Can a support payor be ordered to pay what in retrospect should have been paid annually? For example, if the support payor was ordered to pay support for two children in the year 2012 based on an income of $80,000.00 that would have produced a Child Support Guidelines payment of $1,172 per month. If the payor’s income then went up each year by $5,000.00, was the payor under any obligation to increase the child support payable in accordance with the Guidelines as his or her income went up? Can the payor be subsequently ordered to make those payments even though he was fully up to date with the payments ordered in 2012? The answer depends greatly on the payor’s income disclosure or lack thereof.
Awarding retroactive child support considered by the Court
The court looks at a number of factors when determining whether a retroactive child support should be awarded, including:
- the child’s age;
- delay in making the claim for retroactive support;
- whether there was blameworthy conduct on the part of either the recipient or payor;
- hardship to the child as a result of the non-payment;
- hardship to the payor if a payment is made.
The award should generally only be retroactive to the date when the recipient parent gave the payor parent effective notice of an intention to seek an increase but retroactive support can be ordered prior to that date in circumstances where there is blameworthy conduct on the part of the payor.
When analyzing the factors above, the goal is to ensure that the children benefit from the support that should otherwise have been paid. Any incentives for the payor parent to be underpaying the support should be eliminated.
Unreasonable delay by the recipient in seeking an increase will militate against a retroactive award (e.g. if he or she had knowledge of the increase in the payor’s income and took no steps to make a request for support adjustment), while blameworthy conduct by the payor will have the opposite effect. The court must always balance the competing considerations of fairness to the children and fairness to the payor. If the payor fulfilled his or her court order or agreed upon support obligation each and every month and structured their budget and financial decisions accordingly, it is difficult to find fault. Some blameworthy conduct must be shown. This balance obviously involves a detailed examination of the facts in the particular case. As such, issues related to retroactive child support claims can be difficult and costly to resolve.
Retroactive Support and Compliance with Annual Income Disclosure
Increasingly, a support payor’s failure to prove compliance with annual income disclosure requirements has resulted in rejection of the request to change the arrears. The compliance with annual income disclosure requirements in the separation agreement or court order are the main focus of the blameworthy conduct analysis.
In Ontario, orders made after March 1, 2010 require parties to child support orders or agreements to exchange support information annually. Specifically, all orders contain the following clause:
“For as long as child support is to be paid, the payor and recipient, if applicable must provide updated income disclosure to the other party each year, within 30 days of the anniversary of this order, in accordance with section 24.1 of the Child Support Guidelines.”
Section 24.1 of the Guidelines specify that the tax return for the most recent year, including any materials included in the return such as T4 slips and the Notice of Assessment or Reassessment from CRA must be supplied to the other party each year. Payors who do not comply with this requirement will likely be liable for retroactive child support based on annual income increases. In addition, payor’s who experience an income reduction will likely not receive a retroactive arrears reduction on a motion to change if the annual income disclosure has not been provided.
Apart from these mandatory requirements in Ontario, most separation agreements contain clauses which require the parties to annually exchange tax information and special expense details.
The risk of ignoring this annual disclosure requirement can be financially devastating. At Wood Gold LLP we have significant experience dealing with all types of Child Support issues, including retroactive child support. We can help you make sense of these complicated issues. Complete an intake form and contact us today for a free 30 minute consultation.