High Income Spousal Support and Factors Included in Spousal Support Calculations

High Income Spousal Support and Factors Included in Spousal Support Calculations

High Income Spousal Support and Factors 

When calculating spousal support in family law cases, calculating the amount of spousal support will depend on specific factors.   As a starting point when entitlement has been confirmed or assumed, family lawyers rely upon the Spousal Support Advisory Guidelines (“the Guidelines”) to calculate spousal support.  These Guidelines were provided by a Government of Canada working group back in 2005 and have been updated annually.   The Guidelines provide calculations based on the base factors of income, length of cohabitation, age of the parties, and whether there are children, and whether child support is being paid.

Foundational to the analysis that the Guidelines are based on is premise that calculations are designed to structure income sharing between parties, rather than spousal support calculations being based on budgets of spouses and partners, which they were heavily based upon prior to the inception of the Guidelines.   It should be noted that these Guidelines are not mandatory, but nevertheless are heavily relied upon my family lawyers.

Two calculation processes are relied upon by family lawyers when calculating spousal support for their clients.  The first is that of the spousal support advisory calculator which will provide a “low”, “mid” and “high” range calculations for monthly spousal support.    This is often the most commonly used form to calculate spousal support.   These spousal support calculations are based on a formula that is scalable by a percentage when the above base factors are taken into consideration.      The Guidelines with this scalable calculation though has a “ceiling”.     This ceiling that has been in place since the inception of the Guidelines, and confirms that the spousal support calculator should not be relied upon when dealing with incomes over $350,000, and in fact lawyers are advised to “proceed with caution” when solely relying upon this scalable calculation for incomes in excess of $350,000.   It should be noted that this does not mean that the calculations should be disregarded for incomes over $350,000, or that there is some sort of “cap”.

The second calculation process that can be relied upon when calculating spousal support is the spousal support advisory analyzer, which provides a further breakdown of calculations for the net disposable monthly income in each household when using various levels of proposed spousal support.     When relying upon this calculation process there is greater ability for multiple calculations to be conducted as compared to a “low” “mid” and “high” range for calculations.   These calculations provide the ability to analyze the payor’s income after the deduction of child support (if applicable), taxes and deductions to calculate the individual net disposable income for each household.  In kind these calculations provide the ability to analyze the recipient’s income after the inclusion of child support, minus taxes and deductions and with the inclusion of government benefits and credits.

Commonly an issue when dealing with high incomes, including incomes over $350,000 is the presence of self-employment income, and income that is generated from sources of non-employment income, and income that is generated from a corporation.   The presence of these incomes can also provide further complexity to the calculation of income as it is then applied to spousal support calculations.    In the recent case of K.R. v. J.R., 2022 BSSC 1856, Justice Schultes of the Supreme Court of British Columbia based in part imputation of income to a spouse wherein capital gains and available funds in a corporate holding company were found to be included in the wife’s income.    The additional inclusion of available investments as income for purposes of calculating spousal support still occurred even after these funds were part of the prior final division of the parties’ property.   As part of this analysis, the presence (or lack of) reliable and well set out accounting documentation was instrumental in arguments for each party as to the extent that these funds can and should be included in the calculation of income for spousal support purposes. The finalization of property division, which when divided, if this creates substantial income generation for a recipient of spousal support, can and should be factored into the analysis for finalization of spousal support being paid in cases.   This becomes increasingly important in cases where there is substantial property division, and specifically financial assets that provide flexibility and accessibility for generating income.         

Notwithstanding the different levels of analysis, the Guidelines have been critiqued for being overly rigid when calculating spousal support when solely relied upon.         The inclusion of monthly budgets as required financial disclosure that is exchanged between parties should be part of the further analysis to nuance discussions in calculating spousal support.       These monthly budgets are most relevant when addressing the maintenance of family property debts, which if one party is being predominately responsible, then this should be part of adjustments to initial calculations for spousal support.

A list of additional factors that can alter the application of simplified spousal support advisory guidelines include:

  • Compelling financial circumstances in the interim period
  • Debt payment
  • Prior support obligations
  • Illness and disability
  • Compensatory exception in shorter marriages without children
  • Property division: reapportionment of property 
  • Basic needs/hardship: without child support, custodial payor formulas
  • Non-taxable payor income
  • Non-primary parent to fulfil parenting role under the custodial payor formula
  • Special needs of child

It is important that when reviewing spousal support with your family lawyer that a detailed review of the financial picture is part of your discussions so that you can be provided the most context specific review of this issue in your separation or divorce.  Kindly contact the lawyers at Family Central law Office for an initial consultation to discuss your family law matter by reaching out via email: info@familycentrallaw.com, by telephone: 587-392-7970, or by completing our consultation page submission form.

Written by Nicholas J. Van Duyvenbode

Calgary Family Central Law Firm

Trusted Counsel for Calgary Family Law Matters

Our firm believes in access to legal services for everyone, and serves the Calgary area, as well as regularly traveling for court appearances in Red Deer, Edmonton, Fort McMurray, Medicine Hat, and Lethbridge.

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