QUANTUM, ENFORCEMENT AND TAXATION
Prepared by Kristen Douglas
Law and Government Division
12 March 1993
Revised March 1996
TABLE OF CONTENTS
REVIEW OF CURRENT LEGISLATION: CHILD SUPPORT LAW
A. Quantum of Support
1. Current Practice
Child Support Guidelines
B. Enforcement of Child Support
C. Taxation of Child Support
QUANTUM, ENFORCEMENT AND TAXATION
In outlining the
new federal child support strategy announced in the 6 March 1996 Federal
Budget,(1) Minister of Justice Allan Rock stressed the importance
of meeting the needs of children. The four-pronged strategy announced
included long-awaited changes to the tax treatment of child support and
the introduction of child support guidelines, as well as new enforcement
measures and an enhancement of the Child Tax Benefit available to the
children of the working poor. These measures are scheduled to take effect
over the next two years, and have stirred an immediate response from lawyers,
parents, anti-poverty activists, academics and other commentators. This
paper reviews the law of child support in the three areas that affect
its adequacy to meet childrens needs, quantum, enforcement and taxation.
It also discusses the changes announced in the latest Budget, and suggests
a number of outstanding problems that will be highlighted during the transition
period when the 1996 Budget measures are being debated and adopted.
Family law, of
which the law of child support is an important part, is a rapidly changing
area of Canadian law. Its history has reflected the legal system's efforts
to keep pace with equally dramatic changes in Canadian society, particularly
in families. The law of child support governs the amounts that parents
are required to contribute to the financial support of their children
after separation and divorce. These payments are subject to taxation under
the federal income tax system, and any obligation that is not honoured
may be enforced pursuant to provincial legislation.
jurisdiction to legislate in these areas is divided between the federal
and provincial governments. Divorce, and corollary relief flowing from
divorce - custody and support - are governed by the federal Divorce
Act, 1985. Provincial statutes govern matrimonial property rights,
as well as support and custody in cases where a divorce is not sought.
The enforcement of support obligations is the subject of provincial jurisdiction,
as are issues like adoption, child protection, and change of name. Many
of the common law rules that influence outcomes in family law cases have,
however, evolved in a judicial system where these areas of federal and
provincial authority are mixed.
In the last two
decades, most governments in Canada have re-examined and amended their
family law legislation significantly. There has been a serious effort
to reflect and accommodate areas of change in a society in which variations
of the nuclear family unit have become more commonplace, the participation
of women in the paid labour force has increased, and the long-lasting
consequences of divorce for parents and children are being recognized.
Canadian legislative bodies have attempted to alter family law legislation
so that it provides for families in these circumstances more effectively.
These laws have been changed frequently in recent years and there has
not yet been enough time for research to document which measures have
been effective or to what extent.
REVIEW OF CURRENT CHILD SUPPORT LAW
Until the latter
half of this century, child support law in Canada was based on the desire
of the state to provide for needy women and children abandoned by husbands
or fathers. Since the 1970s, new family law legislation at both the federal
and provincial levels has begun to focus on a gender-neutral parental
obligation to provide for the needs of children. However, as most children
reside with their mothers after their parents separate, most payers of
child support ("payors") are fathers. Many observers have concluded
that inadequate levels of child support and ineffective enforcement of
child support obligations have contributed significantly to child poverty
There are as many
different economic situations facing families after separation as there
are couples who have separated. Very wealthy couples may separate, leaving
both parents well off, and the outstanding financial issues may include
the division of responsibility for payment for what some might consider
luxuries, such as private school tuition and exclusive summer camps. In
these families, both parents may have the ability to earn significant
income, leaving neither dependent on the other for spousal support, and
with plenty of money available to meet the needs of the children. These
are the exceptions, however, and even in these cases the family law system
may fail to distribute responsibility for the children fairly.
Some major trends
in the economic realities facing separated families can be identified.
There are a significant number of Canadian children living in poverty
- one in five in 1985(2) - and the causes
of child poverty have been linked to marriage breakdown. Single-parent
families headed by women are the most poverty-prone of all groups in Canada:
59% of them live below the poverty line.(3)
Studies of child support levels in Canada have indicated that the average
child support order is for considerably less than one-half the actual
expenses incurred in relation to that child, so that the custodial parent
in the average case is required to absorb the difference.(4) Since the overwhelming majority of custodial parents
are women, and women's incomes average about two-thirds those of men,
clearly an inequitable burden is placed on female single parents.
As Lenore Weitzman
documented in the United States, divorce is economically "unfair
to women and children ... The data reveal a dramatic contrast in financial
status of divorced men and divorced women at every income level and every
level of marital duration. Women of all ages and at all socioeconomic
levels experience a precipitous decline in standard of living ... while
their former husbands' standard of living improves ... These economic
changes have drastic psychosocial effects on the children of divorce."(5)
This dynamic is equally observable in Canada, and for many of the same
A number of commentators
have cautioned that neither child poverty, nor the "feminization
of poverty," as the disproportionate presence of women among the
ranks of the poor has been called, can be explained by reference purely
to family law. As Professor E. Diane Pask has argued, despite remarkable
changes in family law in the past 15 years, there has been little or no
change in the social and economic inequality between men, women and children
in Canada.(6) In a review of two recent
American books dealing with child poverty and the family law system, U.S.
law professor Marsha Garrison cautioned that child poverty cannot be dramatically
relieved by improved child support laws because too many parents have
inadequate salaries, and because operating two households will always
cost much more than the one required by an intact family.(7) Improving child support laws cannot be expected
to lift significant numbers of children out of poverty because it offers
the most help to the least needy children. However, child support policy
is of continued importance because it may be able to ensure that the economic
hardship that results from separation or divorce is distributed equitably
among the members of a family, and that children are not disproportionately
impoverished as a result of family breakdown.(8)
A. Quantum of Support
1. Current Practice
Child support levels
are determined in a number of ways: voluntarily by parties who have agreed
to settle their affairs in a separation agreement or consent court order,
or by the decision of a judge applying either provincial family law or
the provisions of the Divorce Act. Where the parties are unable
to settle the child support issue, then, like most contested family law
decisions, it is decided at the discretion of the judge. Given the complexity
of the issues posed by any family breakdown, judicial discretion is needed
to consider and adjust for all the aspects of a particular familys
situation. The judge must be flexible enough to account for all of the
potential variables, but the unfortunate by-product of discretionary decision-making
is that judges may also be inconsistent. If levels of child support were
more consistent, as is hoped will be the case under the system proposed
in the 1996 Budget, outcomes would be more predictable, allowing parties
to settle their affairs outside of court.
Judge James Williams
of the Family Court in Dartmouth, Nova Scotia, found in a 1989 survey
that the most common words used by writers, lawyers or judges to describe
child support levels were inadequate, inconsistent and arbitrary.(9)
Child support awards are inadequate at the time they are made, and become
progressively more so over time, with inflation and the maturation and
growing financial needs of children. Professor Pask has found that both
judicial comment and survey data support the proposition that childraising
costs increase with childrens age.(10)
Child support orders are arbitrary in the sense that the amounts are not
related to any cost guidelines, nor are they based on any judicially articulated
principles, in most cases. There is also tremendous inconsistency between
judges and jurisdictions.
this inconsistency is magnified many times by the number of levels of
courts making child support decisions, by the number of provincial and
federal statutes pursuant to which decisions are made, by the regional
differences in cost of living, and so on.
state of the law under which quantum of child support is established by
judges was examined in great detail by Madame Justice LHeureux-Dubé
in her 1994 concurring judgement in Willick v. Willick.(11)
In her reasons, she argued that the reality that many women suffer
financial hardship following divorce should not be ignored when courts
are dealing with child support. She cited a Justice Department study evaluating
the Divorce Act which found that child support levels had deteriorated
between 1985 and 1988, thereby increasing the burden on custodial parents.(12) Other authorities cited also dealt with
the inadequacy of child support across Canada and the attempted solutions,
such as the attempts in various jurisdictions to quantify the actual costs
of raising children,(13) the identification of a "glass ceiling"
or invisible barrier that acts to prevent more than minimal levels of
child support from being ordered,(14)
and judges general lack of awareness of what should be included
in calculating the costs of childrearing. Madam Justice LHeureux-Dubé
strenuously objected to children living at or near the poverty level while
non-custodial parents have the means by which to meet their needs, and
stated that "the financial burden of divorce should not be borne
primarily by children and their custodial parents."(15)
child support applications under the Divorce Act are governed by
subsections (5) and (8) of section 15.
