Executive Summary

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A. Study Objectives and Methodology

As part of ongoing legal policy work, the Department of Justice Canada contracted with Kelly Sears Consulting Group to conduct an extensive review of international models used to determine child support amounts. The overall purpose of the research was to review and analyze child support models with a focus on how selected issues are addressed. The jurisdictions included in this study were: the United Kingdom, Australia, France, Norway, Sweden, New Zealand, and the American states of Wisconsin, Delaware, Illinois, and Vermont.

The objectives of this study were to:

• Summarize the research completed by the Department of Justice Canada in the 1990s.
• Briefly describe the child support models used in the ten jurisdictions selected for examination by this study.
• Summarize any major changes that have been made to the models over the years and the rationale for the changes.
• Provide an overview and analysis of selected aspects of the child support models across jurisdictions. Of particular interest were how the jurisdictions incorporate policy options common to all models, such as income determination, parenting/custody arrangements, etc.
• Summarize any evaluations or assessments of the models.
• Identify any commonalities and trends across the jurisdictions.

This review was conducted between November 2018 and August 2019 and involved an extensive international literature review and environmental scan as well as structured interviews with child support experts in all ten jurisdictions.

Given the amount of detail and complexity of the information collected in this study, the results are presented in two volumes. Volume I contains the overall findings supported by detailed tables on the various issues examined, by jurisdiction, while Volume II consists of summaries for all ten jurisdictions.

B. Findings

1. Summary of the 1990s Canadian research

In 1990, the Federal, Provincial and Territorial Deputy Ministers of Justice gave the Federal/Provincial/Territorial Family Law Committee (FLC) a mandate to examine child support in Canada. A key outcome of this mandate was the completion of research by the Department of Justice Canada that addressed the fundamental questions that underpin the construction of child support guidelines. The FLC examined various approaches to developing the formula as well as identifying the elements that need to be addressed in legislation that define the components and calculations used in the determination of child support amounts.

With respect to the formula construction, the research included an examination of the various approaches that could be considered to estimate the amount of expenditures on the child that the parents should share, as well as the apportioning approaches to share those expenses. With respect to the elements needed to be considered in the accompanying legislation to any child support guidelines, the research focussed on how issues such as: the calculation of income available for child support; the use of self-support reserves; impacts of the child support amount on the ability to pay of the parent; and the amount of time the child spends with each parent are factored into the formula to arrive at a final child support amount.

Following an extensive five-year program of research, the Federal/Provincial/Territorial Ministers of Justice approved a child support model, consisting of child support tables and rules. The model was based on an approach developed by Statistics Canada1 which calculates the total financial need of the two households and estimates what share of that need relates to the child or children. These costs are then shared between the parents based on a fixed percentage model. The guidelines were supported by legislation that ensured the ability of the paying parent to pay child support by including a self-support reserve, addressed parenting arrangements and provided clear definitions on all elements that need to be factored into the child support calculations.2 The Canadian child support guidelines came into effect on May 1, 1997.3

2. Summary of the models

The ten jurisdictions included in this study operate under different child support models. For each jurisdiction, three areas were examined: the formula, including the expenditure model and apportioning approach, how the scheme is administrated, and what objectives are expected to be achieved by each model.

Summary of the formulas

One of the key findings of this review is that all models and the formulas used in these models operate differently. No two are exactly alike. What was also very clear is that they are complex, requiring multiple sequential computations. To assist parents and family justice officials, all jurisdictions provide comprehensive tools, including online calculators.

That being said, there are some clear commonalities. All formulas require the same types of income information from the paying parent and, if applicable, the receiving parent, as well as information on the number of children who are the subject of the action. All jurisdictions include in their formula calculations provisions for:

• The number of overnights that the child who is the subject of the action spends with each parent.
• Any dependent children who are not the subject of the action, but for whom the paying parent is legally responsible.

There are also a number of elements that are common to most of the jurisdictions. In six jurisdictions,4 the financial ability of the paying parent is taken into consideration when determining the child support amount. This is done by the use of either a self-support reserve or the inclusion of a threshold or “cap” prior to determining the final child support amount.

Expenditure model and apportioning approach

All jurisdictions have adopted into their formula an approach to determine the expenditures on children. The amounts used in the formula do not purport to be actual expenditures, but rather are proxies for these expenditures. These data are the basis for the formula calculations and are presented in either amounts or percentages, depending on the formula type. Various methodologies are used by the jurisdictions to determine these expenditures.

Four jurisdictions (Illinois, Vermont, Australia, and New Zealand) use actual expenditures on children based on current data from national statistical agencies responsible for collecting and disseminating household expenditure data. These data are based on intact two-parent households and represent the additional cost for maintaining the children.

