Spousal Support for High Earners Over $350,000 in Ontario

If one of you earns a very high income, you may have heard that spousal support "stops at a ceiling". That is not quite right. The figure people mention comes from guidelines that judges often use, and what happens above it is more flexible and more dependent on the facts than what happens below it.

This article explains what the ceiling is, how the usual formulas work, how courts approach income above the ceiling, and what else can affect the result. It is general information, and high-income cases often involve business income, investments and tax issues that are worth reviewing with a lawyer and an accountant.

What the $350,000 figure actually is

The Spousal Support Advisory Guidelines (SSAG) are not law, but judges often base their spousal support decisions on them. They were designed for the federal Divorce Act, and courts and lawyers also often use them under provincial legislation such as Ontario's Family Law Act.

The guidelines' formulas do not apply mechanically at the extremes. Above a payor income of $350,000, discretion is used. In other words, the figure marks the point where the formula stops being a reliable shortcut. It is not a legal cap on support, and it does not say that income above it is ignored.

How the formulas work below the ceiling

To see what changes above the ceiling, it helps to know the usual approach. Under the without-child-support formula, support ranges from 1.5% to 2% of the difference between the spouses' gross incomes for each year of cohabitation. The cap is 50%, and the top of the range cannot exceed the amount that would equalize the spouses' net incomes.

Duration is also guided by the formula. The Spousal Support Advisory Guidelines do not decide entitlement, which must first be established under the applicable law. Under the without-child-support formula, support lasts 0.5 to 1 year for each year of cohabitation. It is indefinite if the marriage lasted 20 years or more, or under the rule of 65, which applies when the marriage lasted at least five years and the years of marriage plus the recipient's age at separation total 65 or more. The rule of 65 does not apply to marriages under 5 years, and short marriages produce very limited awards, if there is entitlement at all. There is an exception for compensatory claims in short and short-to-medium marriages without children, which are assessed individually and can fall outside the formula range.

Indefinite does not necessarily mean permanent. It only means no time limit can be set when the order or agreement is made, and the support stays subject to variation and review.

Where there is child support, a different formula leaves the lower-income recipient with 40% to 46% of the couple's combined Individual Net Disposable Income, which is income after child support, taxes and deductions.

How courts treat income above the ceiling

Because discretion is used above $350,000, the formula result becomes one reference point rather than the answer. Where the Divorce Act applies, the court still considers the factors that Act sets out for spousal support. It considers each spouse's condition, means, needs and other circumstances, including how long you cohabited, the roles each of you played, and any existing order, agreement or arrangement about support.

A support order should also recognize economic advantages or disadvantages from the marriage or its breakdown, share the financial consequences of caring for children, relieve economic hardship from the breakdown and, so far as practicable, promote each spouse's economic self-sufficiency within a reasonable period. How the purposes of a support order play out for your family depends on your situation, so it is worth confirming with a lawyer.

Ontario's guidance lists factors such as the income gap, who cared for any children, each person's age, roles during the relationship, health, and ability to support themselves. Under the Divorce Act, the court cannot consider misconduct in the marriage, such as an affair or who left, when it makes a final or interim spousal support order.

Entitlement comes first, even with a large income gap

A large income gap on its own does not create entitlement to spousal support. Entitlement must be proven or agreed before the SSAG formulas apply. Entitlement has three possible bases: compensatory (loss or disadvantage from roles in the relationship), non-compensatory (need), and contractual.

This matters at both ends. If you are the higher earner, a high income does not automatically mean you owe support. If you are the lower earner, a gap between your incomes does not automatically mean you are entitled to it.

The guidelines also recognize grounds for going outside the formula ranges. These include debt payments, prior support obligations, illness and disability, property division, basic needs or hardship, non-taxable payor income, and a child's special needs.

Income, tax and payment issues in high-income cases

• Measuring income: the SSAG start from the definition of income in the Federal Child Support Guidelines, and section 19 of those Guidelines is often the basis for imputing income. Complex income, such as business or investment income, may need careful review.
• Imputed income: a court can readily impute minimum-wage income to a spouse who is not working but should be, but imputing anything higher requires evidence.
• Calculators: Ontario notes that the free online SSAG calculator it links to considers only employment income and simple calculations. It is unlikely to capture a high-income situation fully.
• Lump sums: a lump sum is not limited to very unusual cases, but the payor must have assets or resources to pay. Converting periodic support to a lump sum should be discounted for tax, because a lump sum is neither taxable to the recipient nor deductible by the payor.
• Tax treatment of periodic support: support under a court order or agreement made after April 1997 is taxable to the recipient and deductible by the payer if the order or agreement clearly states the spousal amount and all child support for the current and previous years is fully paid.

When both child support and spousal support are being decided, the court must give child support priority. A zero guideline range under the with-child-support formula is not the same as no entitlement, and it may simply reflect a current inability to pay.

What to do next

• Gather several years of income records, including tax returns, notices of assessment, business statements and investment income.
• List your assets, debts and any existing agreement or order about support or property.
• Write down the length of cohabitation, each person's role during the relationship, and who cared for any children.
• Ask a lawyer whether entitlement is likely to be an issue in your situation, before focusing on the amount.
• Speak to an accountant about how support would be treated for tax, including whether a lump sum or periodic payments suit you better.
• If an order already exists, remember that only a court can change it, and the Family Responsibility Office cannot change support terms.

If support is ordered by a court in Ontario, the order is automatically filed with the Family Responsibility Office, which collects payments from the payor and sends them to the recipient. A separation agreement is different: it must be filed with a court, then registered with the office, before it can enforce it.

Frequently asked questions