(5) In making
an order under this section, the court shall take into consideration
the condition, means, needs and other circumstances of each spouse
and of any child of the marriage for whom support is sought, including
(a) the length
of time the spouses cohabited;
(b) the functions
performed by the spouse during cohabitation; and
(c) any order,
agreement or arrangement relating to support of the spouse or child.
(8) An order
made under this section that provides for the support of a child of
the marriage should
that the spouses have a joint financial obligation to maintain the
the obligation between the spouses according to their relative abilities
to contribute to the performance of the obligation.
The first step
in determining the appropriate level of child support to be paid is to
assess the child's needs. This in itself involves questions of considerable
complexity. A child's needs will be determined to some extent by reference
to the parents' circumstances. The cases in this area have devoted a great
deal of time to questions such as: What proportion of the custodial parent's
fixed costs, such as rent and utilities, relate to the support of the
child? To what extent should the award exceed subsistence level expenses?
Which expenses, such as music lessons or orthodontic expenses, are legitimate?
often comment that judges fail to appreciate the costs of raising children.
The judiciary in Canada is "largely uneducated about the cost of
raising children, and as many are male, and from intact families, [they]
have little or no personal experience in the raising of children."(16)
As a result, many observers have advocated judicial education in this
area, or the establishment of child support guidelines that would remove
judicial discretion from the process. On the other hand, while stressing
the importance of judicial discretion in Willick,(17) Mme. Justice LHeureux-Dubé discussed at length
the sources of information about childrearing costs to which judges should
be referred by counsel, including various types of statistics and commentary
about the inadequacy of child support orders and the costs of raising
In practice, each
parent's counsel is required to file a statement of the parent's financial
circumstances, detailing his or her budget as well as property holdings
and debts. Most custodial parents' counsel would also produce a statement
of the child's expenses, listing things like food, shelter and clothing,
along with others such as hockey lessons and entertainment expenses. Because
these matters are decided in the context of the adversarial litigation
process, it is the opposing counsel's job to attempt to reduce or eliminate
these expenses, resulting in a lower overall assessment of the child's
The courts have
established very few general rules. It is not clear whether all non-custodial
parents are required to contribute to child support regardless of their
means, or only those who have reached at least a certain minimum level
of self-sufficiency. In many cases, the non-custodial parent will arrange
his or her affairs so as to appear unable to contribute to child support.
As Judge Williams noted, to compensate for such attempts, courts have
attributed income to parties who have deliberately reduced their ability
to pay (for example, by quitting jobs or returning to school), forced
the sale of property, awarded lump sum payments set off against matrimonial
property where there was resistance to paying support, and made orders
for support based on the expected rearrangement of the payor's debt load.(18)
is added to this calculation when there is a new partner for one or both
spouses. To what extent are a newly formed household's joint means and
needs to be considered? Certainly new obligations and sources of income
are relevant to an assessment of the lifestyle of either party. The objective
of the quantum decision is to maintain the standard of living of the children
at a level as close as possible to the one that existed before separation.
Also, children may have independent sources of income, such as child tax
credit payments or part-time jobs. There may be a "settled intention"
parent - one who is not the child's biological parent, but who is under
a legal obligation to support the child because he or she "stand[s]
in the place of parents."(19)
Many child support awards are made on variation applications. In these
cases, the parties may add complexity to the determination with the existence
of previous orders or agreements that must be considered in setting a
new level of child support.
Some judicial attempts
were made earlier to develop a formula for the establishment of child
support levels. Most notably, in the Paras case,(20)
a formula was established whereby the sum required to meet the children's
needs is to be apportioned between the parents according to their respective
incomes. Though this formula is widely applied, and has an appealing fairness,
it does not take into account high-income situations, third parties, inflation
or the problem of assessing the costs of raising children. Since there
is no limit to the number of formulas that may be used by judges, the
choice of a formula itself is the subject of judicial discretion and may
lead to inconsistency in results.
in an extensive study of judicial interpretation of the child support
provisions in the Divorce Act, 1985, found that most awards are
not set at levels that would provide an equalizing of standard of living
between the childs household and that of the non-custodial parent,
or even at levels meeting the Paras standard. "Typically the
household of the custodial parent (usually the mother) and children is
left with an income between 40% and 80% of that enjoyed by the non-custodial
parent."(21) As Rogerson points out, this usually means that the
mother's two-or-more-person household must survive on less income than
the father's one-person household (though he may, of course, remarry).
Two other findings
about the courts' application of the Paras formula, whereby a strictly
proportionate share of child care costs is allocated to each parent, led
Rogerson to the conclusion that it was leading to unfair results: (1)
the relatively low incomes earned by custodial mothers were not usually
recognized by the courts, with the result that a disproportionate financial
burden is placed upon mothers; and (2) except in rare cases where the
non-custodial parent is exercising no access, no credit is given to the
custodial parent for her non-financial contributions to the care of the
study was based on a review of reported family law cases. As a result,
she noted that her sample probably involved higher than usual levels of
support, because generally only the well-off can afford litigation. Nonetheless,
Rogerson concluded that the stated objectives for child support, set out
in the Divorce Act, were rarely met. Indeed, they were most closely
approached only in cases where there was also generous spousal support
or the custodial parent earned a relatively high income. "Children
are rarely being maintained at the marital standard of living or even
at a standard equivalent to that of the non-custodial parent."(22)
set out a comprehensive checklist of items to be considered in establishing
child support levels in Syvitski v. Syvitski, which was
cited with approval in the Willick case.(23) The items included on the Syvitski
list covered assessing childrens needs, including lifestyle; the
self-sufficiency of each of the custodial and non-custodial parents; income
tax implications of support; access expenses; responsibility for the support
of others; and non-financial contributions to child care.
factor for the quantum decision in many cases is the impact of income
taxation on both parents, which is discussed in more detail below. The
tax consequences are intended to be considered by lawyers and judges in
setting child support levels, but the complexity of the income tax rules,
which interact with GST and child tax credits, as well as the many future
developments in the lives of the parties that may intervene to reduce
the accuracy of the tax assessment, such as more children, new partners,
new sources of income, and so on, may prevent the tax consequences from
being properly taken into account. When the child support level is set
by a court, or indeed by parties to a settlement, it is taken to incorporate
all reasonably foreseeable future developments.
in addition to the uncertainty of the judicial process, contribute to
the inadequacy of child support awards. In practice, the reasonable needs
of a child may far exceed the combined ability of the child's parents
to contribute. When the non-custodial parent's means are inadequate, the
court's analysis often shifts to a consideration of his or her ability
to pay. The administrative procedures employed by the courts, including
the financial statements that must be filed by each party, emphasize the
parents' financial circumstances. The courts tend to focus on the non-custodial
parent's disposable income, and the custodial parent may be left to pay
the proportion of the child's expenses that cannot be met out of the payor
spouse's disposable income, regardless of the custodial parent's ability
2. Child Support Guidelines
the arbitrariness of the quantum decision as it is currently made, the
federal government announced, as part of the 6 March 1996 Budget, that
it will introduce Child Support Guidelines in the Divorce Act.
The Guidelines, set out as the Annex to the Budget document entitled "Budget
1996: The New Child Support Package," would enable a divorcing couple
to determine immediately the appropriate level of child support to be
paid, based on the payor spouses income. This would replace the
system by which judges, using discretion, determine the specific
costs of raising a child, with one in which parties would be guided by
tables setting out numbers based on average costs of raising a
child; this would be only for cases decided under the Divorce Act,
however. The Budget documents indicate that the government is working
with the provinces and territories to encourage them to adopt guidelines
as well. The government claims that the guidelines will result in more
consistent payment levels across similar income levels, and ensure that
more children will receive adequate amounts of child support.(24)
Child support guidelines
had been recommended for adoption in Canada by the Federal/Provincial/Territorial
Family Law Committee. The Committee began to study child support guidelines
in June 1990, and its final report was released in January 1995.(25)
Guidelines were seen as the best means for achieving consistency in child
support awards, as well as a means of increasing awards overall. The Committee
hoped that, with the provision of consistency, individuals would be able
to settle their affairs without resort to litigation in a higher proportion
of cases. The expectation that the presence of guidelines would facilitate
settlement, and decrease legal costs, was also cited in the recent Budget
documents as one of the benefits of the new system.(26)
been in place in the United States, where each state was required to adopt
child support guidelines, since 1987. Judge Williams reviewed two articles
by American jurists,(27) and outlined the following types of guidelines models
set up in the U.S.:
- Flat percentage guidelines:
parent is required to pay a flat percentage of either gross or net income,
without regard to the income of the custodial parent.
incomes are added together, and a basic joint child cost is estimated
based on the amount that would have been spent in an intact household,
which obligation is then divided between the parents according to their
respective shares of the joint income.