Three jurisdictions (France, Wisconsin and the United Kingdom) derive the percentages used in their fixed percentage model from household expenditure data that was collected when their models were first developed. However, it should be noted that although the percentages may have changed to reflect various factors that are now included in their formal calculations – such as changes to the percentage to be applied for parenting time – no new analysis using current expenditure data has been completed. This reflects the continuing assumption that the proportion of costs spent on children in intact families has not changed over time.

Two jurisdictions, Sweden and Norway, use a budget-based approach, based on national data collected from their consumer agencies. In these jurisdictions, parents can also decide to use their own actual expenditures as the amount that is to be shared.

Finally, Delaware uses a proportion (25%) of the annual United States poverty line amounts for a single person, as the amount to represent the basic needs of the child that is then shared between the two parents. The poverty line amounts are updated annually and therefore, so too are the basic need amounts for children used in the guidelines.

How parents share the child support amount after it has been determined was also examined. Six jurisdictions5 have models based on an income shares approach, where the costs of the child are shared in proportion to each parent’s income. Three jurisdictions (the United Kingdom, Wisconsin and France) are based on a fixed percentage of income model where the child support amount is calculated by using only the paying parent’s income. Finally, Delaware uses a unique approach called the “Melson model”, which incorporates both the income shares and the fixed percentage of income model depending on the calculation being completed.

How the scheme is administered

The review of the ten jurisdictions found that there are basically three options for parents to determine a child support amount: parent-negotiated or private agreements, use of an administrative agency, and use of the family court system. These three options are not exclusive of one another. Neither does the use of one mechanism preclude the use of one or both of the other options. In all jurisdictions, parents have the option to negotiate their own child support amounts. In these cases, use of the child support guidelines is discretionary.

In the four American states as well as in the United Kingdom, Australia, New Zealand, and Norway, administrative agencies6 determine, collect and enforce the payment of child support amounts. With the exception of the United Kingdom, if one of the parents is in receipt of social assistance or government benefits, then they are required to use the services of the administrative agency. In these cases, the use of the child support guidelines is mandatory. In all jurisdictions, parents who are not in receipt of social assistance have the option to use the services of the administrative agency that will then apply the guidelines to determine the applicable child support amount. In New Zealand, the administrative agency is housed in the Inland Revenue Department, making the determination and updating of child support amounts accurate and efficient given their ready access to tax information.7

In the United Kingdom, Australia, New Zealand, Norway and Illinois, the administrative agencies have the authority to determine and vary a child support amount without processing the case through the court system.

In all jurisdictions, when parents cannot agree on a child support amount and do not want to use or are not required to use the relevant administrative agency, they can have their case processed through the court system.

With the exception of France and Sweden, the use of the guidelines is mandatory by the courts.8

Objectives underlying the models

Objectives or principles that underlie a child support model are reflected in the construction of the formula, and in some cases, the sequencing of relevant factors inherent in their mathematical construction. All jurisdictions have some form of statement about what their model is intended to achieve. Although the wording varies, in all jurisdictions there is a reference to both parents having a financial responsibility to care for their children. The concept of being “in the best interest of the child” is either included in legislation or in administrative rules in five jurisdictions.9 References are made in legislation with respect to expenditures either having to be based on data on raising children or in accordance with the costs of children. Finally, several jurisdictions set out objectives that address the standard of support to be provided to the child.

3. Changes made to the models over time

The review identified the major changes that have occurred in the child support legislation in each jurisdiction over time and highlighted any patterns. The nature and volume of the changes vary by jurisdiction and by the category of reforms. Given the volume of the changes, the study focussed on those areas where there has been either a substantial change – such as a change in the apportioning models – or frequent refinements to a particular element contained in the models. Six categories of changes met these two criteria.

Four jurisdictions (Norway, Australia, New Zealand, and Illinois) have changed the way child support amounts are apportioned between the parents. All changed their model from a fixed percentage of income approach to an income shares approach following substantial opposition from the public and family law professionals.

None have changed their legislation with respect to how expenditures on children are determined and incorporated into the formula, nor have the amounts or percentages changed over time. However, all jurisdictions have made regular updates to their various tables to reflect changes in the cost of living, taxation rates and other jurisdiction-specific economic rates.

All have implemented changes with respect to how income is defined for the purposes of determining what income is to be used for child support calculations. The United Kingdom, Delaware and Norway have moved from using net income (considering applicable taxes) to gross income as the starting income used in the formula calculations.

Four jurisdictions, (the United Kingdom, New Zealand, Vermont and Delaware) have also made changes to allow for the deduction of an amount in the formula calculations to recognize other dependent children for whom the parents are legally responsible, but are not the subject of the current action. In six jurisdictions10 this calculation is done as part of the determination of the income available for child support.

All have implemented changes with respect to the treatment of time spent with the child by each parent. These changes have usually focussed on reducing the thresholds that would trigger a change in the child support amount.

