I am often asked, how is child support calculated where one parent’s income is over $150,000? Rigid application of the Federal Child Support Table may result in child support payments that are so in excess of the children’s reasonable needs that they are more in the nature of household equalization, a functional wealth transfer between spouses, or spousal support. Courts therefore have the discretion to remedy situations where Table amounts are so in excess of the children’s reasonable needs as to no longer to qualify as child support. A family’s lifestyle and pattern of expenditure are relevant and important considerations in determining appropriateness of a child support award, thus a modest pre-separation lifestyle provides a justifiable reason to depart from the Table amounts.
How is child support calculated in general?
The presumptive rule under section 3 of the Federal Child Support Guidelines, SOR/97-175 is that child support is calculated using the applicable Table according to (1) the number of children under the age of majority to whom the order relates; (2) the province of residence of the paying spouse; and (3) the income of the paying spouse. In a recent post, I discussed how child support is calculated where the payor parent has unusual forms or patterns of income or is able to manipulate their income for tax purposes.
How is child support calculated where income is over $150,000 per year?
Section 4 of the Guidelines applies where the income of the paying spouse is over $150,000 per year. Maintenance of the children is the primary objective of child support payments, not household equalization, wealth transfers between spouses, or spousal support. At a certain point, child support payments will meet even a wealthy child’s reasonable needs. As such, section 4 sets out two approaches:
- Section 4(a) allows for the calculation of child support payable to be the same as where income is under $150,000 (in other words, the Table amount may still be appropriate and the monthly child support award will simply be increased by the designated percentage as set out in the Table).
- If the payor parent establishes that the Table amount is so in excess of the children’s reasonable needs that it must be considered “inappropriate” or “unsuitable”, section 4(b) of the Guidelines gives the court discretion to move away from Table amount. In exercising that discretion, the court must consider the condition, means, needs, and other circumstances of the children who are entitled to support; the financial ability of each spouse to contribute to the support of the children; and any special or extraordinary expenses under section 7.
A family’s lifestyle and pattern of expenditure are relevant and important considerations in determining appropriateness and calculating child support under section 4 of the Guidelines.
A recent example: How is child support calculated for high-income individuals?
Cross v. Batters, 2016 SKCA 71, demonstrates that a modest pre-separation lifestyle is a justifiable reason to depart from the Table amounts. In that case, Ms. Cross and Mr. Batters were married in 2000 and separated in May of 2015. Both were high-income individuals, but despite their wealth, they had a “rather standard small-town lifestyle” and did not live extravagantly.
Mr. Batters petitioned for divorce and Ms. Cross then brought an application for interim child support of $139,923 monthly for their three children and interim spousal support in the amount of $120,000 monthly. Mr. Batters did not oppose the application for support but did take issue with the amounts requested. The most conservative estimate of the father’s annual income was $4.8 million a year, although the mother argued for imputation of $9 million a year. Even using the more conservative estimate of Mr. Batter’s income, the Table support amount would be $79,791 a month.
The Chambers judge decided that neither the amount claimed by Ms. Cross nor the Table amount under the Guidelines was appropriate. Both of those figures were so excessive as to be a functional transfer of wealth from Mr. Batters to Ms. Cross. In light of all the evidence, including financial statements and estimated monthly costs associated with the children, Mr. Batters had rebutted the presumption that the Table amount of child support should be awarded. The Chambers judge determined that $20,000 per month (an amount equal to roughly ¼ of the Table amount) was sufficient to allow the children to enjoy the same standard of living as they had enjoyed prior to their parents’ separation. The Chambers judge set interim spousal support at $10,000 per month. Both determinations were sanctioned on appeal.
The Cross decision focused centrally on the parents’ pre-separation lifestyle and placed significant emphasis on the fact that the parents in that case lived, and continued to live, in a modest and unostentatious fashion.
Bottom line: How is child support calculated if income is over $150,000?
Where income of the payor parent is over $150,000 per year, section 4 of the Guidelines provides two approaches for calculating child support, and there is an elastic range within which various amounts of child support are appropriate. The family’s lifestyle and pattern of expenditure are relevant and important considerations in determining appropriateness of a child support order under the Guidelines.