- Delaware (Melson) formula:
the amount required by the parents to provide their bare necessities
from their incomes, the primary support needs of the children are established
(there is a minimum); the children receive a percentage of the non-custodial
parent's income after the first two amounts have been deducted.
- Income equalization (Cassetty)
The net income
of each parent's household is to be equalized with that of the other
parent, with a poverty level reserve for each member of each household.
In the United States,
as would be the case in Canada under the 1996 proposal, the guidelines
are not binding on the courts, but are rebuttable presumptions. Thus,
in the context of the adversarial system, the parties may work to avoid
their impact by leading evidence that the result of the application of
the guidelines is in some way unfair. Their desirability, however, seems
to stem from their impact in steering the focus of support proceedings
from expenses to income, with courts dividing income instead of arbitrarily
evaluating the legitimacy of expenses.(28)
Family Law Committee has studied these and other child support guidelines
and their application in various economic models. The guidelines meet
the objective of simplifying the child support system to varying degrees.
One of the major problems of applying this solution in the Canadian context
was emphasized in the Committee's research report The Financial Implications
of Child Support Guidelines: "although child support guidelines
seek to simplify and provide fairness in determining child support awards,
under the present tax system the exercise will remain somewhat complex."(29)
The tax problem was not entirely solved by the Committee in its final
report, and is discussed more fully in the next section of this paper.
The federal government, in its March 1996 package of child support reforms,
has sought to correct the quantum-taxation overlap by simultaneously adopting
guidelines and removing the requirement that child support payments be
taxed as income of the recipient and deducted by the payor.
announced in the 1996 Budget are similar to those recommended by the Federal/Provincial/Territorial
Family Law Committee, with some significant changes. As the Committee
recommended, the guidelines contain tables of numbers based on a mathematical
formula that "calculates the appropriate amount of support in light
of economic data on average expenditures on children across different
income levels."(30) The formula
saves the payor spouse a basic amount of income as a personal reserve,
and adjusts for federal and provincial income taxes. Separate tables for
each province take into account provincial income tax rates; however,
apparently no additional calculations have been made to take into account
regional differences in the cost of living. The figure dictated by the
guidelines would not be binding on a couple who negotiated a settlement
out of court, but would guide a judge deciding an application under the
Divorce Act. Also, in some specific circumstances, the judge could
adjust the guidelines amount.
There are four
proposed types of special child-related expenses that could be added to
the amount set out in the tables (called the "Child Support Payment
Schedules").(31) The four types
of expenses that will be considered are child care expenses for children
not in full-time school, or with special needs; medical expenses over
$200 per year that are not covered by government health insurance plans;
education expenses; and "extraordinary expenses for extracurricular
activities that allow a child to pursue a special interest or talent."(32)
The last will likely provide room for significant numbers of court applications,
given the numbers of children enrolled in lessons and courses of every
kind. If the judge considers it appropriate, then the support payors
contribution to any of these four expenses will be added to the Schedule
amount of support. On the other hand, a payor might plead undue hardship
based on three or more types of circumstances in order to have the Schedule
amount reduced. The Budget materials indicate that situations that might
justify a finding of undue hardship are not limited, but could include
unusually high debt levels; access expenses; or obligations to support
other children or a spouse.(33)
and other commentators have published articles discussing the guideline
options available in Canada and the recommendations of the Federal/Provincial/
Territorial Family Law Committee.(34)
Some warned against
rigid rules that might prevent the anticipation of or proper reaction
to economic change;(35) others expressed the fear that in some
cases the guidelines might result in lower awards;(36)
and one commentator cautioned that the tables released by the Committee
did not take into account the custodial parents income, and would
therefore produce an unfair result in any case where the parents
incomes were not similar.(37) In the
days immediately following the 1996 Budget announcement of their proposed
adoption, the guidelines have not attracted as much attention as the other
aspects of the Budgets child support measures; however, the two
major criticisms have been the absence of retroactivity (so that in order
to benefit from the new system, custodial parents will have to seek to
vary existing agreements and awards) and uncertainty about the amounts
(said to be insufficient or excessive, depending on who commented) dictated
by the guidelines.
Finnie, in an evaluation of the Committees recommendations, suggested
that, while the basic formula proposed was sound, problems with the recommendations
could worsen, rather than improve, the child support situation in Canada.(38)
Finnies concerns were these: (1) that the recommendations do not
adequately consider expenses borne by non-custodial parents who spend
significant amounts of time with the child (or children), but less than
the 40% of the childs time for which an adjustment would be provided
(the adjustment is made only in cases where the non-custodial parent spends
more than 40% of the time with the child); (2) that it is inappropriate
to raise awards, as the Report recommends, for low-income non-custodial
parents above the basic formula levels; (3) the inclusion of a new spouses
income in calculation of household income is unfair and could be a disincentive
to remarriage; (4) the hardship conditions are applicable only to low-income
non-custodial parents, but should apply to all non-custodial parents;
and finally, (5) the Committee failed to resolve how the tax treatment
of child support should interact with guidelines. These problems, and
particularly the last three, appear to have been resolved to some extent
by the 1996 Budget proposals.
Family Law Committee, in recommending the adoption of child support guidelines,
or a child support formula as they referred to it, predicted that fairer
and more consistent child support awards will be the result. This rationale
is also relied upon by the federal government. By removing child support
negotiations as a source of conflict at the time of separation, the formula
will enhance family relations and lower legal costs, including those borne
by the state through legal aid and the administration of the courts.(39)
However, Professor Finnie reports that while guidelines have been introduced
in some countries with positive effect, in others "the results appear
to be fairly disastrous."(40)
reviewed a number of negative consequences that have resulted from the
imposition of guidelines in some American jurisdictions. She examined
the current picture of child support and child poverty, concluding that
although the majority of poor children live in households that would be
eligible for child support, most are not receiving adequate support and
many are receiving nothing at all.(41)
She also noted that the mean child support award in 1989, while higher
in guideline states, still fell short of its 1978 value in inflation-adjusted
dollars.(42) In guideline states, the
mean child support award was $228 per year higher, and the proportion
of women receiving some support was somewhat higher; however, a drop in
compliance with child support orders was noted. Also, for black and never-married
mothers, guidelines meant lower award rates.(43)
These results highlight the importance of careful examination of the ways
different families will be affected by any child support formula adopted.
A different model
for a child support guideline was put forward in 1992 by the Canadian
Bar Associations National Family Law Section.(44)
The C.B.A. proposed guidelines based on an equalization of the living
standards of the two units of the divided family. The calculations used
combine the gross incomes of the parents, and allocate it as follows:
3 parts to the father, 3 parts to the mother, and 1 part to each child.
The underlying premise of this proposal is that children of separated
parents should suffer the least economic hardship possible, and maintain
a standard of living as close as possible to that enjoyed by the family
before separation. It is not clear how this proposal would deal with multiple
family situations, interaction with spousal support, or the tax treatment
of child support. An element of the principle that household standards
of living should be equalized has been incorporated into the 1996 Budget
proposals. When a payor pleads undue hardship, seeking a variation of
the amount payable under the Schedule, he or she will have to give evidence
of having a lower standard of living than the custodial parent.(45)
The federal government
announced in the 1996 Budget that a $50-million fund will be established
for the purpose of developing, together with provincial and territorial
governments, new administrative mechanisms at the provincial level to
facilitate the up-dating and variation of existing child support orders
and agreements, which would otherwise not be affected by the adoption
of child support guidelines. It is hoped that such a system will enable
all children and custodial parents to benefit from the improved system,
but it remains to be seen to what extent that will happen. The government
has also indicated that Justice Canada will monitor and evaluate the operation
of the guidelines, once they are in place, that research will be conducted
on their impact, and that parents, mediators, lawyers and judges will
be asked for their input. The results of the evaluation will be submitted
to Parliament, so that they will be available to legislators as well as
members of the public. Justice Canada will establish an Advisory Committee
to help in the implementation of the guidelines.
