What is Spousal Support/Alimony?

When couples separate, household incomes are like butter spread over too much bread. Monthly expenses are now incurred in two homes instead of just one. The spouse with the higher income will have a clear economic advantage over the spouse with the lower income. Spousal support or Alimony (as the Americans like to call it) is the law’s way of addressing the financial imbalance that frequently occurs at separation. It is intended to help the lower-earning spouse somewhat maintain the standard of living they had during the relationship. When a relationship ends (married or common-law), spousal support is intended to financially off-set the financial imbalance between the parties.

In determining “entitlement” to spousal support, a number of factors are taken into account, including: the length of the relationship, the roles each spouse played during the relationship, dependent children, each spouse’s earning capability and each spouse’s needs and ability to pay.

How is Spousal Support Calculated?

While there is no magic formula for calculating spousal support in Ontario, for most couples, spousal support is determined by the specific circumstances of their case. Generally, the courts will use the following criteria in making a determination on the issue of spousal support:

The length of the relationship will assist the court in determining both the amount and duration of spousal support;
The roles played during the relationship is also a key factor. A spouse who stays at home to care for dependent children or works to support the career of the other spouse may be entitled to receive compensatory spousal support;
Dependent children will play a factor in determining the amount of spousal support. If a hefty amount of child support is owed monthly, it will likely affect the amount of spousal support. When child dependency is removed from the equation (usually when the children become independent), spousal support often enters the equation. There is certainly a correlation between the amount of child support and spousal support.
The court will take into account each spouse’s income, earning capacity, and potential for future income; and
The court will also consider each spouse’s financial obligations and needs.

Spousal Support: Compensatory & Needs Based

Compensatory spousal support is designed to compensate one spouse for the economic disadvantages they have suffered as a consequence of their relationship. A spouse may be entitled to compensatory support if, for example, he or she gave up a career to care for children or worked to advance the career of the other spouse.

Needs based spousal support (or Non-Compensatory Support) is designed to meet the daily financial needs of a spouse who cannot support themselves after separation or divorce. An order of this type of support usually occurs when there is a substantial income disparity between the spouses.

What is the duration of Spousal Support?

There are a number of factors that will affect the duration of spousal support, including the length of the relationship, the age of the spouses, the health of each spouse, whether the recipient spouse has re-partnered/remarried, and the capacity/potential of the recipient spouse to earn income.

How do you end your Support Obligation?

There are several ways to end spousal support, including:

Spousal support can be terminated by mutual agreement between the parties through a Separation Agreement or Marriage Contract;
A court may order the termination of spousal support if there has been a significant change in circumstances or if the time period for support has elapsed;
Spousal support may be terminated if the recipient spouse begins living with someone else and becomes financially self-sufficient; and
Spousal support terminates upon the death of either spouse unless there is a provision (in a domestic contract or court order) for continued payments to the deceased spouse’s estate.

What are the Tax Implications?

Unlike child support, spousal support is taxable. It is tax-deductible for the spouse who pays it and taxable (declared in income) for the spouse who receives it. As a result, the spouse who receives spousal support will be required to pay income tax on that amount, and the spouse who pays spousal support will be able to deduct the value of that support from his or her taxable income.

As indicated above, child support is not tax deductible for the payor, nor taxable to the recipient parent.

Conclusion

Spousal support is perhaps one of the more complicated and contested issues when a relationships end. For this reason, the advice of an experienced family law lawyer is invaluable in navigating through this issue.

Understanding Spousal Support