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Spousal support is a payment made by one spouse, the payor, to the other spouse, the recipient, to help with their day-to-day living expenses or to compensate the recipient for the financial choices the spouses made during the relationship.
Although anyone who was in a married or unmarried spousal relationship can apply for spousal support, it's important to know that there is no automatic right to receive support just because of the relationship. Whether spousal support will be paid, and, if so, how much will be paid, always depends on the particular circumstances of each couple.
There are also limitation periods for applying, which are of particular concern for unmarried spouses.
This section provides an introduction to the law on spousal support. It also looks at what happens when a potential recipient applies for social assistance, and reviews the income tax consequences of spousal support payments. The other sections in this chapter explore issues about spousal support in more detail, including the Spousal Support Advisory Guidelines, making changes to spousal support, and the problem of arrears of spousal support.
- 1 An introduction to spousal support
- 2 The law
- 3 Spousal support and income tax
- 4 Resources and links
An introduction to spousal support
Merely being in a spousal relationship, whether married or unmarried, does not automatically establish a right to life-long support. When a spousal relationship ends, each party needs to become financially independent and self-sufficient as soon as possible. As the judge said in the 1997 Supreme Court case of Dumais-Koski v. Koski, 1997 CanLII 3816 (BC SC):
"Marriage is not a legal institution created for the redistribution of wealth."
Or, as the Alberta Court of Queen's Bench put it in the 2005 case of V.S. v. A.K., 2005 ABQB 754:
"A person does not acquire a lifetime pension as a result of marriage. Likewise, marriage is not an insurance policy."
A spouse who is self-sufficient, or readily capable of becoming self-sufficient, will not usually be entitled to receive spousal support at the end of a relationship .
Spousal support is available for married spouses and formerly married spouses under the federal Divorce Act. Spousal support is also available to spouses under the provincial Family Law Act, which, for the purposes of child support and spousal support, defines spouse as including:
- people who are married to each other,
- people who have lived together in a marriage-like relationship for at least two years,
- people who lived together in a marriage-like relationship for less than two years and have a child together, and
- former spouses.
(Incidentally, the law in British Columbia doesn't talk about people who are common-law spouses and never has. Once upon a time, people could marry each other and create a legal relationship simply by agreeing to marry, without getting a licence from the government or having a particular kind of ceremony. Because the rights between the spouses came from common law principles, these were known as common-law marriages. Common-law marriages were valid in England until the Marriage Act of 1753, better known by its full flowery name, An Act for the Better Preventing of Clandestine Marriage. Please don't use the term common-law marriage. It doesn't mean what most people think it means and is two-and-a-half centuries out of date.)
Spousal support is available for all spouses, whether of the same or opposite sexes, and can be required by a court order or agreed to by a separation agreement.
There is no limitation period for bringing a claim for spousal support under the Divorce Act. It can be brought before or after an order of divorce. Nonetheless, the longer a spouse or former spouse waits, the less likely they will succeed.
The limitation period under the Family Law Act is two years from the date of separation for unmarried spouses and two years from the date of divorce for legally married spouses. Unmarried spouses used to have a one year limitation period under the former Family Relations Act, which did catch some people out. Even at two years, the limitation period can be deceptively short, especially if there is some dispute about when the parties separated. There are some — though limited — circumstances where the limitation period can be extended. These circumstances include where the parties enter into formal family dispute resolution as defined in the Family Law Act, or where the paying spouse acts or speaks in such a way as to lead the recipient spouse to believe that they will not be relying on the limitation period.
Establishing an entitlement to support
Spousal support is paid for one of two reasons:
- to help the recipient maintain or approximate the marital standard of living after separation, or
- to compensate the recipient for financial decisions made by the spouses during their relationship.
The first type is usually called needs-based support. The second is called compensatory support.
Of course, some reduction in the marital standard of living is inevitable. No matter if one spouse was working during the relationship or both worked, the fact is that during the relationship there was only one mortgage payment to make, only one hydro bill, and only one cable bill. After the relationship ends, there are two rent payments, two hydro bills, and two sets of groceries to buy, all of which must be paid out of the same pool of income that supported the family before separation.
