When two married people decide to get divorced, one of the consequences of that decision is that the couple must undertake a division of all of their assets, including any real properties, such as homes or cottages, and any vehicles or other assets and money accumulated between the two. Furthermore, the family court will assess whether any child or spousal support is due from one party to the other, which is an assessment that occurs in accordance with guidelines intended to provide direction as to an appropriate amount to be paid. One consideration to be included in such an assessment is income, meaning that the court will consider how much money each spouse earns when it decides whether and how much spousal support is owed. 

This gives rise to the question of how the courts interpret “income” to calculate spousal support. For example, does income include only monies earned from employment, or are other sources of income also considered? Does the court consider each spouse’s income pre- or post-taxation? And what about monies saved for retirement, such as pension and RRSP contributions – are such amounts properly included in the court’s assessment of the “income” of each spouse? In this blog, we will explore how spousal support is calculated in the province of British Columbia, including whether deductions are made from income for pension and RRSP contributions. 

How to Establish the Right to Spousal Support in British Columbia

Before the appropriate amount of spousal support can be determined, entitlement to receive such support must first be established. In deciding whether either spouse is entitled to receive spousal support, the courts will consider the following factors:

• the length of the relationship between the parties
• the financial circumstances in which each spouse finds themselves
• the role played by each spouse during the relationship, including duties with respect to child care and home maintenance
• what is actually needed by the spouse who seeks spousal support in order to become self-sufficient, such as pursuing an education or an apprenticeship/internship/training program

It is worth noting that, in British Columbia, the reasons for the dissolution of the relationship, including any affairs either spouse may have undertaken throughout the duration of the relationship, are not considered by the court in assessing entitlement to spousal support. 

Once the right to receive spousal support has been determined, the courts will turn to the Spousal Support Advisory Guidelines, which govern how often and in what amount spousal support should be paid from one former spouse to another, to assess the appropriate amount of spousal support to be ordered. 

Determination of “Income” Under the Spousal Support Advisory Guidelines

Under the Spousal Support Advisory Guidelines, the determination of how much spousal support is owed depends on how much income each spouse earns annually. When assessing this amount, the courts must consider each spouse’s annual “income,” so what does “income” include in this scenario? Well, in British Columbia, the calculation of income includes all monies earned by the spouse, including income earned as salary/wages in either an employment capacity or as an independent contractor; investment income such as dividends earned on ownership of shares in a corporation; and rental income, in cases where one spouse owns and acts as a landlord in respect of a non-marital property or properties. The court will add these amounts to establish each spouse’s annual income. 

In considering the salary earned by a spouse in an employment scenario, courts will consider the amount earned as basic salary, including income taxes, CPP deductions and EI premiums, excluding pension contributions. In other words, any pension amounts automatically deducted by a spouse’s employer are excluded from calculating that spouse’s total income. This is because the BC courts have determined that monies deducted as pension are not “available” to that spouse for use, in that the monies have already been allocated elsewhere and cannot be used by that spouse until his or her retirement. In circumstances where pension monies are not under the control of the spouse, are required to be made pursuant to a collective agreement, and do not form part of disposal income (in that they are not available to be used for any purpose other than pension contribution), then the BC courts have stated that such monies are not to be considered part of one spouse’s annual “income.”

Treatment of RRSP Contributions for the Purpose of Calculating “Income”

RRSP contributions, however, are a different matter. RRSP contributions are distinguishable from pension contributions in that RRSP contributions, even where mandated by an employment contract or collective agreement, may be able to be withdrawn. In such circumstances, the monies would become “available” to be spent by the person who holds the RRSP account.

The BC Supreme Court recently reviewed this issue. In that case, the husband sought to have the court exclude his RRSP contributions from calculating his income. The RRSP contributions in that case were made pursuant to a collective agreement, under which the husband was obligated to contribute a certain of his income towards an RRSP in his name. However, there were no restrictions on what became of such monies once the contribution was made; in other words, the husband could decide to remove some or all of his RRSP contributions from the RRSP at any time, for any reason. In this way, the monies were, in fact, “available” to the husband and, as such, put him in a position equivalent to that of any person who received income from employment, then purchased an RRSP on their own accord, free of any obligation under a collective agreement. 

Thus, while pension contributions made through employment are automatically excluded from inclusion in “income” for purposes of assessing spousal support, RRSP contributions are only similarly deductible in circumstances where such contributions are not only mandatory but are also “locked in” such that the owner of the account cannot access such funds. Where the RRSP contributions are either voluntary or, while mandatory, are accessible to the account owner, then such amounts will not be deducted from the calculation of that spouse’s overall “income” to assess child support.

Contact Meridian Law Group Today for Assistance with Your Family Legal Matter

The family law lawyers at Meridian Law Group are experienced in assisting clients to navigate the choppy waters of family law disputes. Whether your dispute relates to property division, domestic agreements, family violence, or parenting issues, Merdian Law Group’s family law lawyers have the knowledge and expertise necessary to guide you through the process and ensure that your rights are preserved and protected at every step of the way. 

Contact a family lawyer at Meridian Law Group today, either online or by telephone, at (604) 687-2277, to schedule a confidential and comprehensive meeting with one of our capable team members.