History and Context
Canada is similar to Australia in that it is a society built on relatively recent immigration, largely from Britain and Europe, with a small indigenous population. The English (and larger) part of the country shares the legal and cultural tradition of Britain. Courts have for many years been authorised to order, during divorce proceedings, the payment of child support. However, until recently, orders could only be enforced through the courts and there was little government assistance , so little was paid.
The Federal government of Canada has responsibility for child support for children of de jure marriages. In 1997 it published child support Guidelines, which form the basis for the calculation of child support liabilities. They have been adopted, with some fairly minor adaptations, by the provinces for the purposes of calculating support liabilities for children affected by de facto separation and for children whose parents have never lived together. Québec has its own guidelines, but the principles and objectives are largely similar to those of the federal Guidelines. Parents are encouraged to come to their own arrangements, and 90% of cases are settled by consent. There is no Child Support Agency: the Guidelines are just that, intended as a guide for judges and parents. There is, however, a system of Maintenance Enforcement Programs.
Like Australia, Canada has a mixture of systems that provide government benefits and services individuals and families. However, unlike Australia, Canada has no specific sole parent pension, nor additional tax benefit for stay-at-home mothers in intact families. In the past, sole parents of young children were declared "unemployable", exempting them from the "search for work" test and allowing them to receive a higher level of benefit (though still below the poverty line) than people expected to look for work, but, since the 1980s, this is no longer the case, at least in most provinces. In 1994, about 57% of Canadian sole parents were employed, most of them on a full-time basis, and only 50% of sole parents received any government income assistance. Family benefits are also much lower than in Australia. They currently consist of a refundable tax credit for lower and middle income families, which is worth only about half of Australia’s FTB. Various provinces pay supplementary benefits, but these are minimal, except in Québec, where the maximum rates are worth about half Australian FTB (in addition to federal benefits).
Basis of scheme
The Canadian Child Support Guidelines aim:
- 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 spouses guidance in setting the levels of child support orders and by encouraging settlement; and
- to ensure consistent treatment of spouses and children who are in similar circumstances.1
The Guidelines seem to be effective in meeting these aims, with the Department of Justice saying that most parents are now setting child support amounts without going to court.
The system is based on a modified income-shares model. Parents are required to contribute to the assessed cost of the child (from tables compiled from economic research on the costs of children at different income levels) according to their capacity. The resident parent’s income does not affect the payer’s liability, except in Québec – that is, except in Québec, the tables show the payer’s share of the costs only. This is justifiable on the grounds that, if the costs of children are calculated on the parents combined incomes, only very rarely will the payee have an income sufficient to reduce the payer’s liability as a percentage of income. Also, the amounts indicated in the tables are intended to be minimal – parents are encouraged to make their own arrangements for more than basic amounts. Additional costs (child care, etc) can be added to the base amounts provided in the tables.
Liabilities are generally calculated on the basis of gross income (with some allowable deductions), although some government payments, such as family benefits, are not usually included. There is a minimum personal reserve (set at approximately unemployment benefit level) below which nothing is payable. In Québec, this benefit-level self-support amount is deducted from both parents’ incomes before calculations are made; in other provinces, the reserve is reflected in low or nil liabilities at low payer incomes. There is an additional rule in Québec, that child support liability cannot exceed 50% of disposable income (with court discretion in case of large assets, for example). The tables only go up to payer incomes of $150k – court discretion applies above this level (1.3% of cases).
Child support is generally considered as income when calculating the payee’s income for the receipt of various government benefits and subsidies, though some provinces allow a "pass-through" (that is, amount exempt from clawback or consideration). The National Child Benefit is calculated on family income, and (non-taxable) child support is not included.
There are formula-based adjustments for shared care only in Québec. Where payers have more than 40% care, each parent’s calculated basic liability is multiplied by the time the child spends with the other parent and liabilities are offset, then additional costs (music lessons, childcare, etc) are divided according to the income ratio. Payers with contact of 20–40% have their basic liability reduced by the percentage of care they have above 20%, for example a payer with 32% care has his or her liability reduced by 12%. In other provinces, arrangements for shared care usually only apply where each parent has at least 40% of care and are by court discretion; rulings range from leaving the table amount stand, if the "resident" parent’s costs are not signicantly reduced and the other parent’s costs not greatly increased, to establishing a much higher cost and dividing that. About 6% of cases involve shared care, which is similar to the Australian situation. In cases of split custody, each parent’s liability towards their non-resident child(ren) is calculated and the liabilities are offset.