Australia and the United Kingdom have made several changes pertaining to the mandate of their administrative agency, either clarification of roles or changes with respect to the actual authority.

As well, other noteworthy changes include changes jurisdictions have made to ensure that the paying parent has the financial means to pay child support (Delaware and New Zealand).

Over the past twenty years, all jurisdictions have made at least one major change to their child support models. These were mostly in response to government-led reviews and/or evaluations, legislated periodic reviews (e.g., federal laws in the US), or public commentary and debate.

Lastly, all these major changes and reforms took a considerable amount of time to complete. The time taken from the initial reviews and research to the formulation of the policy reforms, consultation, and implementation of the reforms often took five to seven years.

4. Overview of legislative/policy aspects

The construction of the child support models reviewed includes accompanying rules that set out how various elements are to be used in the calculation of a child support amount. In some cases, the way jurisdictions apply these rules is very similar, while in others it is very different.

The determination of income available for child support is more complex than merely determining whether the starting income for the calculation is net income or gross income. Seven of the jurisdictions use gross income as the starting income for their child support calculations with no deduction for taxes. Two jurisdictions (Vermont and Illinois) use net income as a starting income and provide tax conversion tables to assist parties in the calculations. The remaining jurisdiction – Sweden – applies the same percentage of income (31%) for its tax calculations.

Jurisdictions also include provisions in their models that allow for deductions of a self-support reserve and other dependent children, in the calculation to determine the amount of income available for child support. Six jurisdictions11 include a self-support reserve amount that is deducted from gross income and six jurisdictions12 include deductions for other dependent children.13 Four jurisdictions (Australia, New Zealand, Vermont and Illinois) have provisions for both.

All jurisdictions incorporate provisions in their models to recognize the time either parent spends with their children. There is greater consistency in the way in which jurisdictions accommodate split custody situations in the formula calculations than how they accommodate shared custody/parenting time arrangements. No jurisdiction allows for discretion on how to calculate child support amounts for parenting time. All jurisdictions have complex calculations that require online tools and worksheets to assist parties.

Most jurisdictions do not have specific provisions to allow for the addition of special or extraordinary expenses. If they are allowed, the types of expenses that are considered are for childcare and medical costs.

All models take into account the ability of the paying parent to pay their child support obligations. The financial hardship of low-income parents to pay child support is recognized through various mechanisms that are built into the formula construction. The aim is to achieve a balance between recognizing financial hardship, and the responsibility each parent has for the economic wellbeing of their child. These mechanisms are common across all jurisdictions.

The rationale for allowing either party to request a modification or variation to a child support award is common across all jurisdictions. Most require a percentage threshold to be met, either a change in the new amount of child support or a substantial change in the level of income, before they allow for a variation to the child support award. Again, common across all jurisdictions are other changes in circumstances such as parenting time or shared care, or the child reaches the age limit after which child support is no longer applicable.

Jurisdictions review on a regular basis the tools in place to assist parents such as the relevant tax conversion tables, child expenditure tables and amounts for self-support reserves. This review is done to ensure that their tools reflect currently available data.

Finally, jurisdictions all have provisions that recognize the limited ability to pay of low-income earners. The majority of jurisdictions include provisions in their models that allow for zero awards or minimum awards. Similarly, most jurisdictions have rules and calculations to ensure that child support amounts in cases of high-income earners do not exceed what would be reasonable expenditures on a child. As well, some jurisdictions have upper limits of income thresholds, after which their guidelines are no longer applicable.

5. Overview of evaluations or assessments of the models

Despite the existence of child support models in most jurisdictions for over twenty years, this study did not find any formal evaluations that examined the effectiveness or efficiency of the system. As well, there was little to no case law that led to legislative changes to the models. The research findings also revealed that there was a dearth of available literature on the advantages and disadvantages pertaining to a particular model in a jurisdiction. What was available was anecdotal or was more generic in nature, such as commentary on the advantages of an income shares versus a fixed percentage approach, or the inequities resulting from using expenditure data on two-parent families as opposed to single parent families.

6. Conclusions

This study confirmed that since the inception of child support guidelines in the 1980s, the ten jurisdictions examined in this review have followed different paths to respond to their particular social and economic circumstances. Although no two models are the same, there are some striking similarities. They have all incorporated changes to their legislation to keep pace with the changing nature of families: the impact of dependants is factored into the formula calculations, as is the amount of time spent with the child. As well, the ability of the paying parent to financially support the child and themselves is an element built into the formula construction in the majority of the models. Finally, in the majority of jurisdictions, the use of administrative agencies as opposed to the courts is the mechanism by which jurisdictions ensure the timely determination of child support awards. All jurisdictions indicated the importance of ensuring that their models reflect the changing reality of families and recognize that the models will continue to evolve.

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