By: Olivia Manzer
Those who receive or pay child support may see an increase or decrease in the amount of child support they pay or receive as a result of the update to the Federal Child Support Guidelines that came into effect on Wednesday, November 22, 2017.
This change is as a result of the new Canadian income tax rates that came into effect in January 2016. The new rates reduced the income tax rate for those that earn between $45,282 and $90,563 per year from 22% to 20.5%, and increased the income tax rate for those that earn over $200,000 per year to 33% from 29%.
It is important to note that the change in the amount of child support will not be automatically applied to a child support order if an individual who pays or receives child support falls into one of the two categories mentioned above. If, however, the updated child support amount is different than the amount in a court order obtained before November 22, 2017, an affected party can apply to the court to have the amount changed due to the “change in circumstances”.
If an individual’s income is between $45,282 and $90,563, the decrease in tax rate leaves them with more disposable income and, as a result, they may see their child support payment amounts increase under the Federal Child Support Guidelines. Conversely, those who are in the highest tax bracket are now paying a higher rate of taxes, have less disposable income, and may see their guideline amounts decrease.
For example, an individual who paid child support for two children in Alberta and made $46,000 per year would have previously had a guideline child support amount of $646 per month. After the changes on November 22, 2017, all else remaining equal, the guideline amount would have increased by $21 to $667 per month.
It is important to note that each case is different and, depending on an individual’s income, what province they live in, their personal circumstances and any child support agreements or orders, there may be no change in the support amount. It is also important to note that this change does not apply retroactively; amounts owed prior to November 22, 2017 are not affected by the new Guidelines.