The finalized version of the Spousal Support Advisory
Guidelines was released in the fall of 2008 and I note the following revisions
or clarifications that relate to BC high-net worth families in British Columbia
Spousal Support cases:
- a new
exception that recognizes a payor’s inability to deduct spousal support
for income tax purposes if his or her income is mostly or entirely from
legitimately non-taxable sources;
This is a critical exception for spouses who are working
abroad in a regime where no taxes are paid or where taxes are paid but no deduction is allowed by the foreign state.
Where the take-home pay of the payor is substantially higher as a result
of no tax being taken off, Courts will routinely gross up the non-tax paying
spouse’s income to reflect what a gross income in Canada would have to be to
net the same amount of take-home pay in the non-tax paying jurisdiction. However, it is critical that the Court be
made aware that the Spousal Support Advisory Guidelines take into account the
substantial tax deduction that is available to the paying spouse and that tax is paid by the receiving spouse.
In cases where there is no tax deduction available to the
payor, it is questionable whether the recipient will pay tax in Canada on such an amount. There are options for
lawyers to be creative with respect to lump-sum payment maintenance to ensure
that neither the recipient nor the payor are affected by the tax deduction tax
inclusion regime.
- a
clarification that “indefinite” spousal support means support with a
duration that is not specified – not permanent or infinite support;
It is important to note that maintenance Orders are never
final and are always subject to being changed if there is a substantial change
in circumstances in the income or asset position of the paying or receiving
spouse. Given the current economy with
job losses at an all time high, it is not improbable that an indefinite Order
for maintenance might last only a few months.
- a new
exception that recognizes the possibility in B.C. of reapportionment of
property on spousal support grounds by allowing the amount of spousal
support to be reduced below the ranges where a large reapportionment order
has been made;
British Columbia is the only province in Canada that allows for a Court to divide property other than equally between the
spouses when taking into account the financial needs of a spouse. As this unequal division relates
substantially to the same issue as economic disadvantage suffered by a spouse
that would qualify them to receive spousal support a special exception for
British Columbia to prevent double recovery had to be instituted. In my opinion, some judges erroneously nearly
add a notional interest component to the property value above half that a
spouse receives when they receive more than half when in fact they should be
dividing the capital as well as the interest that capital can produce over a
certain number of years to reduce dollar for dollar the Spousal Support
Advisory Guidelines calculated amount after factoring in the property is tax free money.
- a
recognition that it is open to counsel to argue for an exception in
high-property, high-income cases;
My firm handles a substantial number of high-net worth
cases. At a certain point when the asset
pot that is divided becomes so high it becomes clear that the spouse with a
lower income should not be provided with spousal support as there was no
disadvantage suffered during the marriage and there is no real need. For example, if a spouse obtains 4 million
dollars in assets in a property division, most cases would suggest that no
spousal support be payable. The issue
becomes if no spousal support is payable on 4 million dollars of assets, what
spousal support should be payable if the spouse receives 2 million. Surely, there should be some reduction of support to reflect the advantage of the assets attained from the marriage. This topic requires a separate article which
I will produce at a later date.
- an
exception allowing for an increase in the duration or amount of spousal
support under the with child support
formula after child support that limited the amount left over for spousal
support pursuant to s. 15.3 (priority of child support) ends.
Finally, the issue of what happens to spousal support under
the with child formula when the
children become adults is a topic of considerable complexity. There must be a transition of child support
from the with child formula to the without child formula when the last
child no longer receives child support.
It is critical that this be taken into account on any settlement or any
Court argument as spousal support under the with
child formula provides the spouse with an amount that is leftover after
child support is paid. As the child
support declines, unless the spousal support increases, there will be an uneven
standard of living in the paying and receiving spouse’s household.
If you have a situation like this, please do not hesitate to
call me.
I am often told by my BC Family Law clients that they suspect family assets or family money have been hidden or gone missing near the end of a marriage. To avoid this problem I recommend you keep a close eye on assets, bank accounts, company financial statements and credit cards amongst other assets and liabilities. Make copies of financial documents and keep them is a safe place and act immediately if you suspect fraud against you.