There is no automatic obligation to pay spousal support the way there is for child support. As a result, the entitlement of a spouse to receive spousal support will be decided on the particular circumstances of that person and their relationship with the other spouse. In general, the court will take into consideration the following factors, among many others:
- Length of marriage: The longer the relationship, the more likely it is that an order for spousal support will be made. As well, the longer the relationship is, the stronger the presumption will be that the parties should have an equal or almost equal standard of living at its conclusion.
- Difference in incomes: The greater the difference in income between the parties is at the end of a relationship, the more likely it is that an order for spousal support will be made, even if the support will only be paid for a short period of time.
- Economic disadvantage: The more economic opportunities a spouse has lost as result of the relationship, such as job skills, job opportunities, raises and promotions, or employability, the more likely it is that an order for spousal support will be made.
- Earning capacity: The more one party's earning capacity is reduced because of family obligations like child care or a serious illness, for example, the more likely it is that an order for spousal support will be made.
Amount of support payments
Once a spouse has established that they are entitled to receive spousal support, the question becomes how much support the spouse ought to get.
The amount of spousal support payments is now generally calculated using the Spousal Support Advisory Guidelines. The Advisory Guidelines is an academic paper released by the federal Department of Justice which describes a number of mathematical formulas that calculate the amount of spousal support payments based on each person's income, the length of their relationship, the age of their children, and other factors. You can find the Guidelines in a separate section of this chapter.
The amount of spousal support is also calculated by looking at the disposable income of the payor and the reasonable needs of the recipient. If a payor has a gross income of, say, $2,000 per month, and of that money $1,500 is spent on taxes, child support, housing costs, utilities, and other basic living expenses, the payor's disposable income will be $500 per month. Spousal support will usually be paid out of that remaining $500 per month, if it's payable at all. Although spouses usually share in the financial consequences of the end of their relationship, the court will not force someone into bankruptcy to provide support for the other spouse. There certainly are times, however, when a support order will result in the payor racking up debt.
Sometimes there is simply not enough money coming in to cover child support, the payor's day-to-day needs, and the day-to-day needs of the recipient. In cases like that, both the Divorce Act and the Family Law Act require child support to take priority over spousal support, and the amount of spousal support paid simply may not suffice to cover the recipient's needs.
Duration of support payments
Once a spouse's entitlement to receive spousal support is established and the amount of support payments has been fixed, the next step is to look at the length of time for which the support payments should be made. For people leaving long relationships, spousal support might be paid permanently or until retirement. For people in shorter relationships, particularly where the recipient is either working outside the home or capable of working outside the home, support might only be payable for a fixed length of time.
There are a number of different ways that an order or agreement for spousal support can deal with the issue of time:
- Lump-sum payments: Instead of ongoing monthly payments, it can sometimes be better to pay a single lump sum for all of the support payments. Of course, the payor has to be able to pay a lump sum like that, and not everyone can.
- Division of property: It is possible that the way the family property and family debt is divided could satisfy the goal of a spousal support order. It's also possible that a payor could agree to give the recipient more of the family property in order to avoid a spousal support obligation.
- Review dates: An order or agreement can say that when a certain date or event arrives, the amount of spousal support or the recipient's entitlement to receive support will be reviewed. This is sometimes easier to accept than a fixed date on which support will terminate, but it does mean that the parties will have to argue about the issue in the future. Again.
- Escalated payments: If someone wants to pay spousal support for as short a time as possible but can't make a lump-sum payment, the payor might be able to get an order or agreement requiring greater monthly payments but over a shorter period of time.
The Advisory Guidelines can also be used to calculate a range of time for which spousal support should be paid, in addition to calculating how much support should be paid. Where a couple have children, time is based on the dates the youngest child will enter and exit school, and, sometimes, on the length of the spouses' relationship. Where a couple doesn't have children, time is based on the length of the couple's relationship.