The joint introduction
of guidelines, as a rebuttable presumption of the appropriate quantum
of support, and a new tax system removing the tax obligation that currently
falls on custodial parents who receive support may not be sufficient to
overcome the inadequacy of child support. There may continue to be enforcement
problems, although the Budget included enhancements in that area as well
(as is discussed in the next section of the paper), and there will continue
to be difficulties surrounding the interaction between spousal and child
support levels, the establishment of parental income, and other factual
determinations, such as how much time each parent spends with the child(ren).
One result of the Committees study and the resulting policy debate
will benefit litigants and their children: Canadians, including lawyers,
judges and parents, are becoming better educated about the costs of raising
children and the devastating consequences of inadequate support.
after finding that the frustration experienced in Nova Scotia with the
inconsistency, arbitrariness and complexity of quantum of child support
decisions was common to all North American jurisdictions, concluded that
there is no answer to the problem.(46) However, he did suggest a number of measures that
would incrementally assist, including the reduction of the number of levels
of court dealing with child support matters in each jurisdiction, the
development of child support guidelines within each province, as well
as a variety of efforts that may be made by individual lawyers and judges
to improve the delivery of this service to clients and their children.
For example, judges should specialize in family law matters, as lawyers
do, so that they will become more educated about family law and the social
and economic realities facing families after separation and divorce.
B. Enforcement of Child Support
of child support orders is primarily a matter under provincial jurisdiction,
whether the orders arise under provincial legislation or the federal Divorce
Act. The federal role in this area has been to facilitate provincial
efforts by providing provincial enforcement agencies with access to federal
sources of information about defaulting spouses, and by ensuring that
federal payments to individuals are subject to garnishment and attachment
have moved in recent years to establish automatic, government-run systems
for the enforcement of child and spousal support orders and agreements.
Before these new programs were developed, support orders, like all court
orders in civil proceedings, were enforced only at the will and expense
of the creditor. In other words, the collection of moneys owed under any
such order depended upon the success of the creditor's efforts to enforce
payment. Methods of enforcement available to a judgement creditor, all
of which continue to be available to those who opt out of the state-operated
enforcement programs, include: the judgement-debtor examination, where
information about assets and income is solicited from the debtor under
oath; seizure and sale of assets, including bank accounts, by the Sheriff's
office; garnishment or attachment of wages or other moneys owed to the
debtor; and default hearings, where the debtor is called before the court
to explain the default.
legislatures, starting with Manitoba in 1985, have taken the significant
step of creating a state-operated enforcement system for family support
because there was a serious problem of non-payment of support orders across
the country. In 1974, the Law Reform Commission of Canada estimated that
some degree of default with respect to support orders occurred in as many
as 75% of all cases.(47) This trend
has been confirmed in a number of other studies, although the exact rate
of non-compliance has been found at various times to be somewhere between
50 and 85%.(48) This failure weakened
the entire family law system, and legislators recognized the difficulty
faced by custodial parents whose support was unpaid in pursuing costly
and ineffective private enforcement means.
Possibly the fact
that so many of such custodial parents turned to public assistance for
financial relief persuaded the provincial governments that the enforcement
of support orders could no longer be treated as a private matter. Certainly
the cost being borne by society was becoming less and less tolerable as
more couples separated without there being any increase in the effectiveness
of the family law system to ensure that both parents continued to contribute
to the adequate support of their children. Several studies reported the
onerous cost of the traditional system of enforcing support obligations.(49)
The new provincial
enforcement systems had some common basic components, reflecting the earlier
work done by the Federal-Provincial Committee on Enforcement of Maintenance
and Custody Orders in Canada from 1981 to 1983. All separation agreements
could be filed with the enforcement agencies, and court orders were automatically
filed. The creditor assigned her (or his) right to enforce to the agency,
which then took steps to enforce the obligation in the most effective
manner. The money collected was forwarded to the creditor. The agency
would deal with any necessary court proceedings, unless the debtor applied
to vary the support order or agreement itself. This meant that support
creditors did not have to hire their own lawyers, and were not required
to initiate the enforcement procedure.
agencies were expected to produce dramatic results. It was known that
the high default rates that had been documented were not the result of
debtors' inability to pay. The Institute for Law Research and Reform,
in an empirical study of the private law enforcement system in Alberta,
found that 80% of separated or divorced spouses had a disposable income
sufficient to discharge their spousal and child support obligations.(50) Because the reasons for non-payment had so little
to do with ability to pay, it was hoped that effective enforcement would
put sufficient funds in the hands of custodial parents and children.
On the federal
level, legislative action has also been taken, and additional measures
were announced. The Garnishment, Attachment and Pension Diversion Act,
R.S.C. 1985, c. G-2, allows for the garnishment of federal employees'
salaries and federal pension benefits. The Family Orders and Agreements
Enforcement Assistance Act, R.S.C. 1985, c. F-1.4, enables provincial
enforcement agencies access to federal information sources to assist in
locating defaulting spouses. It also allows the garnishment of "garnishable
moneys," which have been defined in the Regulations under the Act
since 1988 to include income tax refunds, unemployment insurance benefits,
old age security payments and training allowances. Since January 1991,
GST credits have been included, and, since June 1991, the garnishment
powers have been extended to include Canada Pension Plan payments. A unit
was established in the Department of Justice to provide locating information
and operate the garnishment of federal funds provided for under the legislation.
The unit now processes 10,000 locating requests per year and garnishes
about $37 million annually, according to the Federal/Provincial/Territorial
Family Law Committees Report.(51)
The new federal
enforcement measures, part of the 1996 Budget, include the Federal Licence
Suspension Initiative; extended means of tracing defaulting payors; and
the expansion of powers for the diversion of federal pensions. The licence
suspension initiative will allow the federal government, at the request
of a provincial or territorial enforcement agency, to suspend licences,
privileges or certificates issued to a payor who has failed to pay support
for three consecutive months, or who has accumulated arrears of $3,000.(52) Payors who are in default will be notified by the
appropriate enforcement agency that it intends to invoke this remedy,
and the defaulting individual will be able to avoid licence suspension
by making payment arrangements. This measure will initially apply to passports
and specific federal aviation and marine licences and certificates, but
others may be included later.
In addition to
debtor-tracing assistance already provided to enforcement agencies by
the federal government, the measures announced in March 1996 mean that
Revenue Canada will be added to the list of federal departments whose
data banks can be searched at the request of a provincial enforcement
agency. The information that may be obtained, such as address and name
of employer, is kept confidential, and used only for the purposes of locating
the debtors, and securing support payments. The new pension diversion
measures announced will require the amendment of existing pension legislation
in order to allow pension diversion in a wider range of cases and to "maximize"
the pension benefits that can be applied toward support obligations.(53)
Several other enforcement-related
measures were announced, including a feasibility study on the potential
for incorporating an American enforcement mechanism, whereby all government
agencies must report all their new hiring and re-hiring information to
a national registry. The federal government will also fund a national
public awareness campaign, developed in cooperation with the provinces
and territories, aimed at changing societal attitudes toward support obligations.
It will also contribute up to $13.7 million to joint federal-provincial-territorial
projects that encourage innovative or more rigorous support enforcement,
or streamlining the collection of out-of-province support orders. A new
position, the Federal Support Enforcement Director, will be established
in the Department of Justice, to coordinate enforcement efforts and services
at the federal level, and to work with the provinces and territories as
well. A number of technical and research improvements are also to take
enforcement agencies have not significantly improved the overall rate
of compliance with support orders. The tremendous volume of cases they
handle is likely part of the reason for their disappointing results so
far. All orders filed are monitored by a computer system, with payments
made to the agency and then forwarded to the creditor. Because of the
thousands and thousands of payments being processed, the systems are not
very good at dealing with such occurrences as agreements between debtors
and creditors, changes in either party's financial circumstances, or death.
Other explanations offered in the report of the Federal/ Provincial/Territorial
Family Law Committee include debtors inability to pay, including
inability to pay the necessary legal costs of seeking to vary a child
support order, the difficulty of locating debtor spouses, and the difficulty
of garnishment of self-employed payors, attitudes of payor spouses who
do not attach sufficient importance to child support, and finally, difficulties
in inter-provincial and international cooperation.(54)
Some of the provinces
have made fairly dramatic changes to their enforcement systems even more
recently. Ontario has passed the Family Support Plan Act, S.O.
