This post is presented by J.Donovan Law Group

Many people going through separation and divorce do not know, or have a clear understanding of, what a section 7 expense is.  Like many issues to sort in a separation, there are many misunderstandings around this complex issue.

Section 7 expenses are listed in section 7 of the Federal Child Support Guidelines; hence, the name “section 7 expenses”.  They include tuition, orthodontics, health and medical insurance premiums that exceed $100.00 per year, extraordinary extracurricular activities, primary and secondary school fees, child care that is incurred for the purposes of employment.The most common one is childcare expenses and the most often misunderstood is extraordinary extracurricular activities.

Section 7 expenses differ from child support because they are expenses that are due on top of child support, they are not to be included in child support unless the parties agree.  Also, unlike child support in many cases, both parents have an obligation to contribute to section 7 expenses to the extent of their ability to do so.  There is a formula that is applied to determine what mom pays and what dad pays.

Child support is calculated pursuant to the New Brunswick tables while section 7 expenses are calculated by a proportionate sharing of the combined gross family income.  So, if dad earns $50,000.00 per year and mom earns $25,000.00 per year, their combined gross family income is $75,000.00.  $50,000.00 divided into $75,000.00 equals a proportionate share of 67%.  Mom’s proportionate share is calculated by $25,000.00 divided into $75,000.00 for a proportionate of share 33%. Take for example a scenario where a child’s braces may cost $6,000.00.  A rough calculation would be dad would contribute $4,020.00 toward the $6,000.00 while mom would contribute $1,980.00 Assuming they had no dental coverage.

The above is a rough calculation and depends on the ability to pay, the reasonableness of expense, and generally, the condition, means, needs, other circumstances of the parents, and children.

Section 7 of the guideline says that the duty of the parents is to contribute to the “net” expense.  Determining the “net” expense can be difficult and everyone is encouraged to seek legal advice.  We have software called DivorceMate that helps us determine the net amount and takes into account Income Tax considerations based on each parent’s tax bracket.  It is also important to seek accounting advice on this matter.

In my practice, extraordinary extracurricular activities is often the most misunderstood and the one that tends to result in parents needing to go to court for a Judge to determine.  Not all activities are valid extraordinary extracurricular activities.  For example, common activities that I’m asked to deal with include swimming, Beavers, summer camps, hockey, dance, and gymnastics.  We have to look at what activities a child took part in while his or her parents were together.  Was the child excelling at the activity?  Is the child destined for greatness in the activity?  Was the activity at a competitive level?

Again, it boils down to the parents’ ability to pay and what is reasonable in all the circumstances.  Generally, if a child was not in activities during the time that his or her parents were together and then one of the parents wants to put that child into competitive gymnastics and travel around the country performing and entering competitions, a court is not going to find that a valid extraordinary extracurricular activity.

If a child played competitive hockey while his parents were together and then after separation, one parent no longer wants to pay for that child to continue the sport, a court is likely going to conclude that the child should be able to continue playing in competitive hockey; and if his parents can contribute financially, it is likely the Judge is going to order both parents to continue contributing.  One of the focuses at that time would be on attempting to maintain the least amount of disruption in the child’s life following the separation of his parents.

Section 7 says the proportionate share needs to be proportionate to the parties’ respective incomes.  Not withstanding that, however, parents are permitted to agree to a different sharing.  The most common is parents agreeing to split all agreed-upon section 7 expenses equally [50/50].

Just like child support, section 7 expense provisions in Separation Agreements or Court Orders should be looked at on an annual basis to ensure that they are current and remain accurate.  With the change in income, proportionate shares of section 7 expenses will change.

Section 7 expenses can be a complicated area of law and you’re encouraged to seek legal advice to either ensure that you are not over or under paying towards your share; or, if you’re presented with an expense and you do not wish to pay, seeking advice on whether or not you are able to decline or should decline to contribute.  At the very least, being able to accurately determine your proportionate share of the “net” cost should be very important to you.

All for now

To catch up on more advice from Jennifer, CLICK HERE!

WEBSITE | EMAIL | PHONE: 506.406.8080 | FACEBOOK

You might also like…