to schedule a consultation.
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