A question that is often asked when a payor earns significantly more than $150,000 per year is whether they will have to pay the amount specified in the Federal Child Support Guidelines. In fact, s. 4 of the Federal Child Support Guidelines deals specifically with incomes over $150,000 stating:
Incomes over $150,000
4. Where the income of the spouse against whom a child support order is sought is over $150,000, the amount of a child support order is
a. the amount determined under s. 3; or
b. if the court considers that amount to be inappropriate,
i. in respect of the first $150,000 of the spouse’s income, the amount set out in the applicable table for the number of children under the age of majority to whom the order relates;
ii. in respect of the balance of the spouse’s income, the amount that the court considers appropriate, having regard to the condition, means, needs and other circumstances of the children who are entitled to support and the financial ability of each spouse to contribute to the support of the children; and
iii. the amount, if any, determined under section 7.
As this section indicates, the Court has a great deal of discretion when considering child support awards involving incomes over $150,000 and there can be many factors which can form part of the analysis. This high level of discretion was confirmed in the leading Supreme Court case Francis v Baker, 1999 CarswellOnt. 2948 (SCC). Given this high level of discretion, is it possible to predict how much child support will be payable in cases where the payor earns substantially more than $150,000 per year?
By examining court judgements, it is possible to discern some trends which provide guidance in these types of cases. The courts in Alberta have more often tended to deviate downwards from the Guideline amount in cases where the payor earns approximately $1,000,000 per annum or more. How much the Court will deviate will depend on the specific circumstances of the case. For example, in one recent Alberta case, Baker v Baker, 2016, ABQB 515, the Guideline amount was reduced by approximately 73% (from $29,806 per month to $8,000 per month on an annual income of $2,217,692). The reasons for this reduction were that the payor parent was paying the section 7 expenses and the monthly budget submitted by the recipient spouse showed a need for only $13,664.66 (including the section 7 expenses).
Providing a monthly budget is an important component in these types of cases as not providing one can result in a significant deviation from the Guidelines. Consider the case of Ewing v Ewing, 2009 ABCA 227. In this case, the Guideline amount was reduced by 51% (from $28,297.67 per month to $13,776.00 per month on an annual income of $2,134,975). Because the applicant did not provide a monthly budget, she was unable to show a need for the Guideline amount. The Court stated that awarding more than $13,776 per month would constitute a wealth transfer. The objective of child support in any case is to meet the reasonable needs of each child. Where the Guideline amount far exceeds the possible needs of the children, the more likely it is that a reduction in the Guideline amount will be awarded.
Other factors which are important in determining Guideline income in high income cases include: the age of the children and whether they are over the age of majority; receipt of a high amount of assets in property division; the parenting arrangement (i.e., whether split, shared, etc.); the amount of s. 7 expenses; the conduct of either party throughout the proceedings; the actual lifestyle of the parties; and the reasonableness of the expenses.
Given the number of potential factors which may or may not affect cases involving high income, it is essential to have appropriate legal guidance. At Richmond Tymchuk Family Law LLP, we have the necessary experience and knowledge to assist you in addressing this issue. Contact Us to learn how we can help you.
