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Backgrounder
REPORT TO PARLIAMENT ON FEDERAL CHILD SUPPORT GUIDELINES
When Parliament passed legislation to create the Federal Child Support Guidelines,
a special provision was added to the Divorce Act — a provision stating
that, five years after implementation (on May 1, 1997), the Minister of Justice
would report to Parliament on how well the Guidelines were working. Children
Come First: A Report to Parliament on the Provisions and Operation of the Federal
Child Support Guidelines is the result of this review. The Report discusses
three interrelated topics: the setting of child support amounts, the tax treatment
of child support and the enforcement of child support orders.
Background
In the late 1980s, many separating and divorcing parents, family law professionals,
and others were looking for better ways to determine the amount of financial
support parents pay for their children. Critics said that the system in place
at that time for determining child support was producing amounts that were too
low, inconsistent, and unpredictable. The lack of predictability was a particular
concern, since it tended to encourage parents to go to court over child support,
which increased the costs of separation and divorce, and increased conflict
and the demands on the family law system.
In 1990, the federal, provincial, and territorial ministers of justice and
attorneys general directed the Federal-Provincial-Territorial Family Law Committee
to examine these concerns and recommend improvements to the family law system.
In its Report and Recommendations on Child Support (January 1995), the Committee
proposed that child support guidelines be established under the Divorce Act
for parents, judges, and lawyers to use to determine child support. Such guidelines
would set the amount of child support based on the number of children concerned
and the income of the parent who would be paying the support.
At this time, Canadians were also criticizing the way the tax system dealt
with support payments. Many said it was unfair that parents paying child support
could deduct the payments from their taxable income, while parents receiving
child support had to pay tax on what they received. In addition, many parents
disliked the cumbersome process of managing payments and deductions throughout
the tax year. Moreover, judges, lawyers, and parents found that the tax calculations
involved were so complex that they made determining child support amounts very
difficult.
A third area of concern was enforcement. Many parents had found there was no
way for them to ensure that they received their support payments in full and
on time. The Government of Canada had already helped the provinces and territories
with enforcement by putting a law into place that allowed federal employees'
wages to be garnisheed to satisfy support obligations.
Another law allowed the provinces and territories to use federal databases
to trace parents who were not paying their support, and to garnishee federal
payments such as income tax refunds and employment insurance payments. Still,
many people felt that governments could do more in the area of enforcement.
In March 1996, the Government of Canada announced its intention to address
these concerns by improving the way child support amounts were determined, taxed,
and enforced.
It amended the Divorce Act to introduce child support guidelines to
help parents, lawyers, and judges set fair, predictable, and consistent child
support amounts in divorce cases. It changed the tax treatment of child support
payments made under orders or agreements dated on or after May 1, 1997, so they
would no longer be taxed as income for the parent who receives them or be tax
deductible for the parent who pays them. It also introduced new federal measures
and enhanced services to help provincial and territorial enforcement agencies
ensure that family support is paid in full and on time.
This Report fulfills the Government's obligation to report fully on how well
the Federal Child Support Guidelines are working.
Child Support Guidelines:
The Federal Child Support Guidelines have four key objectives, each designed
to improve on the old system:
- to establish a fair standard of support for children that ensures they
continue to benefit from the financial means of both spouses after separation;
- to reduce conflict and tension between spouses by making the calculation
of child support orders more objective;
- to improve the efficiency of the legal process by giving courts and parents
guidance in setting the levels of child support orders and by encouraging
settlement; and
- to ensure consistent treatment of parents and children who are in similar
circumstances.
Overall Assessment:
The Survey of Child Support Awards (see Vol. 1, Appendix 3, Report to Parliament)
confirms that the Guidelines have been working well. The courts have used the
Federal Child Support Guidelines to determine child support in the vast majority
of divorce cases (except in Quebec which has different child support guidelines).
Child support tables have gone a long way toward ensuring that children receive
a fair amount of support and toward reducing conflict and tension between parents
about child support.
The tables have also made the legal processing of cases more efficient and
have helped ensure that parents and children in similar circumstances are treated
consistently.
Taxation:
The Government of Canada responded to the concerns expressed by Canadians about
the deduction-inclusion tax treatment of child support by implementing new tax
rules that simplify the tax processes for both support recipients and payors.
The Government has also fulfilled its commitment to enrich the Canada Child
Tax Benefit (CCTB).
Enforcement:
For the family law justice system to work, family support obligations must
be enforceable. In Canada, the provinces and territories are responsible for
the enforcement of family support orders. However, over the past six years,
the Government of Canada has taken a more active coordinating role in enforcement
and has therefore helped to support families experiencing family breakdown.
As a result of its role in coordinating enforcement efforts on a broad range
of enforcement issues - from helping to eliminate interprovincial and international
boundaries to re-engineering the federal enforcement operational system - the
Government has helped to improve enforcement across the country. It has also
established a federal enforcement policy unit, increased project-based funding,
and launched a comprehensive program of research on enforcement and compliance
issues. The results of some of the research are expected this year, and they
will be extremely valuable in assessing ongoing efforts and, therefore, in planning
for the future.
Recommendations:
The Report to Parliament contains 12 recommendations. It recommends that:
| 1. |
the child support tables be updated
every five years, or sooner when changes in federal, provincial or territorial
tax regimes would have significant impact on table amounts. |
| 2. |
the factors used to determine the
amount of support in shared custody situations be replaced by the use of
a presumptive formula. A judge would determine the support amount by applying
a prescribed formula, unless inappropriate. |
| 3. |
the term extraordinary expenses
be defined to 1) guide parents and the courts better when support amounts
are being determined, and 2) improve consistency across the country among
families in similar circumstances. |
| 4. |
recipients of support for a child
the age of majority or over be required to disclose information about the
child's ongoing eligibility for support. |
| 5. |
the Comparison of Household Standard
of Living Test be adjusted to account for certain statutory payroll deductions. |
| 6. |
where a parent lives in a country
that has higher effective income tax rates than those in Canada, this fact
be taken into account. |
| 7. |
provinces and territories should
continue to work with the Government of Canada to resolve inter-provincial
and extra-provincial support cases. |
| 8. |
Statistics Canada and its partners
in the National Justice Statistics Initiative should continue to explore
options for collecting and disseminating information on family law issues. |
| 9. |
the Government of Canada continue
to work with the provinces and territories in a coordinating role on developing
a national infrastructure for enforcing family support.
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The Minister of Justice will bring these recommendations forward for implementation
through the regulatory process.
Considerable research demonstrates that when cases are complex and require
an understanding of individual family circumstances, judicial discretion is
required to assess each case to ensure that the result is fair. For these reasons,
the Report to Parliament recommends no changes in the following areas:
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10.
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if a paying parent has access to
or shares custody of a child for 40% or more of the year, then a judge may
order them to pay an amount that is lower than the table amount in the Guidelines. |
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11.
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in some circumstances, paying the
table amount can cause a parent or a child to suffer undue hardship. Courts
and parents can, in these circumstances, decide on a different amount. In
addition, because transportation costs are unpredictable and projected costs
may not actually be incurred, the court may provide, through a separate
order, for the parents to share costs, instead of changing the child support
order. |
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12.
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once it is established that a 'step-parent'
stands in place of a parent, the court has discretion to set his or her
child support obligations. The courts have adopted a variety of approaches
to this issue and, therefore, there have been calls for more direction in
the law. However, the Government believes that allocating child support
responsibilities to step-parents is a complex task and must be driven by
the facts of individual cases to attain a fair result. |
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Department of Justice
April 2002
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