Contents
Total income, found at line 15000 of a tax return, is generally the starting point for determining a payor’s Guideline income, which is used to set support obligations. Under certain conditions, courts have allowed a payor’s pension contributions to be deducted from Guideline income. However, the recent case of Florkowski v Florkowski, 2024 BCSC 1429, calls this practice into question based on a stricter application of the Federal Child Support Guidelines and a closer look at the Court of Appeal’s decision in Brown v. Brown, 2014 BCCA 152.
Lussier v. Ritchie, 2023 BCSC 1817
In Lussier v. Ritchie, the payor, Mr. Lussier, argued that his mandatory pension contributions were akin to an “asset” because they were locked in and inaccessible until retirement. On this basis, his pension contributions were not a form of “income” that was available to him to pay support and should not be counted towards his Guideline income (para. 43)
The Court in Lussier v Ritchie accepted Mr. Lussier’s position and concluded that even though Mr. Lussier’s pension contributions were part of his total income, they were (i) not under his control, (ii) required to be made under his collective agreement, and (iii) not part of his disposable income, and, as such, should not be included in his Guideline income for support purposes (para. 52). The Court cited two similar decisions in which locked-in pension contributions were not counted towards Guideline income: Redlick v. Redlick, 2013 BCSC 1155 at para. 60 and Yip v. Yip, 2016 BCSC 1595 at para. 37 (para. 45-46). The Court also drew support from the Court of Appeal in Brown v. Brown, where dividend payments that were required to be paid towards a share purchase scheme were not considered money available to a payor for support purposes because they were analogous to an employer’s contributions to a pension plan rather than to employee contributions (para. 48).
Loehr v. Loehr, 2023 BCSC 2229
In Loehr v Loehr, the payor attempted to make a similar argument to reduce his Guideline income based on mandatory RRSP contributions that were required by his union. However, the recipient, who was represented by this office, took the position that no adjustment to Guideline income should be made because the contributions were not “locked-in” and could be freely accessed by the payor at any time.
Upon a review of Lussier v. Ritchie and other authorities, the Court agreed that this was a critical distinction in establishing eligibility to deduct contributions (paras. 28-31). From a policy perspective, it would not make sense to give the payor the option to reduce his child support and spousal support payments based on his own decision not to access his ongoing RRSP contributions, regardless of whether his employer made those contributions mandatory (para. 27).
Florkowski v. Florkowski, 2024 BCSC 1429
In Florkowski v. Florkowski, Dr. Florkowskialso relied on Lussier v Ritchie to argue that his mandatory pension contributions should be deducted from his Guideline income. However, Justice D. MacDonald concluded that Lussier v Ritchie was wrongly decided because it did not correctly follow the Court of Appeal’s decision in Brown v. Brown and went beyond the limited specified deductions from income allowed by the Federal Child Support Guidelines (para. 29).
The Court focused on paragraph 41 of the binding Brown v Brown Court of Appeal decision, which stated that “employee contributions to pension plans are included in line 150 income, and are not deducted from it to determine Guideline income” (para. 22). In the Brown v Brown decision, the payor’s dividends could only be excluded from his Guideline income because they were viewed as most analogous to employer pension contributions, and Schedule III of the Federal Child Support Guidelines specifically calls for the adjustment of dividends to reflect the amount actually received. Mandatory pension deductions, by contrast, are not included in Schedule III (para. 24). The result was that Dr. Florkowski was not permitted to deduct his pension contributions from his Guideline income.
Conclusion
The Florkowski v. Florkowski case has upset a longstanding line of cases discussing pension deductions, which spanned from Redlick v. Redlick and Yip v. Yip to Lussier v. Ritchie and continued to be debated in the Loehr v. Loehr. Regardless of a payor’s discretionary access to pension or RRSP contributions, no adjustment to Guideline income should be made based on employee contributions to a mandatory retirement plan based on the reasoning in Florkowski v. Florkowski.
However, this does not make mandatory pension contributions irrelevant when setting support. The commentary within The Spousal Support Advisory Guidelines notes that “the size” of contributions “may sometimes be used to justify fixing an amount towards the lower end of the spousal support range” (section 8.3.1). Mandatory contributions might also be relevant in setting child support in any case in which the Federal Child Support Guidelines calls upon the Court to consider the condition, means, needs, and other circumstances of the children or spouse, such as when setting child support for children over the age of majority under s.3(2)(b) or in shared parenting arrangements under s.9(c).