11 August 2017

Is child support payable for a child over the age of majority who is attending college or university?


As we approach September, the question is arising more and more frequently in my practice about when a child is still considered to be a dependent ‘child’ and in need of financial support if they are attending college or university and not living  at home. As a mother of three ‘children’, ages 19, 22 and 24, all of whom are pursuing post-secondary studies, I can tell you first hand that there is no clear point at which children are no longer in need of financial aid from their parents.  The case of Kiristmanson v. Kristmanson 2012 BSC 1750 is helpful in this regard. 

From the Court’s perspective, payment of child support for a child over the age of majority depends on the facts of each particular case. 

In six Canadian provinces, the age of majority is 18: Alberta, Manitoba, Ontario, Prince Edward Island, Quebec, and Saskatchewan.  And, the age of majority is 19 in the four remaining provinces and the three territories: British Columbia, New Brunswick, Newfoundland, Northwest Territories, Nova Scotia, Nunavut, and Yukon.

The Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) provides the following definition for the term "child of the marriage" where a person is over the age of majority:

“child of the marriage” means a child of two spouses or former spouses who, at the material time,

 . . . is the age of majority or over and under their charge but unable, by reason of illness, disability or other cause, to withdraw from their charge or to obtain the necessaries of life;

Case law has interpreted "other cause" to include an adult child in attendance at post-secondary schooling.

The seminal case of Farden v. Farden (1993), 2570 BCSC tells us that the onus rests upon the applicant to establish that the person for whom a support order is sought is still a child within the meaning of the Act Master Joyce, as he then was, provided the following helpful analysis for determining the status of an adult child:

Whether or not attendance in a post-secondary institution will be sufficient cause for a finding that the child is still a "child of the marriage" requires examination of all of the circumstances.  It is not a conclusion which follows automatically from proof of attendance at the institution . . . In my view the relevant circumstances include:

(1)  whether the child is in fact enrolled in a course of studies and whether it is a full-time or part-time course of studies;

(2)  whether or not the child has applied for or is eligible        for student loans or other financial assistance;

(3)  the career plans of the child, i.e. whether the child has some reasonable and appropriate plan or is simply going to college because there is nothing better to do;

(4)  the ability of the child to contribute to his own support through part-time employment;

(5)  the age of the child;

(6)  the child's past academic performance, whether the child is demonstrating success in the chosen course of studies;

(7)  what plans the parents made for the education of their children, particularly where those plans were made during cohabitation;

(8)  at least in the case of a mature child who has reached the age of majority, whether or not the child has unilaterally terminated a relationship from the parent from whom support is sought.

In Neufeld v. Neufeld, 2005 BCCA 7 (CanLII), the Court of Appeal expressly adopted the above passage from Farden as being a non-exhaustive list of considerations which apply in cases where the Court is being asked whether support is payable for an adult child.  In Neufeld, the issue was whether support was payable for an adult child pursuing a medical degree.  One of the important factors considered by the trial judge was that the decision to pursue this level of education was in keeping with the family’s pre-separation plans for their daughter. 

The cases tell us that there is no arbitrary cut-off point for child support for adult children, based either on age or level of education.  We know that there is no statutory prohibition against support for an adult child seeking a second degree; determination depends on the facts of each specific case, and Neufeld reminds us there is not a specific or primary piece of the Farden inquiry which will determine the result in any given case. 
So, the answer to the question, "Is child support payable for a child over the age of majority who is attending college or university?", is, as with most family law matters, it depends on the facts of your case.   

08 August 2017

The Presumption of Advancement as an “anachronistic legal principle”


The Presumption of Advancement as an “anachronistic legal principle”

In the recent decision of H.C.F. v. D.T.F. 2017 BCSC 1226, Mr. Justice Voith, in his lengthy (70pg) decision, provides an excellent overview of recent case law on the issue of division of property including excluding property.  He also provides commentary on the intersection between the law and consistency with social change.   The Honorable Judge examines the legislative intent behind the FLA, including the reasons for the expanded definition of spouse, which was specifically intended to include same sex couples.  His Lordship’s thoughtful and logical analysis paints his clear views on the presumption of advancement as an outdated concept, which, should not be allowed to continue, as he says, “in the context of legislation that was intended to recognize and reflect the broader and changed nature of relationships in present day society.”    He says at paragraph 149, “The ongoing application of the presumption of advancement under the FLA would mean that of these various potential forms of relationships, within which all partners are “spouses” for the purposes of the FLA, the only subset of relationship to which the presumption of advancement would apply would be a gift from a man to a woman in a traditional marriage. “  This being a result he calls “incoherent”. 