1991, c. 5, in effect since 1 March 1992, which aims to streamline
enforcement to improve service to support creditors. This controversial
new system provides for automatic support deductions, whereby all support
orders must contain provisions requiring a portion of the debtor's income
to be diverted at source to the Family Support Plan Office, to be directed
from there to the creditor. This is similar to garnishment, except that
every debtor's income is affected, without waiting for a default. Stiffer
penalties for contravention of the provision of the Act apply, with fines
up to $10,000 or imprisonment available. There is also a new provision
making it very difficult for a couple to withdraw from the system: specific
grounds must be met to satisfy a judge that the parties should be allowed
to withdraw, and the support debtor must post security in an amount equal
to four months of support.
the other hand, has made less drastic changes to its Enforcement of
Maintenance Orders Act, S.S. 1984-85-86, c. E-9.2, the latest
changes having been in effect since November 1992. The enforcement powers
of the Maintenance Enforcement Office and its Director have been increased.
The Director can now fix an amount of up to 15% of the payor's gross income,
to a maximum of $500 a month, which may be garnisheed along with any ongoing
maintenance obligation. This continuing garnishment may be issued and
served by the Director without being issued by the court. Also, the Director's
powers to demand information in default hearings have been expanded. Saskatchewan's
Department of Justice officials report that the enforcement system is
working very well: since 1986, the default rate has fallen from an estimated
80% to 32%.(55) Saskatchewan is now
looking at proposed legislative amendments including withholding motor
vehicle licences for payors in default.(56)
Nova Scotia, New
Brunswick, Alberta, and British Columbia have also recently proposed or
enacted strengthening measures for the enforcement of child support, and
both Yukon and Northwest Territories are reviewing their maintenance enforcement
legislation and establishing public awareness campaigns.(57)
The federal government continues to provide funding to the provinces and
territories, which are the primary collectors of support, to help them
improve their support enforcement systems. Other research, statistics-gathering
and cooperative commitments have been made by the federal government,
as set out in an Appendix to the Federal/Provincial/Territorial Family
Law Committees Report dealing with enforcement issues.(58)
None of these initiatives
has been in place long enough for researchers to draw any conclusions
about which models will produce the highest levels of compliance. Generally
speaking, improvements have been noted across Canada, and most lawyers
and custodial parents at least have the impression that major efforts
are being made to solve the problem of defaulting support debtors. A great
deal of public attention has been brought to bear on the issue, with the
result that support obligations are taken more seriously, both while they
are being established and thereafter. Perhaps it is because these obligations
are now so much more enforceable that attention has also been given to
their adequacy, and the newest federal measures indicate that this trend
The books reviewed
by Professor Garrison and dealing with American experiences with child
support policy and child poverty in the last decade and a half, looked
at the failure of enhanced enforcement measures, among other things, in
improving the situation of poor children. Some new enforcement techniques
were found to be effective in improving compliance, but others were not.
Automatic or mandatory wage withholding, which has been widely implemented
in Canada, and automatic liens against property, were found to have been
effective in improving compliance with child support orders and agreements.(59)
Criminal penalties seemed to lose effectiveness as states acquired other
means by which to enforce support obligations. Voluntary wage assignments,
and securities, bonds or other guarantees of payment seemed indirectly
to encourage higher rates of support.(60) In Canada, there will have to be careful
monitoring of the results of new enforcement tools as they are developed,
with specific attention to the differential impact of various reforms.
C. Taxation of Child Support
Of all the child
support measures announced in the 1996 Budget, the most dramatic is the
change to the tax treatment of child support. This measure will affect
all new final child support orders and agreements, whether made under
provincial or federal legislation, or in a court order or separation agreement,
made after 1 May 1997. By virtue of its far-reaching effect, and the public
attention that was garnered by the lead-up to it, including the Thibaudeau
case, this change has been met with intense reaction, both positive and
Until May 1997,
the inclusion/deduction mechanism will remain in place, so that support
payments will continue to be generally deductible from the taxable income
of the payor, but included in calculating the income of the recipient.
This arrangement has been controversial because it increases the tax liability
of support recipients, who are by definition financially dependent, and
may reduce their ability to meet their own or their children's expenses.
On the other hand, the arrangement can have an income-splitting effect,
and had been justified on the basis that it reduced the overall tax liability
of the now-separated family.
Family Law Committee's Research Report on the Financial Implications
of Child Support Guidelines explored the treatment of child support
payments in the Canadian tax system. The policy of inclusion and deduction
of child support payments was developed in 1942, the report states, when
personal income tax rates were increasing due to the war. Various criteria
have been added to the Income Tax Act since then, but the inclusion/deduction
policy remained in place until the 1996 Budget announcements.
The rationale for
the inclusion/deduction policy, as articulated by the Department of Finance,
included four tenets.(61) The first
is that it is a principle of taxation that, where a payor claims a deduction
in respect of an expense, the recipient of the payment should pay the
tax on it. Also, it means that support recipients will pay amounts of
income tax similar to those of other taxpayers receiving the same amount
from other sources.
Two other explanations
for the policy were offered by the Finance Department. One is the theory
that the tax deduction allowed to the payor will make the payment of child
support more attractive; however, the overwhelming levels of non-compliance
with these obligations should surely lay this idea to rest. The other
explanation of the policy is that the tax treatment provides a subsidy
for children since it encourages larger payments. This last is also illusory:
as explained above, any increase in the quantum of support resulting from
the consideration of the tax consequences of child support will be devoted
to the payment of income tax, not to the child's expenses.
When the inclusion/deduction
policy was developed, virtually all support payors were in a higher tax
bracket than support recipients. When child support was paid, the money
resulted in a larger deduction for the payor than tax liability for the
recipient, resulting in lower taxes paid by the couple overall, with potentially
some or most of this "extra" money available for the children.
Canadian society has changed tremendously since 1942, as have other provisions
of the Income Tax Act, making this rationale for the inclusion/deduction
policy less supportable than it may once have been.
The number of tax
brackets has been significantly reduced, so that support creditors and
debtors may be in the same tax bracket even though one earns more than
the other. When the Federal/Provincial/Territorial Family Law Committee
examined 1988 taxation statistics to determine to what extent the policy
was benefiting children, they found that, in spite of these changes in
tax brackets, 60% of support payors were in the two top tax brackets prior
to the deduction of support payments, and almost 90% of recipients were
either non-taxable or in the lowest bracket. After the deduction/inclusion
of support payments, 50% of the payors remained in the top two brackets,
and 80% of recipients remained non-taxable or in the lowest tax bracket.
Thus, even though a clear majority of cases could have benefited
from the income-splitting effect of the policy, little or no benefit was
being passed on to the children through the support recipient.
that support recipients include child support payments in income is governed
by sections 56 and 56.1 of the Income Tax Act, S.C. 1970-71-72,
c. 63, as amended. Section 56 (1)(b), (c) and (c.1) determines what
payments will be considered alimony or maintenance within the meaning
of the Act, and therefore included in income. Sections 60 and 60.1 provide
that payments that meet the same requirements will be deductible by the
payor. These provisions of the Income Tax Act were tested and upheld
by the Supreme Court of Canada in its 1995 decision in Thibaudeau
In 1991, Suzanne
Thibaudeau appealed the Minister of Revenues assessment of her tax
obligation for the 1989 tax year, whereby the income she received as child
support for her two children had been added to her taxable income. She
took the position that the income was actually that of her children, and
had even maintained a separate bank account and filed separate income
tax returns for her children. The Tax Court of Canada dismissed Suzanne
Thibaudeaus appeal, upholding the inclusion/deduction system, but
suggesting that if the tax consequences of the child support award had
not been considered, she should appeal the child support decision and
not look to Revenue Canada for relief.(63) The Federal Court of Canada reversed the decision,
holding that section 56(1)(b) of the Income Tax Act infringed section
15(1) of the Canadian Charter of Rights and Freedoms and could
not be justified under section 1 of the Charter.(64)
The federal government appealed the Federal Court decision to the Supreme
Court of Canada, whose decision reversing the result was released on 25
The majority of
the Supreme Court justices upheld the inclusion/deduction provisions,
finding that there was no violation of the Charters equality guarantee.
The judgements noted that if there is any disproportionate impact of the
tax liability on mothers, who form the majority of the custodial parent
population, the responsibility lies not in the income tax system but in
the family law system. Professor James McLeod, in his Annotation in the
Reports of Family Law, suggested that family law is not to blame
either, because information about tax consequences is readily available,
so that if tax consequences are not properly figured into support awards,
it is lawyers and judges who are at fault.(65) Allocating responsibility in this fashion, too, may
under-emphasize the complexity of family law negotiations, which are affected
by power imbalances among the parties, as well as competing emotional
and personal struggles. Professor McLeod predicted that the tax treatment
of child support would be altered by Parliament, and expressed the hope
that the income-splitting benefit derived by most families would be recognized
and retained. He also cautioned that if the tax treatment was changed
without child support guidelines being in place, the courts would be flooded
with applications to vary support, because most support orders include
a tax gross-up.(66)
and McLachlin dissented from the majority decision in Thibaudeau.
