GEORGIA SWAN

TAX AND ESTATE PLANNER, TD WEALTH

A: Sadly, I think this question may be a common one. A breakdown of a marriage or common-law relationship often leads to reduced disposable income for each parent, due to having to maintain two separate households. Unless a child is especially interested or gifted in a particular area, and therefore destined for professional sports or music, the fun stuff like ballet and drum lessons is usually the first thing to go when money is tight.

In Canada, child support amounts are based on the Federal Child Support Guidelines.1 Basic child support amounts (which vary from province to province) are generally meant to cover a child’s food, housing expenses and basic clothing. All other child-related expenses would be over and above the basic child support amounts, and as I’ve seen time and time again, parents may see their obligations very differently. The Guidelines do talk about certain additional expenses which are categorized as “Special or Extraordinary Expenses” and should be shared by the parents. Often referred to as “Section 7 Expenses,” after the section of the Guidelines that discusses them, these can include private school tuition if the child was already in private school, necessary medical expenses not covered by a provincial or private health plan, post-secondary education, and child-care expenses if certain conditions are met.2

Tutoring, winter boots and extra-curricular activities like the dance lessons you mention, aren’t specifically listed, and that can lead to disagreements over who should pay what and how much. When parents can’t agree on what costs they should share, the law may consider certain conditions. The following are the first considerations of a Section 7 Expense before being approved by a court:

  1. It should be necessary to the child’s best interests.

  2. It should be reasonable in relation to the means of the parents and the child.

  3. It should also be reasonable in relation to the spending pattern of the family prior to separation.

If the parents can’t come to an agreement, the courts may try to see to it that the lifestyles of the children remain similar to what was in place before the separation. When looking at a claim, the court will often look at factors like whether dance lessons were something the child had been doing all along; is the tutoring something that can be obtained free by utilizing extra help from a teacher or is specialized private tutoring necessary? A court may also look at whether the parents actually have the financial means to cover these expenses and whether the child is contributing to any portion of the expenses.

Some common Section 7 grey areas might include school (special fees, supplies, trips and transportation), the cost of outdoor clothing, and specialized equipment required for extracurricular activities such as soccer cleats and dance leotards. Cell phones and computers often cause heated debate because technology continues to develop, and teenagers may want the latest smartphone. Elementary school children may need access to a computer or mobile device to do their basic homework, although computers may be available in the library. I’ve also seen much disagreement on whether a parent is responsible for sharing the increased cost of a premium item like a name-brand luxury winter coat. What is considered necessary, and what is considered frivolous may be very subjective. The best way forward is to try to discuss these costs before they are spent, to manage everyone’s expectations.

If you are able to discuss these expenses and come to an agreement on what is affordable and necessary, then you need to also come to agreement on how they are paid for. The guiding principle found in the Guidelines is that the expense is shared by the parents in proportion to their respective incomes, after deducting from the expense any contribution by the child. A court may also take into account subsidies, benefits, tax deductions or credits which relate to the expense and are available to the parents. Custody arrangements may also influence the formula.

But, remember that consistency may help children cope with their parent’s separation and divorce. Suddenly stopping all activities that a child loves or not allowing a child to have something that he or she needs to get by doesn’t help an already difficult transition. A financial professional can help you plan for all these extra-costs as you move forward.

If you feel the cost of extras for your child are not being split reasonably or fairly, a lawyer who specializes in child support and family law may be able to help.

Georgia Swan is a Tax and Estate Planner with TD Wealth. Georgia was called to the Ontario Bar in 1994 and began her legal career in the areas of Estate Planning, Estate Administration and Family Law. In her free time Georgia loves the outdoors, having grown up on a farm in Ontario's King Township. Her Greek heritage means that she is passionate about friends, family and food.