Get a coffee, sit down and read it.   It’s long but it's an essential and important case. 


26 July 2017

Paying child support in shared parenting cases - the new (ab)normal!


I have written about this issue before but this morning when I was reading a newsletter circulated by the folks at DIVORCEMATE I came across their article on Harder v. The Queen, 2016 TCC 197  I thought it was worth sharing.  Both parents in a child sharing situation need to be aware of the potential consequences of not complying with the requirement that both parents actually and physically pay child support to the other.  The old practice of paying an offset amount, is no longer acceptable. 

"Beware of New Tax Court Ruling The allocation of the “eligible dependant credit” (formerly, the equivalent-to-spouse credit) in a shared parenting arrangement has recently come under intense discussion and scrutiny as a result of a recent decision of the Tax Court of Canada, Harder v. R., 2016 TCC 197. Until this decision, it was generally understood that in shared parenting, so long as any court order or written separation agreement provided that both parties were paying support, even if ultimately a “setoff” payment was made from one to the other for convenience, this would suffice to allow the parties to allocate the credit to the higher income parent. The basis for this understanding came from the Income Tax Act (“ITA”) and various guides and folios published by CRA. It is against this backdrop that the Tax Court of Canada released its Harder v. R. decision, and threw the family law bar into a tizzy. In this case, the parties had two children and had resolved all issues arising out of their separation pursuant to a written consent that was filed with the court. Despite the fact that the consent outlined both parties’ child support obligations in a shared parenting arrangement, and specifically provided that each party would each claim one of the children as a dependant for the eligible dependant tax credit, the Tax Court disallowed the allocation of the credit because ultimately a single setoff payment was paid by the higher income parent to the other. The court held that the “combined effect of subsections 118(5) and 118(5.1) [of the ITA], at a minimum, requires a comprehensive documentary and evidentiary record... Surely cheques, or even their more modern replacement of recurring e-transfers, may evidence a clearly enumerated, reciprocal and mandatory support amount paid by each spouse to the other” (par 11). The unfortunate conclusion of this case is that it now appears necessary to not only provide that both parties are paying support to one another in any written court order or agreement, but the parties must now actually do so, creating the necessary “documentary and evidentiary record”. Aside from the unnecessarily cumbersome two-way exchange of money, this raises concerns where one parent pays his/her share, but the other parent does not. This leads to a particularly ridiculous result when the “deadbeat” parent is the higher income earner - not only would the lower income parent not get the support required, but he/she would be supplementing the deadbeat parent as well! Unfortunately, until such time as the court or the legislators revisit this issue, this is the result with which we are left."


Karen F. Redmond
Family Law Lawyer

19 July 2017

What to do about summer parenting access problems?

As the wildfires burn out of control in BC this summer, so it seems, do the ongoing disputes between some parents about summer parenting time. I wonder sometimes if parents realize how awful it must be for the children to be caught in the crossfire between the 'responsible' adults in their life, all of which is done, supposedly in "the name of love".  I wonder if there is a better way to show love and commitment to parenting without putting a child smack in the middle of your disputes?


If my annoyance is coming across in my writing, I apologize, but it's not surprising given the number of interactions I have had in the past weeks with parents who are so blinded by concerns for their own 'rights' to their children, that they can't see their way to resolving disputes "in the best interests of their child", for what that's worth.  Of course there will be the exceptional cases where lawyers need to be involved, but for the most part, I believe there is a better way to resolve these types of disputes and that is to use professionals who are trained to deal with children and children's issues. 


This is my little plug for parents to use parenting coaches and parenting counselors instead of lawyers, to resolve summer parenting and scheduling problems.  Collaborative Divorce BC has a website that lists counselors and coaches who can help both parents (together!)  to come up with some sort of compromise that doesn't necessitate dragging the children on a sunny summer day to the lawyers office to try to give a statement about what the parent did or didn't do.  Honestly, it feels tragic to me that parents could think that their child actually wants to be involved to the point of making a statement to a lawyer about the other parent. 


