Spousal Support Guidelines serve as a tool to enable financial equity between ex-partners after separation. Either partner can seek support, and fault is not a consideration in entitlement. Spousal Support is not an automatic right and is not restricted to married partners. In Ontario, the Spousal Support Advisory Guideline is a reference range for the amount and length of support between ex-partners.
How is entitlement established?
There are three considerations to establish entitlement:
- Compensation,
- Need or
- Contractual Obligation
Evaluative considerations for entitlement include:
- length of the marriage, or co-habitation as a couple (3 years), or a relationship of some permanence and have a child together,
- party’s age and health at separation,
- existing income and future earning potential,
- sacrifices made related to family’s financial prosperity
- a pre-nuptial or post-nuptial agreement
The amount and length of support may shift based on a prioritized obligation for Child Support. For partners without children, support duration ranges from six months to one year of support for each year of marriage and, depending on age of parties’, becomes indefinite after 20 years of marriage. There are various options to satisfy payment including lump sum, monthly or periodic payments.
Tax Implications
Spousal Support payments do have tax implications. The method of spousal support payment can have a significant tax implication for all parties.
To consider Spousal Support payments as taxable and deductible they must:
- be paid routinely,
- included as part of the Divorce Order or Separation Agreement and
- paid directly to the ex-partner.
- The payee is then required to pay income tax on the total amount received yearly.
If payment for Spousal Support is received as a single lump-sum payment the recipient does not pay income tax on it.
As you can see, there are many considerations to determine party obligation or entitlement. In conjunction with obtaining Independent Legal Advice, Christine will facilitate these important conversations between you and your ex-partner, to actualize the financial security needed for long-term solutions.
Together we can discuss Spousal Support, and the financial security needed to move forward.