Having a second family does not automatically reduce the liability. Either parent can apply for a departure on the grounds of "undue hardship", and the support of other children is a basis on which this may be claimed.
In Canada, step-parents can be found liable for child support. The Divorce Act defines a child of the marriage (a child eligible to receive child support) as a child of two spouses or former spouses, including "any child of whom one is the parent and for whom the other stands in the place of a parent." Once it has been established that a step-parent has been acting
in loco parentis, the step-parent can be found liable by the court to pay child support, though the court may order a lower amount, or payment for a limited amount of time, with the intention of allowing the biological parents of the child time to adapt to providing financial support. Courts use a variety of factors in determining liability, including the step-parent’s degree of involvement in the life of the child, with the wellbeing of the child as the paramount consideration. Anyone judged to be acting
in loco parentis can also apply for custody or contact.
Grounds for departure from the guidelines include:
- when children have reached the age of majority (but are still dependent),
- when there are additional expenses (which are defined restrictively, and include childcare, medical insurance and care, and extraordinary educational expenses),
- when there is undue hardship (such as indebtedness for family reasons, or a high cost to exercise the right of access to the children being supported, or the burden of other support obligations – if the payee household faces greater hardship than the payer household, on an equivalised household income basis, the claim will not be granted), and
- when there are high incomes.
Courts can exercise discretion or depart entirely from the formula.
Since decisions are made by courts (following guidelines), appeal and application for variation is through the court. Some provinces are setting up more administrative systems for variations.
Outcomes
The Scheme enjoys reasonable public perceptions, with about 75% of stakeholders thinking that the Guidelines are fair. 90% of cases are settled by consent, which seems to show reasonable acceptance of the Guidelines in practice, and may indicate that the Scheme is achieving its objective of increasing parental co-operation. However, the 40% threshold that the anglophone provinces set for determining shared care is problematic – it is seen as arbitrary, creating a cliff effect, and parents say that it is difficult to determine if it has been reached. The Scheme is also criticized for linking financial incentives to time spent with children, when child support and child custody are supposed to be separate issues. This can lead to conflict. In addition, the Canadian system is still largely reliant on the courts – this discretion lends flexibility to the Scheme, but also leads to inconsistency, and it is time-consuming and expensive.
Liabilities produced by the guidelines vary between provinces. On average for the anglophone provinces, a payer with a gross income of C$15,000 (all figures in Canadian dollars, C$1=~A$1.04) would be liable, according to the tables, for about 9% of income, or $1,350, for one child, up to $3,450 or 23% for six (this represents from 11% [for one child] to 28% [for six] of net income). A payer on $80k would be liable for about 10% gross for one child, up to 30% for six (15-47% of net). The median award for all cases in 2002 was $427 a month, with the median for payer income being $36,000 (mean $43,532) and $25,140 for payees (mean $30,374). The amounts included in the tables are generally seen as a minimum amount, with courts often awarding more. Only 10% of paying parents report an income of less than $15,000, compared with 40% in Australia (dollars and benefit levles are roughly equivalent). In Québec, a payer earning $15,000 a year gross, if the payee had the same, would be liable for about $2670 a year, unless the situation involved shared care.
The Government of Canada has authority to trace payers through federal databases and to garnishee and attach federal salaries and to divert pension benefits payable under the federal Superannuation Act to satisfy family support orders. To help families whose support payments are in persistent arrears, there is a special provision to allow pensions to be diverted before the pension becomes payable. Governments can also deny or suspend passports and specific federal licences to encourage compliance with family support orders and provisions. Defiance of a court order can result in incarceration. Various provinces also have access to their provincial databases, such as motor registry, and can trace payers and suspend licences.
There are no readily available national statistics on compliance. It is estimated that 25–30% of cases registered with the Maintenance Enforcement Programs are fully compliant, and another 60% are compliant to some degree. Of course, cases with a history of non-compliance or where payees fear default are more likely to be registered for state enforcement. Regular payment appears to be much higher (about 2/3) amongst parents who come to a negotiated agreement than amongst those subject to a court order (43%). Regular payment is strongly associated with regular contact.