Child support—What is It & How is it Determined?
Why do I have to pay for child support?
Child support covers the essential expenses of raising children. It includes necessities such as food, shelter, clothing, education, and medical treatment. It is the child’s right to receive this support.
Child support should be fair and reasonable with the primary focus on the well-being of the children and with both parents contributing according to their financial ability.
Generally, the Federal Child Support Guidelines serve as the basis for determining the amount of child support, thus reducing conflicts between parents regarding payment amounts and arrangements.
Prior to entering mediation, it is advisable to seek legal advice so that you know your rights and responsibilities so you can make informed decisions during mediation. A mediator should be trained and qualified but not necessarily a lawyer.
Note: The following general information about child support should not substitute for advice from a legal professional, as every situation is unique and requires personized guidance prior to mediation.
How long does child support last?
Typically, child support lasts until the child turns 18 and/or becomes independent.
Parents are obligated to support adult dependent children.
There is no age limit for providing child support to adult dependent children requiring parental care due to illness, disability, being a full-time student or “other cause.”
regardless of martial status, all parents are obligated to provide support to adult dependent children with disabilities.
Amount of support is determined by the:
1) Federal Support Guidelines as if the adult child were under the age of majority, and/or
2) financial ability of each parent to support the needs of the adult child.
What is considered when determining Child Support?
Prior to determining child support the following should be considered:
Determining the income of each parent.
Number of children
Who the child(ren) live with and for what percentage of time per year?
What, if any, are the extraordinary expenses (section 7 or special expenses).
STEP 1: INCOME DETERMINATION
1. How is Income determined for Calculating Child Support?
Both parents are required to support their children based on their ability to pay. This is typically determined by income tax returns.
If additional factors need to be considered, a qualified financial professional may be needed to assist with the financial disclosure process.
“Parents” is defined as biological parents or stepparents, or “person in place of parent”
If tax returns are not considered the fairest way to determine income, then the last three years of income are usually averaged to determine a fair and reasonable amount.
2. When might a financial professional be needed?
An accountant or financial professional is typically used to assist with the financial disclosure statement if:
annual income does not reflect all the money available to the parent for child support if a parent is a shareholder, director or officer of a corporation.
there are pre-tax considerations of the corporation, pension contributions, income splitting, self employment adjustments, working for cash etc.
there may be capital or business investment loss (non-recurring).
other complexities associated with income earning.
3. What else is considered when determining income?
intentional under-employed or unemployment of a parent
exemption from paying income taxes
(appearance of) income diversion
property is not reasonably used to generate income
parent has failed to generate income information and/or unreasonable expenses are deducted from income
income is taxed at a lower rate
the parent is a beneficiary under a trust
reasonableness of expense deductions
4. What is Undue Hardship?
Undue hardship is when the parent or child asking for support would face significant difficulties if the support were not given.
Undue hardship on a parent or child may be due to:
high level of debt prior to separation.
high level of expenses related to accessing or parenting the child.
legal duty to support a child other than the child of the parents or a child of the other parent.
legal duty to support an adult child who cannot support themselves due to illness or disability.
Undue hardship may be denied if the parent who is claiming undue hardship, has a higher standard of living than the other parent, after the amount of child support is determined.
STEP 2: ONCE INCOME is DETERMINED:
How are sections 3 and section 7 (special) child support benefits determined?
1. The monthly amount (Section 3)
Section 3 monthly amounts are determined by the Federal Child Support Guidelines.
If each parent access time is at least 40%, both may be required to pay each other the monthly support calculated by the guidelines.
If a parent’s income is over $150, 000, the balance that is over $150,000 is deemed appropriate for the child(ren) and the amount for any section 7 expenses (special or extraordinary).
2. Section 7 (Special Extraordinary) expenses
These expenses are NOT applicable to all children.
BOTH parents must share in these expenses, in proportion to their respective incomes (less contribution to the child in section 3 benefits).
Section 7 expenses fall outside regular (section 3) child support payments and are for non-ordinary things or extraordinary expenses.
Considers amounts of any subsidies, benefits, income tax deductions or credits relating to the expense and any claim to these.
If it is unclear an expense is a section 7 expense, then the parents must discuss and agree on what is a Section 7 expense prior to incurring it.
For example: cell phones, sports clothing, overly expensive clothing. As this is subjective, the parents must negotiate if it falls under a section 3 or section 7 expenses.
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necessity of the expense in relation to the child’s best interest,
reasonableness of the expense and ability to pay,
was the expense part of the family’s lifestyle prior to separation?
amount of the expense in relation to income of the requesting parent including any funds received for section 3 expenses.
nature and number of educational programs and extracurricular activities.
Special needs or talents of the child(ren).
Overall cost of the program and activities.
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medical and dental insurance payments,
health related expenses exceeding insurance reimbursements (i.e.: orthodontics, physiotherapy, glasses, contact lenses, hearing aids, speech therapy)
extraordinary expenses for primary and secondary school
private schools
extracurricular activities
post-secondary education expenses
Daycare or after school care fees
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Whatever is provided under section 3 (regular meals, laundry, non-special clothing, normal school costs, allowance, babysitting etc.)
Prior to incurring the expense, both parents must discuss and agree as to what constitutes section 7 (special) expenses and how they will be shared (i.e. 50/50 split?).
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Section 7 expenses are split between parents based upon each of their incomes on a percentage basis (if one earns $30K, the other earns $70K then it is split 30% and 70% respectively).
What Do I do After Gathering all Relevant Documentation?
Once you have gathered your information and have completed a financial disclosure statement or similar document, you can scan your documents as pdfs and send them your mediator, such as JRB Mediations.
Mediators are NOT responsible for ensuring parties have disclosed all financial information. This is the responsibility of the parties themselves.
Parties may require the assistance of other professionals such an accountant, valuator, etc. to provide the required disclosure statement, depending upon the complexity of financial information to be gathered.