Paul Hogan, best known for his role as Michael “Crocodile” Dundee,
recently finalized his divorce with his former spouse Linda. According to TMZ,
Paul will be keeping the rights to the “Crocodile Dundee” character
and ownership of the home located in Venice, California.
Paul, however, had to open up his vault for his former spouse as he will
pay Linda a lump sum payment of $5.775 million. Yes, I attempted to make
the number look smaller than it is, in case you were wondering, that is
an astronomical $5,775,000.00. Linda also has the right to remain living
in the Venice house until 2018 or until she remarries. She also retains
the option to purchase the luxurious home from Paul for $1.59 million
– the original purchase price. In short, Linda will not only strike it
rich by landing a lump sum payment, but she will also be able to purchase
the Venice home for the original purchase price and then, if she desires
to, resell the home for a further profit.
Moving past the financials of their separation, the former couple will
share legal custody of their 15 year old son, Chance, with neither party
paying child support.
Lastly, neither Paul nor Linda will be required to pay
spousal support.
A few aspects of this divorce are important from an Ontarian family law
perspective:
The Lump Sum Payment
In Ontario, there are no tax consequences related to a lump sum equalization
payment. Thus, the lump sum payment of $5,775,000 will be received in
whole by Linda. One must be careful, however, not to confuse the above
with the tax consequences relating to spousal support payments. In Ontario,
spousal support is only taxable if it is periodic and pursuant to a written
agreement or court order.. A lump sum payment of spousal support is not
tax deductible for the payor and is not tax inclusive for the recipient.
Shared Custody Arrangement
The term “custody” is often misunderstood. In Ontario, it is
important to distinguish between
- sole custody;
- joint custody; and
- shared custody.
Sole custody means that one parent has the right to make all major decisions
about the children. Similarly, joint custody means that both parents will
make major decisions about the children. On the contrary, shared custody
means that a child will live with either parent at least 40% of the time.
Although a child’s living arrangement may, and often does, coincide
with a sole custody order, this does not necessarily have to be the case.
When a court orders that a parent have sole custody of a child, this only
means that the parent will have the responsibility/right to make all major
decisions with respect to that child.
According to TMZ, Paul and Linda will have shared custody of Chance. Chance
will spend at least 40% of the time with each parent. Furthermore, special
provisions will apply to calculation of child support in a shared custody
arrangement.
The Absence of Child Support
In Ontario, the framework for deciding the amount of child support to be
paid is governed by the Child Support Guidelines. Child support is determined
based on the annual income of the payor and the number of children who
are entitled to support. The court, however, also may exercise its discretion
to alter the amount to be paid in limited circumstances, such as undue
hardship or a shared custody arrangement.
In the case of Chance, a shared custody arrangement exists and the amount
of child support payable would be determined after a more complex consideration
of factors. Often the courts will calculate the amount of child support
to be paid by each parent as if they were the payor and then make an Order
for child support to offset the difference between such amounts. The reasoning
underlying this process is to ensure that the child has a similar standard
of living when residing with each parent. In this case, an Ontario may
determine that the special circumstances present permit no child support
to be payable by either party.