Both held that by imposing a tax burden uniquely on one spouse, section
56(1)(b) infringes section 15(1) of the Charter, and it is not saved by
section 1. Madam Justice McLachlin would have read down section 56(1)(b)
to exclude child support payments from its operation, and Madam Justice
LHeureux-Dubé would have struck the provision down, but suspended
the declaration of invalidity for 12 months to allow Parliament to implement
a less discriminatory alternative. The dissenting judges recognized that
the income-splitting feature of the inclusion/deduction system creates
a benefit for most separated families; however, the benefit is unequally
distributed between the spouses, and it is primarily payors who benefit.
Both dissenting judges accepted a great deal of external evidence about
the impact of the inclusion/deduction system on divorced or separated
mothers and their children.
When the courts
refused to alter the tax treatment of periodic child support payments
in Canada, womens advocates and other interested parties continued
to press for change on a political level. The National Association of
Women and the Law and the Canadian Advisory Council on the Status of Women
have lobbied Parliament since the late 1970s, seeking an amendment of
the Income Tax Act to ensure that child support payments are no
longer considered taxable income in the hands of the recipient.(67)
Members of Parliament, including Dawn Black and Beryl Gaffney, sponsored
motions in the House of Commons calling for the necessary amendment to
the Income Tax Act to render child support payments non-taxable
in the hands of custodial parents. Beryl Gaffneys motion to that
effect was passed, on division, on 30 May 1994 in the House of Commons.
Much of the advocacy
of change to the tax treatment of child support in recent years, including
Ms. Gaffneys Private Members Motion, has been informed by
the research of Ellen Zweibel and Richard Shillington, who released in
1993 a study of the financial impact of the inclusion/deduction system
on divorced couples and their families. Zweibel and Shillington found
that the combined impact of income tax and child support policies has
to be considered in the "real light of their impact on the standard
of living produced in actual family law cases."(68)
They critically analyzed the policy rationales upon which the Finance
Department bases its continued support for the deduction/inclusion mechanism
for taxation of child support payments. Confirming what had often been
observed and reported by women and their advocates, the research found
that there was a potential subsidy to divorcing couples in only 51% of
the cases studied - in 49% of cases, the current mechanism could not have
produced a subsidy for the family.
treatment of child support has made an overall tax savings available only
where the payor is in a higher tax bracket than the support recipient
after child support is paid. Therefore, in these situations, where financial
resources have been available but shared in a way that resulted in inequity
between the two after-divorce households (i.e., the father by himself
has significantly more resources available to him than the household comprising
the mother with children), there has been a tax saving. No tax relief
has been provided where both parents are in the same tax bracket after
support is paid, and there has been a tax penalty where the custodial
household is in a higher tax bracket than the payor.
Tax policies should
not produce or support results that conflict with other aspects of federal
policy, as Zweibel and Shillington discuss. It is a clear objective of
family law policy that, as much as possible, the standards of living of
the two households after divorce should be equal. Therefore, in most cases,
the custodial household should have more resources available to it than
the one-member household of the non-custodial parent. If this objective
were more commonly achieved, even fewer families would benefit from any
Zweibel and Shillington
also identify some glaring errors in the policy basis for the deduction/inclusion
policy also ignores the reality that child support is a contentious
issue and that non-custodial fathers seeking to minimize their payments
may not readily agree to either a gross-up or to a further sharing
of any tax savings above the gross-up. The Finance Department's rationale
also ignores the number of persons who settle their child support
arrangements on their own, without the assistance of lawyers or accountants,
the number of lawyers and judges who rely on rough estimates and the
number of cases where, despite the custodial mother's lawyer's careful
tax calculation, the "glass ceiling" moves in to reduce
The Finance Department's
contention that the current mechanism is an incentive for non-custodial
parents to pay higher amounts, or to pay at all, is simply unsupported
by experience. As the National Association of Women and the Law's recent
brief to the House of Commons Legislative Committee on Bill C-79 (amendments
to the Divorce Act) points out: "The myth that an income tax
deduction is an incentive to payors to pay support has been laid to rest
with the knowledge that 85% of payors prefer not to pay, rather than avail
themselves of the tax advantage."(70)
A number of potential
income tax reforms, combined with several anti-poverty proposals, were
tested by Zweibel and Shillington against their data to determine which
combination had the best potential to improve the economic position of
custodial mothers and their dependent children, while not adversely affecting
the equity with which the system treats non-custodial fathers. The paper
also tests a number of child support guidelines models, concluding that
guidelines have the potential to increase the adequacy of quantum of child
support and equity between families only if they are based on realistic
estimates of the cost of raising children.
Zweibel and Shillington
identified some crucial areas for further research, including the tax
treatment of spousal support. If spousal support continued to be subjected
to the inclusion/deduction mechanism once child support was not, then
anti-tax avoidance mechanisms might have to be developed to prevent child
support from being improperly characterized as spousal support. Also,
other models for tax reform could be considered, such as the system in
France whereby child support payments are deducted by the payor, but only
partially included in the recipient's income.
research left a number of important areas to be studied elsewhere, the
Zweibel and Shillington paper came to an important conclusion:
The good news
from this research is that something can be done. Combining income
tax reforms which address both the inequities of the deduction/inclusion
provisions and contain anti-poverty elements, with child support guidelines
supported by reasonable estimates on the costs of raising children
can improve both the adequacy and equity of the private child support
A study of the
tax treatment of periodic child support payments by the Federal/Provincial/Territorial
Family Law Committee resulted in a "Working Paper on the Tax Implications
of Child Support," released as an Appendix to the Committees
1995 Report.(72) The Working
Paper reviewed the advantages and disadvantages of the then current tax
treatment of child support, and explored a number of options for reform.
The Committee found a fundamental conflict between the tax treatment of
child support and the family law principle that obligations should be
imposed on both divorcing parents to support their children financially
following family breakdown. The obligation is divided, and the non-custodial
parent receives a tax break on his (or her) share while the custodial
parent does not. Family law, as the Committee notes, is a discretionary
system while tax law is not, and there will always be difficulties in
trying to deliver precise results in a system based on discretion.
The committee recommended
the elimination of the inclusion/deduction provisions of the Income
Tax Act, along with the maintenance of the value of the current subsidy
to families who benefit from it, and passing it along to children who
need it. The Committee felt it important that the value of the subsidy
not be lost, and that it be directed more effectively to children. The
Committee identified three possible ways to pass the subsidy on to children,
including the enhancement of the basic Child Tax Benefit to all low income
families, an increase in the Equivalent to Married Credit, or the creation
of a new benefit for children of separated and divorced families, and
recommended that they be explored further.
Citing the consultations
held by the Federal/Provincial/Territorial Family Law Committee and the
Task Group on the Taxation of Child Support, the federal government in
the 1996 Budget documents recognizes that most Canadians no longer support
the application of the inclusion/deduction mechanism with respect to child
support. Child support paid pursuant to a written order or agreement made
after 1 May 1997, will be neither deductible by the payor nor included
in the income of the recipient. The time lag is intended to provide time
for the enactment of child support guidelines and to prepare for an anticipated
increase in court applications to vary existing orders and agreements.
Orders or agreements
made before 1 May 1997 can be varied to take into account the tax changes
after that date, or can indicate that the parties wish the new tax rules
to apply as of that date. Also, the parties to a support order or agreement
can sign and file a form with Revenue Canada indicating that the new tax
rules will apply to their payments as of a specific date (no earlier than
30 April 1997). Parties will not be allowed to return to the old rules
once this change has been effected.
The change does
not apply to spousal support, and courts will be required to distinguish
clearly between child and spousal support in all orders made after 1 May
1997. At present, in some jurisdictions, support orders are sometimes
made for the support of both spouse and children in one global sum. After
1 May 1997, any support payment that does not indicate that it is solely
for the support of a spouse will be treated as child support for income
tax purposes. Third party support payments will be treated as child support
as well, unless they are clearly identified as being solely for the benefit
of the spouse. Wherever an agreement or order provides for the payment
of both child and spousal support, and there is any default in a tax year,
the payments made will first be considered child support for income tax
The New Child Support Package" indicates that the inclusion/ deduction
mechanism for the tax treatment of child support costs the federal and
provincial governments about $410 million per year in lost tax revenues,
of which the federal component is $240 million.(73) These costs are expected to decrease
gradually, as the new tax treatment of child support becomes effective.
