Many times, a party in a family law proceeding asks the court to find that the other party is making more income than stated in the financial disclosure. This often arises in situations where such as the support payor receives cash income, lives a lifestyle inconsistent with the reported income, or the support payor is intentionally underemployed. As the child support and spousal support amount largely depends on the payor’s income, determining the payor’s income can be a highly contentious issue in family law proceeding.
Section 19 of the Ontario Federal child Support Guidelines stipulates that the court may impute such amount of income to a parent or spouse as it considers appropriate in the circumstances. The circumstances include:
(a) Intentional under-employment
(b) Exemption from payment of income tax
(c) Payment of tax at an effective rate lower than that in Canada
(d) Diversion of income
(e) The parent’s failure to reasonably utilize property to generate income
(f) The parent’s failure to make proper financial disclosure
(g) A situation in which a significant portion of income is paid from dividends or capital gains
(h) The parent’s unreasonable deduction of expenses from income, reasonableness not being solely governed by the standard applied in the Income Tax Act
(i) The parent is a beneficiary of a trust and is or will receive income or other benefits from the trust
The situation where a party only works a few days a week, or the party is working at a minimum wage job while having received high education can raise serious red flags. If income is imputed, the court may adjust the amount by increasing it to take into account income tax since the Child Support Table is based on gross taxable income.
Each parent has an obligation to make financial disclosure to permit the determination of income. Usually the disclosure includes income tax returns, notices of assessment and re-assessment, and statements of earnings for employees. Where the payor parent is self-employed, it also includes financial statements of the business or practice, a breakdown of salaries, wages and management fees to non-arm’s length parties, and financial statements of a corporation controlled by a parent and of any trust of which the parent is a beneficiary. The parent asking a court to find a different income bears the onus of proof.
If the payor parent refuses to make voluntary disclosure, the recipient parent must commence a court application to obtain orders to compel financial disclosure. The recipient parent can also ask the judge presiding the case conference, settlement conference or trial management conference to make disclosure orders.
This article is only intended for education purposes and not a substitute of legal advice. Please contact a family lawyer for tailored opinion on your case.
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