Child Support Obligations if a Parent’s Income is Over $150,000

Child support calculations can be complicated and daunting, especially if particularly high incomes are involved. When determining the amount of child support a parent is obliged to pay, an income over $150,000 is considered an exceptional circumstance. The following blog will set out the law on how child support is determined in such a situation.

Child Support Quantum: Federal Child Support Guidlines

The Federal Child Support Guidelines (the “Guidelines”) provide a set of rules for calculating the amount of child support one parent, called the “payor”, must pay to the other parent, called the “payee”, to help support their child or children. The term “Guideline” is a bit of misnomer: in almost all cases, judges are required to follow the guidelines to determine the amount of child support.

As discussed in this blog post, each parent and guardian of a child has a duty to provide support for the child, irrespective of whether the parents were married spouses, unmarried spouses, or never together. In some circumstances, obligations of child support may extend to other parties who are not the child’s biological or legal parent, such as a stepparent.

The Guidelines includes provincial tables that set out the amount of child support to be ordered depending on income levels and province of residence. The amount set out in the applicable table is the presumptive rule, but there are certain exceptions. One such exception is found in section 4 of the Guidelines, which provides as follows (emphasis added):

4 Where the income of the spouse against whom a child support order is sought is over $150,000, the amount of a child support order is

(a)  the amount determined under section 3; or

(b)  if the court considers that amount to be inappropriate,

(i)              in respect of the first $150,000 of the spouse’s income, the amount set out in the applicable table for the number of children under the age of majority to whom the order relates;

(ii)             in respect of the balance of the spouse’s income, the amount that the court considers appropriate, having regard to the condition, means, needs and other circumstances of the children who are entitled to support and the financial ability of each spouse to contribute to the support of the children; and

(iii)           the amount, if any, determined under section 7.

Therefore, in circumstances where the payor earns over $150,000, there are two options available to the court. First, the court may proceed with the presumptive amount provided by the applicable table. However, if the court considers that amount to be inappropriate, the payor will be ordered to pay the applicable table amount on the first $150,000 and, on the income in excess of $150,000, the court has discretion to order a further amount of child support that it considers appropriate. In determining that further amount, the court will consider:

·       the condition, means, needs and other circumstances of the children; and

·       the financial ability of each parent to contribute to the support of the children.

Under section 7 of the Guidelines, the court may also order further child support payments for “special or extraordinary expenses”. In the case of a payor with income over $150,000, this would be in addition to the table amount and any further amount based on the income, if ordered.

Understanding Section 4: Leading Case Law

This section of the blog will explain some of the leading case law on the interpretation of section 4.

In Francis v. Baker, [1999] 3 SCR 250, the Supreme Court of Canada stated that the term “inappropriate” in section 4(b) must therefore be broadly construed to mean “unsuitable”, rather than merely “inadequate”, such that courts have discretion to both increase and reduce the amount of child support prescribed by strict application of the Guidelines. The Court also confirmed that Parliament intended the Guidelines’ tables to be presumptively applicable, and that the party seeking to deviate from the table amount must rebut this presumption of appropriateness. To do so, the party must put forward clear and compelling evidence sufficient to persuade the court to depart from the Guidelines figures. A court should consider the reasonable needs of the children in any particular case; in some cases, courts may conclude that the applicable Guideline figure is so in excess of the children’s reasonable needs that it must be considered to be a functional wealth transfer or effectively spousal support. However, courts should not be too quick to make such a finding and will only be where such an amount is “inappropriate” or “unsuitable”.

The Court in Francis went on to explain how to determine when a presumptive amount can be said to be “inappropriate” in the case of payor income over $150,000, such that the amount should be increased or decreased. The Court emphasized the “centrality” of the actual circumstances of the child(ren). The needs of the child(ren) are an important factor, and therefore child expense budgets will often be a necessary piece of evidence in such cases. However, there is no “blanket rule” requiring child expense budgets when section 4 is invoked, and therefore trial judges have discretion whether or not to require them.

In Hollenbach v. Hollenbach, 2020 BCCA 620, and recently reiterated in Hathaway v. Hathaway, 2014 BCCA 310, the British Columbia Court of Appeal noted that Francis created a “formidable onus” for wealthy payors seeking to establish that the Guideline amount is inappropriate.

In S.G. v. K.G., 2012 BCSC 1937, the Supreme Court of British Columbia stated that the case law suggests the greater the payor’s income is in excess of $150,000, the greater the need for a careful analysis of the actual means, needs, and circumstances of the parties and the children to arrive at a fair award.

Case Law Examples

The following section will set out a few examples in which the court either followed the Guideline amount, ordered child support in excess of the Guideline amount, or ordered child support lesser than the Guideline amount.

Upholding Guideline Amount

In Hathaway, the trial judge ordered child support in accordance with the Guideline amount for a payor with an income of $1,000,000. The Court of Appeal upheld the trial judge’s finding that the Guideline amount was not inappropriate, and that the payor had not met the formidable onus to establish that the children could not reasonably use the extra funds, having regard to the standard of living of other children with very wealthy parents.

In Hollenbach, the trial judge initially lowered the child support order from the Guideline amount for a payor with an income of $711,544. The Court of Appeal found this to be an error, instead varying the order to reflect the Guideline amount. In doing so, the Court rejected the payor’s argument that the family, when together, had lived well below their means and without a “luxurious” lifestyle, concluding that, “the fact that the children have never lived in a style usually associated with the kind of wealth possessed by this father is not a reason for doubting the appropriateness of the Guidelines”.

Increasing Guideline Amount

In Hodgkinson v. Hodgkinson, 2006 BCCA 158, the British Columbia Court of Appeal increased the monthly child support payment from $2,415 as prescribed by the Guidelines to $2,716. In doing so, the Court found that the reasonable expenses of the children came to $2,716 and noted the vast discrepancy in the parents’ income: the mother earned $24,000 per year, while the father earned approximately $360,000. In such circumstances, an order that fails to cover the reasonable expenses of the child may be said to be "unsuitable".

Decreasing Guideline Amount

In contrast to the decision in Hollenbach, the Supreme Court of British Columbia in S.R.M. v. I.A.M., 2001 BCSC 1055, lowered the child support from a $59,000 per month Guideline amount to $20,000 per month, based on a payor income of $4.5 million. This was in part due to the relatively modest lifestyle lived by the parties both before and after the separation, as agreed by both parties, and as reflected in the payee mother’s proposed budget.

In J.A.T.P. v. H.M., 2023 BCSC 1484, the Supreme Court of British Columbia found that the table amount of $103,318 per month based on a payor income of $13 million, was inappropriate because it was far in excess of the child’s reasonable needs, even at the payee’s most “elaborate” proposed budget. Rather, a basic child support amount of $15,000 per month was appropriate. The Court also ordered special and extraordinary expenses in accordance with section 7 of the Guidelines.

Conclusion

It appears that, in cases where there is a significant discrepancy between payor and payee income, and the payor’s income is not so high as to make the Guideline amount in excess of the child’s reasonable expenses, the court may be more likely to increase the Guideline amount in order to ensure the child support payments cover the reasonable needs of the child. By contrast, where the payor’s income is so high such that the Guideline amount would see a transfer of wealth beyond the child’s reasonable needs, amounting to “de facto spousal support”, the court may be more likely to decrease the Guideline amount.

Disputes over child support can be complicated, adding further stress during a difficult relationship breakdown. Hiring a lawyer to help understand and advocate for your interests may be the best course of action to ensure you and your children receive what you are entitled to.

If you would like to learn more, please contact our team of Vancouver family lawyers for a consultation.