Regulations Amending the Family Support Orders and Agreements Garnishment Regulations: SOR/2019-65
Canada Gazette, Part II, Volume 153, Number 6
SOR/2019-65 March 4, 2019
FAMILY ORDERS AND AGREEMENTS ENFORCEMENT ASSISTANCE ACT
P.C. 2019-136 February 28, 2019
Her Excellency the Governor General in Council, on the recommendation of the Minister of Justice, pursuant to section 61footnote a of the Family Orders and Agreements Enforcement Assistance Act footnote b, makes the annexed Regulations Amending the Family Support Orders and Agreements Garnishment Regulations.
Regulations Amending the Family Support Orders and Agreements Garnishment Regulations
1 Sections 10 to 12 of the Family Support Orders and Agreements Garnishment Regulations footnote 1 are replaced by the following:
10 The fee in respect of the processing of a garnishee summons, served on the Minister, that is to be paid by the judgment debtor named in the garnishee summons is $38 for each year during which Her Majesty is bound by the garnishee summons.
Recovery of Fees
11 A fee in respect of the processing of a garnishee summons may be recovered only in the year in which the fee becomes payable.
Remission of Fees
12 If a fee in respect of the processing of a garnishee summons, or any part of that fee, remains payable by the judgment debtor at the end of a year during which the garnishee summons is binding on Her Majesty, or if Her Majesty ceases to be bound by a garnishee summons at any time during a year, that fee or that part of the fee is remitted.
2 Schedule 2 to the Regulations is replaced by the Schedule 2 set out in the schedule to these Regulations.
3 Sections 10 to 12, as they read immediately before the day on which these Regulations come into force, continue to apply in respect of any garnishee summons that was served on Her Majesty before that day until the next anniversary of the day on which the garnishee summons became binding on Her Majesty.
Coming into Force
4 These Regulations come into force on April 1, 2019.
Notice to Debtor
Department of Justice Reference Number:
Take notice that on the Government of Canada was served with a garnishee summons. This summons was served by the following court or a provincial or territorial entity:
Effective on , the summons indicates that you owe the following amounts for family support:
- Arrears owing $ as of the summons issue date of .
- Periodic payments of $ as of .
Any moneys that are payable to you by the Government of Canada under Acts, funds or programs designated in the regulations made under the Family Orders and Agreements Enforcement Assistance Act may be garnisheed to pay the judgment creditor named in the summons.
If you have questions about the amount of money due, or if you wish to dispute the garnishee summons, please contact the court or the provincial or territorial entity that issued the garnishee summons.
After sufficient moneys are garnisheed to pay the judgment creditor, a fee of up to $38 for each year during which Her Majesty is bound by the garnishee summons will be deducted from the moneys payable to you.
The garnishment of funds and the collection of the fee are authorized by the Family Orders and Agreements Enforcement Assistance Act.
Family Orders and Agreements Enforcement Assistance Unit
Department of Justice
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
The Family Support Orders and Agreements Garnishment Regulations (the Regulations) designate the fees that can be charged to process a garnishee summons under Part II of the Family Orders and Agreements Enforcement Assistance Act (FOAEAA) and the manner in which they can be collected. Over the years, the Department has received considerable feedback from stakeholders about the current fee collection model. A review of the model has revealed an uneven collection of fees amongst support payors depending on the type of funds being garnished. This is partly due to the application of provincial and territorial legislation which often limits the amount that may be garnished from income (including sources of income replacement such as Employment Insurance payments) to a maximum of 50% while other types of garnishable moneys (e.g. Income Tax Refunds) may be 100% garnishable. Where only 50% of income is garnished, fees can be recovered from the remaining 50% that is payable to the payor. In contrast, where 100% of an income tax refund is garnished, there are no garnishable moneys from which to recover fees. Further, in some cases, no fees are collected if, during the five-year period, there are no garnishable moneys payable to the payor. As a result, under the current fee collection model, more fees are collected from support payors receiving income.
In addition, fees are cumulative over the five-year binding period and can total up to $190. This can cause financial hardship for support payors in the fifth year where the full $190 can all be deducted at once from their remaining income. The accumulation of fees over a five-year period is also problematic when unpaid fees are remitted at the end of that period. When the Department reports on its doubtful accounts at the end of a fiscal year, the volume of uncollected FOAEAA fees is inflated because the reporting that should be based on a period of 365 days instead includes, in the FOAEAA case, unpaid fees from the 5 previous fiscal years.
Amendments to the current fee collection model are required to reduce the financial hardship faced by support payors receiving income and add transparency to the Department’s accounts receivable related to the government’s cost recovery under FOAEAA.
