Can Child Support Change When the Payor Retires in Ontario?

You may be close to retirement and wondering whether your child support will drop when your paycheque stops. Or you may be the parent receiving support and worried that a retirement announcement means the money is about to shrink. Either way, the answer is rarely automatic.

This article explains how retirement fits into Ontario child support: what has to happen before the amount changes, how pension income comes into the picture, and why the reason and timing of a retirement matter. It is general information, not advice on your own order.

Retirement does not change your order on its own

A support order or agreement keeps operating until something formally changes it. The Family Responsibility Office (FRO) says it cannot change the amount a payor pays, and that only a court can change the amount of support. FRO also tells payors to keep paying until it says in writing that they can stop.

So if you retire and simply reduce or stop your payments, the unpaid amounts are treated as arrears, which is what missed support is called. If support has been missed, FRO says the payor should contact it right away, and a voluntary arrears payment schedule can be worked out. That schedule is not the same as changing the amount of support.

What a court looks at when income changes

A court can vary, rescind or suspend a support order. Under the Guidelines, a change in circumstances that would result in a different child support order is a circumstance that allows variation, and the Divorce Act requires the court to be satisfied that such a change has occurred before it varies a child support order.

Retirement is often a drop in income, but whether and how much your support changes depends on the facts of your situation. Annual income is generally worked out using the sources under the Total income heading of the T1 General tax form, with adjustments. The court may also look at income over the last three years if the current year would not be the fairest picture.

• Your income records, including your tax returns, will matter.
• Your retirement date and the reason for it matter.
• Your new income sources, not just the ones you are leaving, will be examined.

Pension income and other new sources

Retirement rarely means zero income. Income from a pension, employment insurance, social assistance, workers' compensation, disability payments and other sources is among the income that must be disclosed. Whether a particular pension payment is counted in full, and how it compares with your old earnings, depends on the facts, so it is worth having a lawyer or accountant review your numbers.

For a payor, the practical point is that the court will want the whole picture: pension, savings that generate income, and any other receipts. Property that is not being used to generate income can also be a reason for a court to attribute income. For a recipient, the same logic applies: a reduction in work income does not necessarily mean a matching reduction in income overall.

Good-faith retirement and explaining the drop

There is no single rule in this area that we can point to that says a retirement at a certain age is always accepted. What courts do have is a power to impute income, meaning to treat a person as earning a certain amount. A court may do so if a spouse is intentionally under-employed or unemployed, unless the child's needs or the spouse's reasonable educational or health needs require it. The amount is whatever the court considers appropriate in the circumstances.

Two Ontario Court of Appeal decisions show the range. In one, the court upheld using a payor's prior three-year average income where he had not adequately explained why he left a much more lucrative arrangement, which illustrates that a voluntary income drop must be explained. In another, the court said that once a payor became unintentionally unemployed, it was not appropriate to impute his former full salary while imputing no income to the recipient, and that intentional under-employment does not require proof of an intent to evade support.

Timing and next steps

Because the order stays in force until a court changes it, timing matters. The safer approach is generally to raise the issue before your income drops rather than after arrears have built up. A lawyer can tell you how far back a change may apply in your situation.

• Keep paying the full amount until FRO tells you in writing that you can stop.
• Contact FRO right away if you expect to miss payments.
• Gather your last three years of tax returns and notices of assessment.
• Collect pension statements, severance documents and proof of any other new income.
• Write down the reasons and timeline for your retirement decision.
• Speak with a family lawyer about whether to start a variation or negotiate a written agreement.

Frequently asked questions