If you have a parenting dispute, which even the most skilled parents and communicators will encounter, consider using a mental health professional, a counselor or a parenting coach to assist you.  You and your former partner can sit together to discuss the issue with a counselor, and get some guidance and advice, which you may or may not accept, but isn't it worth a try, for the sake of your child?


Here is the link to the Collaborative Divorce BC Website, where you can find the parenting coaches and counselors: 




http://www.collaborativedivorcebc.com/index.php


and HERE  for child specialists




Karen Redmond
Family Law Lawyer and Mediator

09 June 2017

Can the date of separation be used for valuation of family property in British Columbia?


The humorous subtitle to this article is "Why the heck does he/she get to benefit from the mortgage payments I made on the house since he/she left?" 


Most often in separation and divorce, couples manage their finances in an informal way for months and sometimes even years before they venture in to see a lawyer and have a formal separation agreement drawn up.  Many times, one party has moved out and the other party has stayed in the family residence, one party pays the mortgage and the other party pays their rent and their own bills and so on.  It is not surprising, therefore, that the person who has been in the family home thinks they alone should be able to benefit from their payments, so when they meet with their lawyer they often expect that the value of the family home will be the date that their spouse moved out.  This is not so, says the Family Law Act
Section 87 of the FLA requires, unless an agreement or order provides otherwise, that the value of family property be based on fair market value at the date of trial: 

Valuing family property and family debt:
87        Unless an agreement or order provides otherwise and except in relation to a division of family property under Part 6,

                        (a) the value of family property must be based on its fair market value, and
                   
    (b) the value of family property and family debt must be determined as of the date
                         
(i) an agreement dividing the family property and family debt is made, or
                         
(ii) of the hearing before the court respecting the division of property and family debt.
However, the court does have discretion to order an alternative date for valuation in order to avoid significant unfairness relating to a spouse’s post-separation contribution.   In the case of Bamford v. Mulyati, 2017 BCSC 945 CLICK HERE the 83 year old Claimant applied to divorce his 51 year old wife after she fled the country with his first (deceased) wife’s jewelry in 2013.  The family property consisted of the increase in value of the Claimant’s pre-marital investments and his claim to the Court was for reapportionment in his favour based on significant unfairness due to post separation contributions to those assets. 

The Bamford case referenced the case of Slavenova v. Ranguelov, 2015 BCSC 79 HERE to support the claim for valuation at the date of separation.  From paragraph 53:  “the FLA provides two alternate routes to address potential unfairness that may arise from a party’s post-separation contributions, namely s. 87 and s. 95.  Under s. 95 a court can order reapportionment to address any “significant unfairness” that may arise from an equal division of property and debt in light of the spouse’s post-separation contribution.  Alternatively, under s. 87 the Court may depart from the date of hearing or agreement as the valuation date.”

Madam Justice Morellato in the Bamford case agreed that the date of separation should be the date of valuation, as she found that a significant unfairness had arisen because Ms. Mulyati had not made any contributions towards the family property since her ‘sudden departure’ in 2013.  A review of the cases makes it clear that it does take a set of very unique facts for the Court to Order valuation at the date of separation. In the case of K.A.L. v. K.J.L. 2017 BCSC 651 HERE the Claimant had remained living in the family residence and was responsible for making mortgage payments.  The family residence had increased in value since separation, and the Claimant said it would be unfair for her to share that with the Respondent.  The Court looked at the financial arrangement, which as with most separated couples, involves a complicated web of payments by each party to support the family in the immediate months and years post separation, stating at paragraph 286:  “In my view, there should be compelling evidence to depart from the standard valuation date as the date of trial thereby disentitling one property owner the benefit of the increase in value of property which is brought about by market forces and not as a result of direct effort of the other party.”  And at Para 289:  “  I am persuaded by these comments to conclude that a change in valuation date from the norm should certainly be the exception and should only be ordered if it would be significantly unfair to do otherwise. 
See also Jaszczewska v. Kostanski, 2016 BCCA 286 (CanLII), HERE at para. 39, the British Columbia Court of Appeal discusses the general rule that parties should share in post‑separation increase in value of property independent of the parties’ respective contributions to post‑separation increase in value.
[39]      Also, because family property is generally valued on the date of the hearing, the parties will presumptively share in any post-separation increases in the value of family property. Once again, because of s. 81, this entitlement exists independent of the parties’ respective contribution to the post-separation increase in value.

