Federal Child Support Guidelines and Tax Changes

Effective May 1, 1997, family law in Canada was altered in the most significant way since the Divorce Act of 1985 which brought in "no-fault" divorce. Child support is now almost entirely formulaic, and is no longer the subject of special income tax treatment.

The amount payable under the guidelines is primarily driven by the income of the payor with no regard to the custodial parent's income, except in defined circumstances. See our Primer - Child Support for more information or go directly to the Guidelines. The Table amounts were generated from a computer model.

Income tax law, which used to allow the payor to deduct the child support payments and required the recipient to claim the amounts on his or her income tax, no longer applies to Orders or agreements respecting child support made after May 1, 1997. Previously, where the payor was usually in a higher tax bracket than the payee, there was a net tax saving which allowed the court to make a higher award, thus passing the savings onto the child. A misunderstanding of this concept, coupled with the notion that the courts were not uniformly considering the tax implications of their awards - an unfair description of Manitoba's courts, I would contend - led to the repeal. The net effect of the change benefits the Minister of National Revenue who promised increase child tax benefits in return.