(Note: The law regarding property division relates only to the breakdown of a legal marriage—it does not apply to common-law relationships. For that reason, it’s important for common-law spouses to consider the benefits of having a cohabitation agreement.)

When it comes to property division (also called “asset division”), everything revolves around a concept called “equalization.”

The simplest definition of equalization is “the process for achieving an equal division of the wealth that is owned and acquired by spouses during a marriage.” Therefore, an “equalization payment” is a sum of money paid by one partner to the other to ensure the property or assets are divided equality.

Equalization and equalization payments are governed by Ontario’s Family Law Act, which describes what’s involved and how it is calculated.

In general terms, here is how the equalization payment is determined:

  1. Each spouse calculates the net value of his or her property on the date of separation.

  2. Each spouse then subtracts the net value of his or her property on the date of the marriage, other than the matrimonial home.

The resulting numeric value for each partner becomes his or her “net family property.”

  1. The spouse with the higher net family property value pays the other spouse one-half of the difference between the two. This becomes the equalization payment.

Important to know

  • “Property” can include a broad array of items, such as RRSPs, pensions and corporate shares owned by a spouse.

  • Each spouse is entitled to deduct certain amounts (such as debts, taxes owed and other liabilities) from the value of his or her property at separation.

  • Other items such as gifts and inheritances may also be excluded when calculating property value as of the date of marriage.

  • Certain items received during the marriage are also excluded, including gifts from third parties, inheritances or proceeds from a personal injury claim (provided the money or gift was kept separate and was still intact at the date of separation).


It is also important to understand that the “matrimonial home” is specifically excluded when net family property is calculated. Instead, it is dealt with under separate provisions of the Family Law Act.

Dividing property can be complex.

For a free consultation with an AGB family lawyer to talk about protecting your rights and understanding your obligations in the event of marriage breakdown, call us today in Ottawa at 613-232-8832 or email us at info@agblawyers.com. Want to talk right now? A representative is available for a live chat.

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