Spousal support, also called alimony or maintenance, is a paid by one spouse to the other to help defray the recipient's day-to-day living expenses after their relationship ends. Spousal support isn't always payable when a relationship breaks down; there must be a pattern of financial dependance of one party upon the other during the relationship, or a need to compensate a dependent party for a loss suffered as a result of the relationship, and the dependant party must be unable to adequately support him- or herself without the other party's assistance.
The basic concept behind spousal support is this: living together is cost effective; living separately isn't. During a relationship, there are one or more incomes paying one set of common household bills. When a relationship comes to an end, the same amount of income must cover two rent cheques, two hydro bills, two phone bills and so forth. When one spouse can't afford to meet these basic living costs or deserves financial compensation for another reason, spousal support will be payable, as long as the other spouse has the disposable income to pay it.
A. Basic Criteria for the Payment of Support
Broadly speaking, a person claiming support must have suffered an economic disadvantage arising from the relationship or the breakdown of the relationship. Simply having had a relationship isn't enough to establish a claim for spousal support; there must be some sort of economic disadvantage or loss resulting from the relationship.
In a single-earner household, the consequences to the party who isn't employed outside the home are obvious: the unemployed spouse has no income with which to meet his or her basic living expenses. In a dual-earner household, there may still be a case for support where one party earns substantially less than the other and the relationship was fairly long. Either way, the question comes down to the dependent person's need for financial assistance and the other party's ability to provide it.
A spouse's obligation to pay support is counterbalanced somewhat by the dependent spouse's obligation to try to become financially independent. Unless there is a very good reason why a recipient of spousal support cannot become independent, such as illness, disability or advanced age, the recipient must expect that spousal support will not be paid indefinitely and must take steps to find employment.
B. Types of Support Payments
The goal of spousal support is, in most cases, to help the recipient get by until he or she can achieve financial independence. In the cases of older couples or couples where the dependent spouse suffers from a disability, independence may never be achieved. In other cases, where there are no such barriers to independence, the dependent party will be expected to become self-sufficient in relatively short order.
Spousal support is generally paid periodically, usually once per month, in equal amounts for a fixed amount of time. Where a party is able to become self-sufficient, the payments can be structured to encourage him or her towards self-sufficiency by gradually reducing the amount paid over time.
Spousal support can also be paid in a single lump sum, with or without periodic support payments. Lump sum payments are generally appropriate where the payor has a track record of inconsistency in making his or her support payments, or where a lump sum is what's needed to help the recipient become independent, perhaps if it would be used as a downpayment on a house or to purchase of a business. Of course, the payor also has to be able to pay the lump sum.
C. Calculating the Amount of Support Payments
Spousal support used to be calculated by looking at the parties' monthly income and expenses, taking into account factors like:
- the payor's disposable income and ability to pay;
- the recipient's living expenses and reasonable needs; and,
- sometimes the standard of living that the couple enjoyed during their relationship, particularly where that relationship was very long.
For the last several years, however, the court has generally referred to the Spousal Support Advisory Guidelines when making orders about spousal support, once a person's entitlement to receive spousal support has been established.
The Advisory Guidelines sets out a number of formulas that can be used to calculate the amount of support payable and the length of time support should be paid for, with different formulas applying when child support is being paid and when it isn't. While the Advisory Guidelines is not a law and isn't going to become law, judges and lawyers routinely consult the Advisory Guidelines when determining spousal support. More information about the Advisory Guidelines can be found in the chapter Spousal Support > The Advisory Guidelines.
D. Spousal Support and Income Tax
Spousal support payments made on a regular, periodic basis are deductible against the payor's taxable income and are taxable income in the hands of the recipient, providing that the payments are made according to a written agreement or a court order. The person paying support gets a tax deduction for the payment of support in the same way that you get a deduction for RRSP contributions, while the person receiving support must pay tax on the spousal support he or she receives as if it was employment income or some other form of taxable income.
Lump-sum spousal support payments are tax-neutral: the payor doesn't get a deduction and the recipient doesn't have to declare the payment as income.
E. Spousal Support and the Division of Assets
For married spouses, the court will often consider the question of the division of the family assets before considering whether spousal support ought to be paid and, if so, how much support ought to be paid. Since the goal of spousal support is to enable a spouse to achieve financial independence, it may very well be the case that the division of assets required by the court will meet those needs.
The effect that the division of assets has on a spouse's ability to be self-sufficient should be taken into account regardless of whether the courts are called upon to resolve a dispute or the parties are able to negotiate a resolution themselves.
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