Changing spousal support
It is almost always possible to apply to change an order for spousal support or to renegotiate a separation agreement that requires the payment of spousal support, as long as there has been a change in circumstances since the order or agreement was made.
Recipients might want to change an order or an agreement if:
- their spousal support payments are going to end but their financial situation hasn't improved,
- their financial situation has worsened and they need more support than they did before, or
- something unexpected has happened, like an illness or an accident, that causes them to need support.
Payors usually want to change things if:
- their financial situation unexpectedly worsens,
- the recipient finds work or gets better-paying work,
- the recipient enters a new spousal relationship,
- the recipient's financial situation unexpectedly improves, or
- they have a new legal obligation to support someone else.
If the parties can't agree about if or how a support order should be changed, they will usually have to make an application in court to vary the order. Couples with an agreement often try to negotiate a change and only go to court if they can't agree on the change.
Spousal support and income tax
A spouse who pays support on a periodic basis is entitled to claim the whole amount of their payments as a deduction against their taxable income, just like an RRSP contribution. The recipient is obliged to claim the support they have received as taxable income, just like employment income, and the recipient will wind up owing money to the government at tax time each year.
To claim spousal support payments as a tax deduction, the order or agreement that obliges the payor to make the spousal support payments must clearly state that the payments are for spousal support and the payments must be periodic in nature rather than paid as a lump sum. Without these clear statements, the federal Income Tax Act requires the payments to be treated as child support payments, and child support payments are neither tax deductible for the payor nor taxable income for the recipient.
Lump-sum spousal support payments are neither deductible for the payor nor taxable for the recipient.
Ensuring spousal support is deductible
If you want to ensure that the money you are paying as spousal support is deductible, there are a couple of important points you must pay attention to in order to satisfy the tax department:
- Court Orders: The order must clearly state a fixed, periodic sum that is being paid, and this fixed sum must be described as spousal support.
- Separation Agreements: In addition to a term describing a fixed, periodic sum as spousal support, the agreement must also state that the parties have been separated since a certain date and intend to continue to live separate from each other. Payments for child support and spousal support should never be expressed as a single amount.
- Unwritten Agreements: In general, the tax department will not recognize anything other than a written separation agreement or a court order. There are some exceptions to this rule, but you really should arrange your support payments in a formal fashion.
- Proof of Payment: CRA will want proof you made the payments you are seeking to deduct. If you can’t get receipts, make sure you can document the payments you made. E-transfers or bank records in the correct amount may not be enough. It has to be recorded as spousal support somehow (e.g. cancelled cheque — with “spousal support” noted in the memo line). Cash payments are the worst. If you must pay in cash, get a receipt.
Changing source deductions
A source deduction (or payroll deduction) is an amount of money your employer is required by law to deduct from your pay and remit to the Canada Revenue Agency. Your employer calculates the source deduction based on the salary or wages they are paying you. You need to take steps to make sure that any periodic spousal support you're paying is also factored in, otherwise your source deduction will be higher than it needs to be. While you could just wait to until tax time to get the money back, you do not need to. You can arrange through your payroll department and the Canada Revenue Agency for approval of an adjustment to your source deductions for income tax, so your new take-home pay reflects both the payment of spousal support and the deduction for tax purposes.
Avoiding unexpected taxes
The payment of spousal support will require the recipient to pay additional taxes each year since the payments received must be reported as income.
A recipient of support may also be subject to other tax consequences that aren't so obvious. One of the more common ways this can happen is if the payor is making the payments indirectly, through a company they own. For example, say that Bob, the owner of Bob's Brewery, writes his spousal support cheques on the company bank account of Bob's Brewery instead of from his personal chequing account. In a case like this, the recipient risks having the payor declare the money to have been paid as a corporate dividend or as salary, as if the recipient were a shareholder or employee of the company.