 

05 June 2017

Is Spousal Support Paid to a Canadian Recipient by a Payor in the United States Taxable in the Hands of the Recipient?

Karen F. Redmond
Family Law Lawyer and Mediator


Recently in Court a Judge asked a colleague and I this question and although we were all fairly sure we knew the answer, none of us knew with certainty, so here is the answer:   Yes, spousal support paid to a Canadian recipient by a payor in the United States is taxable in the hands of the recipient and deductible by the payor in certain circumstances. 

A US citizen (or a US resident who is not a US citizen) can deduct spousal support payment paid to a Canadian resident.  Here is Article XVIII paragraph 6 of the Canada-US tax treaty (http://www.fin.gc.ca/treaties-conventions/unitedstates-etatunis-eng.asp) :


 “ 6.  Alimony and other similar amounts (including child support payments) arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable  as follows:


                          (a) such amounts shall be taxable only in that other State;


                           (b) notwithstanding the provisions of subparagraph (a), the amount that


would be excluded from taxable income in the first-mentioned State if the recipient were a resident thereof shall be exempt from taxation in that other State.”


Therefore, yes, the spousal support income is taxable in Canada to the recipient who is a Canadian resident and the spousal support is deductible by the payor in his/her US tax return.  In addition, the spousal support income is not taxable in the US for the recipient.


Having said that, please note the following, sent to me by a tax colleague:


1.       In order for the US citizen to deduct the spousal support in his/her US tax return:


  1. The recipient must have a US tax number (US Social Security Number or Individual Taxpayer Identification Number).  This may imply that the recipient must be willing to apply for the tax number.



  2. Without a US tax number for the recipient, the IRS will deny the spousal support  deduction.  In IRS’ point of view, a person who does not have a US tax number does not exist.


2.   I cannot conclude if the US citizen must withhold 15% US tax on the alimony paid if he resides in the US.  You may need to seek additional advice if you require further clarification.  


3.   Based on the treaty table provided by the IRS (https://www.irs.gov/pub/irs-utl/Tax_Treaty_Table_1.pdf), it is silent if alimony is subject to withholding tax (see Belgium or Bulgaria where footnote f specifically mentions “include alimony”).


4.  Based on IRS’ Publication 515 (https://www.irs.gov/pub/irs-pdf/p515.pdf) Page 32 and 51, the IRS now does not require any US tax withholding on alimony payment to non-resident.  Here is the quote:


 “Income that is exempt under a treaty is not subject to withholding at source
        under the statu­tory rules discussed in this publication”


31 May 2017

Is income from a new spouse relevant in an application to cancel or reduce spousal support ?



by Karen F. Redmond
Family Law Lawyer


I am involved in an interesting case this week where the husband is applying to reduce his spousal support.  The case has raised a number of interesting issues which I will post more about this week.  The first question is whether the income of the husband's common law wife is relevant to the application for cancellation or reduction of spousal support. 


The answer to the question of whether a new spouse's income is relevant, in short, is yes, for both the recipient and the payor, in different ways, and of course it depends on the particular facts of the case and whether the application is for a change in child or spousal support.


It is fair to say, however, that income from a payor’s new spouse is relevant to a determination of support owing to a former spouse.  I looked at a few cases including:


  1. Chevalier v. Chevalier, 1993 CanLII 4475 (NS SC)  (child and spousal support variation application)   Chevalier v. Chevalier
  2. Redpath v. Redpath, 2008 BCSC 68 (child and spousal support variation application) Redpath v. Redpath
  3. Rakose v Rakose, 2008 BCSC 1165  (application to vary spousal support) Rakose v. Rakose
  4. Moreau v. Fliesen, 2008 BCSC 1358  (application to vary child support) Moreau v. Fliesen
  5. Chalmers v. Chalmers, 2009 BCSC 517   (application to vary spousal support)  Chalmers v. Chalmers


These cases say that the new spouses either are, or should be, contributing to the household expenses thus making more money available to the payor for payment of support.  I found it particularly interesting that in the Chevalier case the Judge even included the unemployment insurance of the new common law spouse as part of the payor’s household income.  The cases I read all say, in a nutshell, when the court considers an application to end spousal support and to vary child support, it should consider the earning capacity of the parties and the means of any new spouse. 


