Equalization Payment vs Spousal Support in Ontario Explained

When a relationship ends, people often hear the words "equalization" and "spousal support" in the same breath and assume they are two names for the same payment. They are not.

This article explains what each one is for, who can claim, the time limits that apply, and how the two can affect each other.

Two payments with different purposes

Equalization of net family property is separate from support. The spouse with the larger net family property pays half of the difference to the other. It is about dividing what was built up, not about covering ongoing living costs.

Spousal support rests on a different footing. Entitlement can be compensatory (loss or disadvantage from roles in the relationship), non-compensatory (need), or contractual, and a contractual basis can come from a formal domestic contract or from an implied or informal agreement. Under the Divorce Act, a court can order a lump sum, periodic sums, or both, in whatever amount it thinks reasonable for support. A support order should recognize economic advantages or disadvantages from the marriage or its breakdown, share the financial consequences of caring for children, relieve economic hardship, and, so far as practicable, promote each spouse's economic self-sufficiency within a reasonable period.

Side by side

Who can claim what

In Ontario, you may be eligible for spousal support if you were married, if you lived together as a couple for at least three years, or if you were in a relationship of some permanence and had a child together.

Property is different for unmarried couples. Common-law partners are not legally required to split property acquired while living together, and property generally belongs to whoever bought it.

Couples can agree on support in a separation agreement or have a judge decide. When spouses are divorcing, the Divorce Act says a court considers each spouse's condition, means, needs and other circumstances, including how long they cohabited, their roles, and any existing order, agreement or arrangement about support. Under the Divorce Act, the court may not consider misconduct such as an affair or who left when it makes a final or interim spousal support order.

How the two affect each other

They are separate claims, but they are often negotiated together. A few connections to know about:

• Property division is a recognized reason to go outside the Spousal Support Advisory Guidelines ranges.
• To avoid "double-dipping", support after retirement focuses on the undivided portion of the payor's pension, and the payor must prove how much was already divided.
• A lump sum of support is not limited to very unusual cases, but the payor must have assets or resources to pay, and these lump sums are most common in short and medium marriages without children.
• A lump sum paid to be released from future support obligations is not a support amount, so it is not deductible or taxable.
• An income gap on its own does not create entitlement to support.

Because tax treatment and the structure of a settlement can change the real value of each payment, it is worth speaking with a lawyer and an accountant before you sign.

What to do next

Treat the two claims as separate checklists and keep an eye on the dates.

• Note your separation date and, if you divorce, the date the divorce becomes final, since the equalization time limit runs from those dates.
• List assets, debts and pensions on the date of separation and when you began living together.
• Gather income records for both spouses to look at support.
• If your spouse has died, be aware that a surviving spouse who wants an equalization payment must file and mail an Election of Surviving Spouse no later than six months after the death.
• Remember that someone who depended on the deceased can separately claim against the estate for support.
• Get legal advice early so property and support are considered together.

Frequently asked questions