ARCHIVED — Guidelines Amending the Federal Child Support Guidelines
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Vol. 143, No. 13 — June 24, 2009
SOR/2009-181 June 11, 2009
P.C. 2009-950 June 11, 2009
Her Excellency the Governor General in Council, on the recommendation of the Minister of Justice, pursuant to subsection 26.1(1) (see footnote a) of the Divorce Act (see footnote b), hereby establishes the annexed Guidelines Amending the Federal Child Support Guidelines.
GUIDELINES AMENDING THE FEDERAL CHILD SUPPORT GUIDELINES
1. Schedule III of the Federal Child Support Guidelines (see footnote 1) is amended by adding the following after section 13:
14. If a spouse is deemed to have received a split-pension amount under paragraph 60.03(2)(b) of the Income Tax Act that is included in that spouse’s total income in the T1 General form issued by the Canada Revenue Agency, deduct that amount.
COMING INTO FORCE
2. These Guidelines come into force on the day on which they are registered.
(This statement is not part of the Guidelines.)
Issue and objectives
The Federal Child Support Guidelines (Federal Guidelines) are regulations made under the DivorceAct. They consist of a set of rules and tables used in determining child support. They are based on parents’ ability to pay using the parent’s total income (see footnote 2) (adjusted by Schedule III of the Federal Guidelines), the number of children and the province of residence. Schedule III of the Federal Guidelines permits certain adjustments to total income to better reflect the parents’ ability to pay.
Gross income is used under the Federal Guidelines as it is considered a fairer reflection of income because net income allows a large number of discretionary deductions that can make it difficult to set fair levels of support. Also, the formula behind the tables of the Federal Guidelines already accounts for the taxes a parent will pay at both the federal and provincial/territorial level, which explains why there are different tables for each province and territory.
The Pension Income Splitting program was implemented under the Income Tax Act, in 2007, to allow Canadian residents to allocate up to one-half of their eligible pension income to their spouse or common-law partner for tax purposes. (see footnote 3) This has the effect of lowering a couple’s household tax liability. It also has the effect of artificially increasing the gross income of the recipient, even though there is no actual transfer of funds to him or her. As such, because the calculation of child support is based on a parent’s total income, if a recipient is also a child support payor, his or her child support obligation is increased as a direct result of his or her artificially increased total income. This is an unintended impact of pension income splitting on child support calculations. Since there is no transfer of funds, this impact is contrary to the Federal Guidelines’ fundamental principle that child support should be based on a parent’s ability to pay. Furthermore, the Federal Guidelines do not currently include a relief mechanism permitting the allocated pension amount to be deducted from the recipient’s total income for the purpose of calculating child support.
An amendment to Schedule III of the Federal Guidelines is necessary to address the impact of pension income splitting on the calculation of child support.
This amendment ensures that the amount of pension income received by a person, in accordance with the Pension Income Splitting program, does not have an impact on the calculation of child support where that person is also a parent paying child support. The objectives of this amendment are
- to maintain the principle on which the Federal Guidelines are based, i.e. that parents have a joint financial obligation to maintain the children of the marriage in accordance with their ability to contribute;
- to ensure that income used under the Federal Guidelines continues to reflect a person’s actual ability to pay; and
- to uphold the fairness, predictability and consistency of the determination of child support under the Federal Guidelines.
Description and rationale
The amendment to Schedule III of the Federal Guidelines permits the deduction of the allocated pension splitting amount from the recipient’s income used for child support purposes. The amendment is intended to neutralize the impact of pension income splitting on the application of the Federal Guidelines by ensuring that the parent’s income used for the purposes of applying the Federal Guidelines reflects their actual ability to pay child support.
It is worth noting that the amendment only allows the deduction from the recipient’s income, not the transferor’s. This is because pension income splitting does not affect a transferor’s total income. In addition, the court retains its discretion to impute any income to spouses, under section 19 of the Federal Guidelines.
This amendment does not affect the rules established under the Income Tax Act regarding the Pension Income Splitting program.
This amendment may result in some minor costs to the federal government for updating publications. There may be some minor costs to the provinces and territories for making mirroring amendments to their provincial and territorial child support guidelines.
Discussions between Justice Canada and the provinces and territories on the impact of pension income splitting on the Federal Guidelines were held. The proposed amendment was developed in collaboration with the provinces and territories. All provinces and territories, except Quebec, have adopted child support guidelines that are either fairly similar or identical to the Federal Guidelines. It is expected that provinces and territories will make mirroring amendments to their child support guidelines. It should be noted that, after analysing the question, Quebec has concluded that their regulations (which are different than the Federal Guidelines) do not require an amendment.
Implementation, enforcement and service standards
As this amendment is consequential in nature and not substantive, an implementation plan was not required.
Family, Children and Youth Section
Department of Justice
S.C. 1997, c. 1, s. 11
R.S., c. 3 (2nd Supp.)
A person’s income can be found on Line 150 (i.e. “Total Income”) of their income tax form. It should be noted, however, that this amount may need to be adjusted if it does not reflect the most current income information.
For purposes of this document, the person who allocates the amount will be called the “transferor,” while the person who receives it will be called the “recipient.”
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