The government indicates that the funds will be used to implement the
guidelines and the new enforcement measures, as well as to double the
Working Income Supplement (WIS) of the Federal Child Tax Benefit.
The Federal Child
Tax Benefit was established pursuant to the 1992 Budget, and has been
delivered monthly since January 1993. Maximum payments go to families
with net incomes under $25,921; the WIS is an additional payment available
to low-income working families. The WIS represents a payment of up to
$500, tax-free, per month, subject to a reduction formula based on household
income. Under the changes announced in March 1996, the maximum WIS will
be doubled. The Budget documents indicate that this change recognizes
the difficulties faced by low-income working parents, and reflects the
importance of living standards in low-income homes. It is intended to
help low-income parents off-set the higher costs of working outside the
home. The government anticipates that over 700,000 families will benefit
from the increased WIS, which will cost the government $250 million a
year once it is fully implemented in July 1998.
The doubling of
the WIS was welcomed by the Canadian Council on Social Development in
its report called "Child Poverty: What Are the Consequences?",
released 12 March 1996; however, the fact that the additional funds
were made available only to children whose parents worked was seen as
an unfair reward to working parents, at the expense of poor children whose
parents do not work.(74) The new measure
would provide no assistance to children whose parents depend on social
assistance. Certainly, this mechanism falls short of what was recommended
by the Federal/Provincial/Territorial Family Law Committee as an appropriate
way to pass on to children the subsidy lost when the tax treatment of
child support was changed. The Committee had proposed that the Child Tax
Benefit be enhanced for all low income families, or that there be an increase
in the Equivalent to Married Credit, or that a new benefit be created
specifically for the children of divorced or separated families.
Of the three areas
of child support policy discussed in this paper, only quantum and taxation
are areas where federal legislative change may have a significant impact.
The writers referred to throughout this paper consistently pointed out
that changes to child support legislation, however appropriate and well-intentioned,
will have limited success in improving the economic well-being of children
because so many causes of child poverty lie outside the family law system.
Family law is important to many Canadians, however, and equally undeniable
is the proposition that the equal distribution of the financial hardship
resulting from family breakdown is a compelling legal and policy goal.
The harmful consequences
of divorce and child poverty are well documented. In the United States,
exposure to a single-parent family has been correlated with poor health,
childhood behaviour problems, delinquency, reduced educational attainment,
lower income, and higher rates of poverty, early childbearing, and divorce.(75)
Similar patterns are observable in Canada. The economic difficulties facing
even intact young families have been particularly pronounced in the 1990s.(76)
There is a clear onus on legislators and policy-makers to improve the
family law systems capacity to fairly distribute the consequences
of marital breakdown.
cautioned against simultaneous reforms of the various areas of child support
law. Based on the American research that indicated the differential impact
of different reform measures, where the beneficial effects of one sometimes
were negated by the impact of another, Professor Garrison suggested the
need for caution in adopting many reforms at once, without careful monitoring
of the impacts of each measure.(77)
Professor Zweibel pointed out that some reforms may benefit particular
subgroups of custodial mothers without affecting others, or even leaving
them worse off.(78) She gave the example of Ontario women receiving full
or partial social assistance, who would not benefit from higher support
awards because their assistance payments are reduced dollar for dollar
by any child support they receive.(79) Ottawa family lawyer Catherine Aitken
has predicted that if the government chooses to change the tax treatment
of child support payments at the same time as it introduces child support
guidelines, as it indeed has done, and to allow variation applications
for existing support agreements and orders, "lawyers will have no
shortage of work and there will be pandemonium in the courts."(80)
At least one Canadian
academic has questioned the appropriateness of looking to the family law
system to improve the economic situation of single mothers and their children.
Professor Jane Pulkingham points out that, while the number of women who
are poor has increased, women have always been poorer than men, and in
fact the proportion of women who are poor has decreased.(81) She suggests that treating the problem
that causes female and child poverty as a failure of the family law system,
reflects the mistaken assumption that it is the individual male breadwinners
job to provide for women and children, and not societys. Professor
Pulkingham asserts that there needs to be a recognition of collective
responsibility and a broader program of social and economic change. Her
1994 paper also points out that the inclusion/deduction treatment of child
support costs the federal government approximately $250 million per year,
which is almost as much as it spent in 1992-93 on transfers to the provinces
through the Canada Assistance Plan for child care. In addition, governments
are paying significant amounts of money for the enforcement of child support
obligations, money that might be more appropriately spent, in her view,
on measures more likely to alleviate child poverty.
If the goal of
reform in this area of law is to improve the financial situation of children
whose parents have separated or divorced, there is clear recognition that
family law and tax law amendments will not be sufficient. As Professor
Zweibel has emphasized, "in the majority of cases, childrens
need for systematic and stable family income cannot be met
through the combined financial resources of their custodial and non-custodial
parent."(82) Some have suggested
that a system of advanced payment, like that in place in Sweden, would
be more helpful to low income recipients because it would protect them
from the insecurities of payment and enforcement that have not been entirely
Family Law Committees original mandate included the requirement
that child support be considered within a broader context of family breakdown,
because of a recognition that child support alone cannot resolve the problem
of inadequate private resources.(84)
These issues were not covered in the Committees study, but were
directed to the federal governments Social Security Review. There
continues, however, to be overlap between these policy areas. If the goal
of child support reform is to better distribute the financial consequences
of marital breakdown among the family, rather than the alleviation of
child poverty, as must be the case, understanding this should better inform
the work of those developing reform alternatives.
There may be risks
involved in the adoption of any particular law reform alternative for
correcting the continuing problems that have been identified in the area
of child support law. In some cases, new measures may produce results
that are no better, or indeed even worse, than what the current law would
produce. However, with care to avoid such negative outcomes, a major improvement
can be selected from the schemes that have been developed in recent years,
building on the changes to be made as a result of the 1996 Budget. Any
measure leading to greater consistency and predictability of outcomes
will reduce the costs, emotional and financial, that parties to litigation
must bear. In order to avoid litigation, however, it is essential that
the impact on existing as well as future arrangements be considered and
provided for. Whatever new measures are adopted, their effectiveness will
be enhanced as a result of ongoing consultation between the federal and
provincial governments, parents, lawyers, judges and children, which will
allow for monitoring their impact, as well as any fine-tuning that may
become necessary in the future.
Government of Canada, "Government Announces New Child Support
Strategy," News Release, Ottawa, 6 March 1996.
"Income Distribution by Size in Canada," Statistics
Canada Publications Catalogue 13-207, Supply and Services Canada,
Ottawa, 1985, p. 16. The percentage of Canadian children who are poor
increased from 14.5% in 1989 to 18.9% in 1992, representing 331,000 additional
poor children, according to Statistics Canada figures reported in the
November 1994 report of the Centre for International Statistics on Economics
and Social Welfare at the Canadian Council on Social Development, entitled
Countdown 94: Campaign 2000 Child Poverty Indicator Report.
Philippe Dubuissons, "Hausse de 66 p.c. des mères seules avec
des enfants à charge en 15 ans," La Presse, 9 March 1993.
This figure represents an increase from 57% in 1990, as set out in the
National Council of Welfare report Women and Poverty Revisited,
Supply and Services Canada, Ottawa, 1990, at p. 2.
E. Diane Pask and M.L. McCall, "How Much and Why? An Overview,"
Challenging Our Assumptions, The Association of Family and Conciliation
Courts, Winnipeg, 1990, p. 142.
Lenore Weitzman, The Divorce Revolution: The Unexpected Social
and Economic Consequences for Women and Children in America,
The Free Press, New York, 1985, p. 400.
E. Diane Pask, "Gender Bias and Child Support: Sharing the Poverty?",
Canadian Family Law Quarterly, Vol. 10, 1994, p. 33-121 at p. 36.
Marsha Garrison, "Child Support and Childrens Poverty
- A Review of Small Change: The Economics of Child Support and
Americas Children: Resources from Family, Government, and the
Economy," Fall 1994, Family Law Quarterly, Vol. 28, No.
3, p.475-507, at p.502.
R. James Williams, "Quantification of Child Support," (1989)
18 R.F.L. (3d) 234.
Pask (1994), p. 81.
