Understanding child and spousal support recalculation: What you need to know

Child support recalculation

You recalculate child support annually based on the paying parent's current income tax information so that payments stay in line with the laws and your agreement. Most provinces offer online tools such as a child support calculator to help you recalculate based on the Federal Child Support and Spousal Support guidelines, which have been fully adopted to calculate child support in Canada.

Once support calculations are updated, you can apply them to splitting extraordinary expenses pro rata.

Since the guidelines are straightforward, this begs the question of why there can be so much conflict around these payments. The answer is in the calculation of income. Income is made up of several components, including:

• Base Income
• Dividends
• Bonuses
• Stock options
• Interest Income
• Self-employed

The calculation is relatively easy for someone with a straightforward T4, but when there is more, it can be complex.

It's important to note that child custody arrangements can significantly impact support calculations. In cases of shared custody or split custody, where each parent has the child for at least 40% of the time, the child support obligation may be adjusted accordingly.

Our goal at Fairway is to help parents keep child support payment levels in line with their income so that families can avoid the time and expense of asking the courts to review their child support orders.

Spousal or alimony support calculator

Most separation agreements will set out the terms regarding spousal support, also known as alimony in detail. The need for recalculation depends on your specific terms. If your spousal support was either a lump sum or fixed payments over a fixed term, there is typically no payment variability. However, some agreements may include provisions for recalculation in case of significant changes in annual income or simply as a matter of time.

The more common type of spousal support is variable. Your agreement may set out the equation for determining future spousal support payments or have left it blank. Since the calculation and payments around spousal support are not black-and-white and are often an area of contention, it’s best to seek assistance for recalculations.

Depending on the length of the marriage and other factors outlined in the spousal support advisory guidelines, support can continue indefinitely or for some shorter length of time. The spousal support calculation will often consider factors such as the income difference between spouses, the presence of a dependent child, and each spouse's ability to become self-sufficient (known as the self-support reserve).

Additional considerations

During the recalculation process, it's important to consider other aspects of your separation or divorce, such as:

• Property division
• Financial support for extraordinary expenses
• Consumer protection issues related to joint debts or assets

At Fairway, we can help you get this done with little stress or cost

We strive to keep it easy, stress-free and inexpensive. The differences of opinion and approaches can result in stress and conflict. We use our proven Independently Negotiated Resolution (INR™) process so that each party can make decisions independently without emotional pressure.

We always ensure you are an informed and empowered decision-maker, even during recalculations of support. Our team of financial experts helps couples work through recalculations fairly, accurately, and cost-effectively.