A divided family is a difficult and emotional situation, especially for the children. It can be even more difficult when parents spend years in costly legal battles, or when children are plunged into poverty due to inadequate or unpaid child support. The Liberal government has introduced a comprehensive strategy to reform child support provisions, to ensure both parents are treated fairly and that children will be supported by both parents. The strategy, announced with the 1996 Budget, includes guidelines for setting child support, fairer taxation of payments, better enforcement and an increased income supplement for working families.

Child support payments set by courts vary widely, often failing to reflect the cost of raising children. The Liberal government will implement guidelines in the Divorce Act for setting fair and consistent child support amounts. The guidelines should reduce legal conflict and costs when setting support amounts, and will apply to court orders in a divorce proceeding made on or after May 1, 1997.

The guidelines set support according to the income of the support-paying parent and the number of children. The formula includes a basic income amount for the parent paying support, and adjusts for varying levels of federal and provincial taxes. Some special expenses may be added, where necessary for the child and within the means of the support-paying parent. These include child care, educational and medical expenses. Support amounts may be adjusted if they cause undue hardship to either parent or to the child.

The current system places the tax burden on the custodial parent, and provides a deduction for the payer. This system provides the greatest benefits when the support-paying parent earns much more than the custodial parent, and penalizes the growing number of custodial parents earning as much or more than the support-paying parent. Support amounts are supposed to be set high enough to cover taxes, but often are not. Children have been the losers.

Under the new child support strategy, custodial parents will no longer pay income tax on child support, and non-custodial parents will no longer claim a tax deduction. The new tax rules will apply to agreements or court orders made on or after May 1, 1997. They will not apply to existing orders unless the orders are changed by the courts or the parties agree. The federal government will provide $50 million to help the provinces handle requests to change existing support orders, and develop systems to do this efficiently and economically.

For children to benefit from fairer and consistent child support, it must be paid in full and on time. New enforcement measures are not aimed at the many parents who fulfill their responsibilities. They target those parents who can pay support but willfully and chronically fail to do so. Proposed measures include suspensions of federal licences and certificates (such as passports) and allowing provinces to trace persistent defaulters through Revenue Canada databanks.

The Liberal government will help all low-income working families by doubling the Working Income Supplement (WIS), a non-taxable supplement to employment earnings of families with net annual incomes under $25,900. The current maximum is $500 annually; it will rise to $750 in July 1997, and to $1,000 in July 1998. This change will put another $250 million a year into the hands of 700,000 Canadian families. Every dollar, and more, of increased revenue to the federal government due to changes in the taxation of support payments will be reinvested in families through the higher WIS.

Together, these measures form a comprehensive strategy for reforming child support in the best interests of Canadian children.