(1994), 6 R.F.L. 4th 161 (S.C.C.). Professor Julien Payne, in an
article entitled "Support After Moge, Willick and Levesque"
(1995), 12 C.F.L.Q. 261, noted that Madam Justice LHeureux-Dubés
reasons received the support of only three of seven judges of the Supreme
Court of Canada, but suggested that they would likely be cited with approval
in Canadian courts (p. 287).
Department of Justice, "Evaluation of the Divorce Act
- Phase II: Monitoring and Evaluation," Department of Justice, Ottawa,
1990, cited at para. 66 of Willick.
Edmonton Social Planning Council, Family Budgeting Guide,
Edmonton, March 1992 and a similar project in Metropolitan Toronto were
cited as having been discussed in Ellen B. Zweibel, "Child Support
Guidelines: An Ineffective and Potentially Gender-Biased Response to Child
Support Issues," in Family Law Voodoo: Economics for Women - Feminist
Analysis Conference, Canadian Bar Association, Ontario, 1993.
Myriam Grassby, "Women in Their Forties: The Extent of Their
Rights to Alimentary Support," (1991), 30 R.F.L. (3d) 369, and Rosalie
S. Abella, "Economic Adjustment on Marriage Breakdown: Support,"
4 Fam. L. Rev. 1, 1981.
Carole Curtis, "Workshop on Limits of the System: Women in
Family Law," Paper delivered at the Conference of the National Association
of Women and the Law, Toronto, February 1991, p. 2.
Willick, para. 60.
Williams (1989), p. 246.
Divorce Act, 1985, R.S.C. 1985, c. 27 (2d Supp.), s. 2(2).
Paras v. Paras,  1 O.R. 130, 2 R.F.L. 328 (C.A.)
Carol Rogerson, "Judicial Interpretation of the Spousal and
Child Support Provisions of the Divorce Act, 1985," (Part
II), 7 C. Fam. Law Q. 271, 1991, p. 274.
Ibid., p. 304.
(1988), 86 N.S.R. (2d) 248 (Fam. Ct.)
Government of Canada, "Budget 1996: The New Child Support
Package," Ottawa, 6 March 1996, p. 13.
Federal/Provincial/Territorial Family Law Committees Report
and Recommendations on Child Support, Ottawa: Department of Justice,
1995. The Report points out that the recommended method of apportioning
costs of children between parents, which had been referred to throughout
the Committees previous work as "guidelines," would be
more appropriately called a "formula," as the Committee was
recommending the adoption of a mathematical formula for the calculation
of the costs of children as well as an apportioning principle (Report,
"Budget 1996: The New Child Support Package," p. 11.
Elrod, "Kansas Child Support Guidelines: An Elusive Search
for Fairness in Support Orders," (1987) 27 Washburn Law J. 104 and
Williams, "Guidelines for Setting Levels of Child Support Orders"
(1987), 21 Fam. Law Q. 281, cited in Williams (1989), p. 267.
Williams (1989), p. 271.
Federal/Provincial/Territorial Family Law Committee, The Financial
Implications of Child Support Guidelines: Research Report,
"Budget 1996: The New Child Support Package," p. 12.
Ibid., p. 15.
(34) For example, Ross Finnie et al., Child
Support: The Guideline Options, The Institute for Research on Public
Policy, Montreal, 1994.
Gordon Jarenko, "Child Support Plan Details Questioned,"
Calgary Herald, 28 January 1995, p .B6.
Anita Elash, "Legal Update: Family Law," Canadian
Lawyer, Vol. 18, No. 8, October 1994, p. 36; Catherine Aitken,
"Will Federal Child Support Guidelines Lead to Pandemonium?",
The Lawyers Weekly, 23 February 1996, p. 22.
Stephen L.P. Sanderson, "Proposed Support Guidelines Dont
Jibe with Current Law," Law Times, 26 June - 2 July 1995,
Ross Finnie, "Child Support Guidelines: An Evaluation of Recent
Government Proposals," (1995), 11 Reports of Family Law (4th)
317, at p. 318.
Summary: Federal/Provincial/Territorial Family Law Committees
Report and Recommendations on Child Support, Department of Justice,
Ottawa, 1995, p. 3.
Finnie et al. (1994), p. 13.
Garrison (1994), p. 480.
Ibid., p.489, citing Andrea H. Beller and John W. Graham, Small
Change: The Economics of Child Support, Yale University Press, 1993.
Canadian Bar Association, Submission of the National Family Law
Section of the C.B.A. on Child Maintenance Guidelines, Toronto,
December 1992, cited in Pask (1994), p. 114.
"Budget 1996: The New Child Support Package," p. 15.
Williams (1989), p. 271.
Law Reform Commission of Canada, The Family Court, Working Paper
1, Law Reform Commission, Ottawa, 1974, p. 51.
F.M. Steel, "An Overview of Provincial and Federal Maintenance
Enforcement Legislation," Challenging Our Assumptions, The
Association of Family and Conciliation Courts, Winnipeg, 1990, p. 262.
F.M. Steel, "Maintenance Enforcement in Canada," Ottawa
Law Review, Vol. 17, 1985, p. 504.
The Institute of Law Research and Reform, Matrimonial Support
Failures: Reasons, Profiles and Perceptions of Individuals Involved,
Vol. 1, Edmonton, 1981, cited in F.M. Steel (1990), p. 264.
Federal/Provincial/Territorial Family Law Committees Report and
Recommendations, p. D-2.
"Budget 1996: The New Child Support Package," p. 20.
Ibid., p. 21.
Federal/Provincial/Territorial Family Law Committees Report and
Recommendations, p. D-3.
Susan Amrud, Department of Justice, Legislative Services Branch,
Saskatchewan, personal communication, 2 November 1992.
Federal/Provincial/Territorial Family Law Committees Report and
Recommendations, p. D5
(58) Ibid., Appendix D.
Garrison (1994), p. 484.
Federal/Provincial/Territorial Family Law Committee (1992), p.
(1995), 12 R.F.L. (4th) 1.
Thibaudeau v. R., 92 D.T.C. 2111.
94 D.T.C. 6230.
James G. McLeod, "Annotation," Thibaudeau v. R.
(1995), 12 R.F.L. (4th) 1, at p.12.
See Ellen B. Zweibel, "Child Support Policy and Child Support
Guidelines: Broadening the Agenda," Canadian Journal of Women
and the Law, Vol. 6, No. 2, 1993, p. 371, note 9; Canadian Advisory
Council on the Status of Women, "Comments on the Federal/ Provincial/Territorial
Family Law Committees Report and Recommendations on Child Support,"
March 1995, p.12; and National Association of Women and the Law, "Summary
of Resolutions," Tenth Biennial Conference - "Healing the Past,
Forming the Future," 19-21 February 1993.
Ellen B. Zweibel and Richard Shillington, "Child Support Policy:
Income Tax Treatment and Child Support Guidelines," Paper supported
by the Policy Research Centre on Children, Youth and Families, 1993, p. 2.
Ibid., p. 17.
The National Association of Women and the Law, Brief Submitted
on Bill C-79, An Act to amend the Divorce Act and the Family Orders and
Agreements Enforcement Assistance Act, February 1993, p. 5.
Zweibel and Shillington (1993), p. 50.
Federal/Provincial/Territorial Family Law Committee, "Working
Paper on the Tax Treatment of Child Support Payments," Report
and Recommendations on Child Support, January 1995, Appendix E. Note
that the Working Paper was prepared before the Supreme Court of Canada
rendered its decision in the Thibaudeau case.
Estimated, 1996-97, "Budget 1996: The New Child Support Package,"
Derek Ferguson, "Budget No Help to Many Kids, Report Says,"
Toronto Star, 12 March 1996.
Garrison (1994), p. 503.
Susan McGrath et al., "The Prospects of Young Families,"
Transition, Vol. 25, December 1995, p. 12
Garrison (1994), p. 487.
Zweibel, "Child Support Policy..." (1993), p. 374.
Of course, these women would benefit if higher awards exceeded
the total amounts of their assistance payments.
Aitken (1996), p. 21.
Jane Pulkingham, "Private Troubles, Private Solutions: Poverty
Among Divorced Women and the Politics of Support Enforcement and Child
Custody Determination," Canadian Journal of Law and Society,
Vol. 9, No. 2, Fall 1994, 73, at p. 80.
Zweibel, "Child Support Policy..." (1993), p. 401.
Pask (1994), p. 118.
Canadian Advisory Council on the Status of Women (1995), p. 13.