In the case of support declared as salary, the recipient might also face an unexpected bill from EI or CPP for missed payments, as well as for unpaid tax from the Canada Revenue Agency. In the case of support paid as a dividend, the payments might be taxed at the corporate tax rate, which may be higher than the recipient's personal tax rate.
The easiest way to guard against unexpected taxes is to ensure that the payments are made by way of a personal cheque drawn on the payor's personal bank account.
Taking taxes into account
When it will be difficult for a recipient to pay the tax owing on spousal support, a couple can agree to deal with these taxes in one of two ways if the recipient is to avoid a big bill in April:
- the payor could pay more in spousal support to account for the tax consequences, or
- the payor could simply pay the tax owing by the recipient when the recipient files their tax return.
When someone pays more support, the recipient must put the extra amount aside for tax time, or their bill to the Canada Revenue Agency will just be that much higher. Since it can be a bit difficult to figure out how much money the recipient will have to pay in taxes, you might want to talk to an accountant to get the number right.
When someone agrees to pay the taxes owing on account of the spousal support and the recipient has other sources of income, it can be very difficult to figure out exactly how much of the recipient's tax bill results from their receipt of spousal support. This is another good time to hire an accountant.
Deductibility of legal fees
The portion of a lawyer's bill attributable to establishing, increasing or enforcing a spousal support order for periodic payments is tax deductible by the recipient. A payor cannot deduct legal fees paid to establish, negotiate, contest, reduce or terminate the amount of spousal support. Read the Canada Revenue Agency's Income Tax Folio: S1-F3-C3, Support Payments for the fine print.
To claim these deductions, the lawyer must write a letter to the CRA setting out what portion of their fees were attributable to advancing a spousal support claim. If you intend to ask your lawyer for a letter like this, you must tell your lawyer as soon as possible, preferably the moment the lawyer takes your case. It may be impossible to winnow out the portions of an account spent on spousal support after the fact.
Spousal support and death
As a general rule, if the payor dies, support ends. Under the Family Law Act, however, a recipient spouse may apply to have support continue, to be paid by the estate of the deceased spouse. Section 171 lists the factors for the court to consider:
- the need of the recipient,
- the size of the estate,
- the claims of estate creditors or beneficiaries, and
- that no other practical means exist to meet the need of the recipient. (For example, life insurance would usually be a preferable means of securing the recipient, but it is not always available or affordable.)
There is no limitation period to apply for continuation, but as a practical matter, the recipient would have to apply soon. Otherwise, they risk the estate being wound up and paid out.
If the support order already provided for support to continue past the death of the payor, their estate can apply to have the support reduced or ended.
If the recipient dies, obviously support ends. But what if there were arrears owing? Does the estate of the recipient get to collect them? The answer is not always clear. It seems to depend in part on whether the recipient had been actively pursuing them, or whether they had spent their own savings (estate) to make up the difference.
The Divorce Act does not have the equivalent of s 171 of the Family Law Act, so if you fall under this statute, an application to make the estate liable for continuing spousal support is not possible after the paying spouse has died. You must have an agreement or court order that pre-dates the death of the paying spouse. So, if you are seeking support and you think you may need some security in the event the paying spouse dies, apply for such an order or negotiate such an agreement now. If you wait, you may lose the chance.
- Spousal Support Advisory Guidelines
- Canada Revenue Agency's Income Tax Folio: S1-F3-C3, Support Payments
- Department of Justice's website "About spousal support"
- Ministry of Attorney General's website "Family Maintenance Services"
- Legal Services Society's Family Law website's information page "Child & spousal support"
- See "Spousal support"
- Family Maintenance Enforcement Program website
- Dial-A-Law Script "Spousal support"
- Clicklaw listing of resources on spousal support
- DIVORCEmate's free basic spousal support calculator
|This information applies to British Columbia, Canada. Last reviewed for legal accuracy by David Dundee and Gillian Oliver, May 15, 2019.|
|JP Boyd on Family Law © John-Paul Boyd and Courthouse Libraries BC is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 2.5 Canada Licence.|