 For the recipient, re marriage will also be looked at by the Courts but not necessarily in the same way. For example in L.J.Z v. J.A.Z 2014 BCJ No. 1925 the 61 year old husband applied to cancel spousal support based on the wife’s re marriage.  The parties had been married for 29 years and the wife was 55 years old and had been receiving support for only 4 and a  half years at the time of the application.  The wife successfully argued that since the original order contained compensatory elements, the husband had not met the obligation of compensating her for the economic consequences of the marriage breakdown. 


From paragraph 57:   “If the evidence shows the recipient spouse's circumstances have materially changed to the extent they no longer need financial support to achieve a standard of living that approximates what they enjoyed during the marriage, absent a compensatory basis for the award, attachment to the payor spouse's income can no longer be justified. In the present case, therefore, the wife's remarriage and the resulting financial benefits she receives from it become relevant to determining whether she still needs financial support to allow her to maintain the marital standard of living.  And paragraph 58:  "The parties divided the family assets equally. Therefore, to the extent that the wife is entitled to compensation for economic disadvantages she sustained and the economic advantages the husband gained arising from the marital relationship, it must come through a spousal support order, whether lump sum or periodic."   Paragraph 59:  "As noticed earlier, the wife acknowledged in her affidavit that the support order contained both compensatory and non-compensatory consideration. As is most often the case, however, the order does not divide the support amount into compensatory and non-compensatory parts. In my opinion, the most practical way in this case to address that is to determine a percentage reasonably representative of the weight of evidence supporting a compensatory amount. This at least would be a useful starting point……"   The Judge went on to consider the evidence provided by the parties and found that there were both compensatory and non compensatory elements to the original support order. 


Even if the support is based also solely on non compensatory grounds, the Courts still consider the means and needs of the parties.  For example, Aujla v. Singh, [2012] ONSC 5217   Aujla v. Singh  and a line of Ontario cases including Pindur v. Pindur, [2015] O.J. No. 1598 provide direction in non-compensatory cases that involve disabled recipients.  In both the Aujla and Pindur cases, the marriages were under ten years and the husbands were both able bodied and the wives became disabled during the marriage and unable to work.  Neither cases contained strong components of compensatory support.  The Courts, in relying on Bracklow v. Bracklow, [1999] S.C.J. No. 14, said that the cases give rise to entitlement by a disabled spouse regardless of the absence of a compensatory claim (cited at paragraph 39 of Aujla).  In the Bracklow case the marriage was only 7 years and the wife became totally disabled from working.  She was unable to establish any compensatory basis for her claim and although the British Columbia Court of Appeal dismissed her appeal, the Supreme Court of Canada allowed her appeal stating that her claim could be maintained on a non-compensatory basis, at paragraph 48:


Divorce ends the marriage.  Yet in some circumstances the law may require that a healthy party continue to support a disabled party, absent a contractual or compensatory entitlement.  Justice and considerations of fairness may demand no less……….


At paragraph 31:


…. It places the primary burden of support for a needy partner who cannot attain post marital self-sufficiency on the partners to the relationship, rather than on the state, recognizing the potential injustice of foisting a helpless former partner onto the public assistance rolls.


In the Aujla case, the wife had not given up any part of her career to further the applicant’s interests and until she became disabled she was gainfully employed.  She lost her job because of her disability not because of her marriage (para 45).  At paragraph 55 the Court said, “notwithstanding that the Guidelines suggest a maximum duration of spousal support of five years, I will order the applicant to pay spousal support for an indefinite period, subject only to variation based on a material change in circumstances.”  Counsel for the wife argued for indefinite support on the basis that the payments should be based on her need, because of her disability, saying, “anything less will leave her destitute.  Apart from spousal support, her income is fixed and is entirely beyond her control.  In addition, her expenses are entirely beyond her control, and indeed they are relatively modest.  Anything less than the amount she has requested will means that she will be in poverty, and cannot live with any dignity.”


As always, speak to a family law lawyer about the particular facts of your case, but it seems, that from the perspective of the Courts, spousal support is an obligation that you can't easily contract out of, especially if you have a disabled spouse. 


FOOTNOTE:  in Court last week Mr. Justice Leask found that the income of the payer's new spouse was relevant and he was not prepared to hear the application without the information.  If we get a written decision I will post. 


Karen F. Redmond