Enforcement of family support obligations is primarily a provincial and territorial responsibility. The federal government assists the provinces and territories in their enforcement activities through federal legislation such as the FOAEAA. Under Part II of the FOAEAA, certain federal payments (e.g. Employment Insurance, Old Age Security, Canada Pension Plan and federal Income Tax Refunds) designated under the Regulations may be garnished to pay family support obligations. To effect garnishment, an applicant must serve on the Minister of Justice an application and a garnishee summons.
Currently, a fee is charged to support payors for every garnishee summons issued against them that is processed under Part II of the FOAEAA. This fee was established in the 1980s to recover the cost associated with the administration and the operation of the interception program within the Department of Justice (the Department) and other departments (i.e. Employment and Social Development Canada, Canada Revenue Agency). Currently, the Regulations set out the rate of $190 collected in yearly instalments of $38 for the five-year period during which Her Majesty is bound by the garnishee summons. Any portion of the fee that is not recovered in the year it became payable is carried forward and can be recovered in any subsequent year during the five-year binding period. The fee is recoverable against garnishable moneys payable to the support payor after garnishment has taken place. Any portion of the fees that is not recovered during the five-year binding period is remitted (i.e. no longer owed by the support payor) either at the end of the five-year period or sooner if a garnishment application is terminated.
The Regulations seek to provide a better balance between the objective of government cost recovery and that of reducing the potential financial hardship faced by certain support payors. The amendments improve the effectiveness of the FOAEAA system by making the calculation of the fees owed at the end of a specific year less complicated and add transparency to the Department’s accounts receivable related to the government’s cost recovery under FOAEAA.
The amendment to section 10 removes the cumulative five-year period to collect fees. Instead, an annual $38 fee will be charged to support payors for every garnishee summons issued against them in order to offset the costs of processing the garnishee summonses under Part II of the FOAEAA. The fee becomes payable on the day that Her Majesty is bound by the garnishee summons and under section 11, recoverable only during the year following that day or until the garnishee summons ceased to bind Her Majesty, whichever comes first.
The amendment to section 12 specifies that any portion of the fee unpaid at the end of the year after it became payable or at the time Her Majesty ceased to be bound by the garnishee summons will be remitted.
Finally, the old rules continue to apply to a garnishee summons being processed under Part II of the FOAEAA before the coming into force of the amendments until its next yearly anniversary from the date it became binding on Her Majesty. The new rules apply to these garnishee summons after that date. The new rules immediately apply to all garnishee summonses processed after the coming into force of the Regulations.
The fee collection model will also be monitored closely for a period of three to five years as recommended in the Treasury Board of Canada Guide to Establishing the Level of a Cost-Based User Fee or Regulatory Charge to ensure that it reflects the costs associated with the program delivery.
The “One-for-One” Rule does not apply to these amendments, as they do not result in any administrative costs to businesses.
Small business lens
The small business lens does not apply to these amendments, as there are no costs to small businesses.
Consultations were held with federal partners that can be affected by these amendments as well as our provincial and territorial counterparts in the spring of 2017. They were all supportive of the amendments. We do not anticipate any concerns as these amendments do not affect creditors and they ensure that support payors are treated more fairly.
These amendments were published in the Canada Gazette, Part I, on October 27, 2018, followed by a 30-day period where creditors and support payors had an opportunity to be heard. No submissions or comments were received.
In 2017, men were identified as support payors in 96.5% of active garnishment applications. The amendments may therefore primarily affect low-income men who are support payors and in receipt of income such as Employment Insurance, Old Age Security and Canada Pension Plan benefits.
As presented in the Department of Justice financial statements, the allowance for doubtful accounts for the fees owed under FOAEAA amounted to $12.438 million in 2017–2018 and $11.773 million in 2016–2017. It is expected that the accounting impacts of the proposed changes will significantly reduce the annual doubtful accounts as they will eliminate all uncollected fees that are overdue by more than a year and have cumulated over five years. Also, an annual loss of revenue is anticipated of approximately $500,000 to $750,000 that is usually collected per year from old accounts (older than a year).
These amendments provide a better balance between the objective of government cost recovery and that of reducing the potential financial hardship faced by certain support payors. They improve the administration of the FOAEAA Part II garnishment scheme while reflecting current practices. They also add transparency to the Department’s accounts receivable and ensure that Canadians have a better understanding of the financial reality related to the cost recovery under the FOAEAA interception program, as published annually in the public accounts and financial statements.
Implementation, enforcement and service standards
These Regulations will come into force on April 1, 2019.
Implementation of these amendments will be carried out by the Family Law Assistance Services, responsible for the administration of the FOAEAA and the Finance and Planning Branch of the Department as well as other federal departments that are responsible for the garnishable moneys designated in the Regulations. Compliance with FOAEAA, Part II, and its Regulations continues to be assured by those parties. Any costs associated with these amendments will be absorbed through existing resources.
Department of Justice