Determination of income; disclosure of income
| Author | Julien D. Payne; Marilyn A. Payne |
| Pages | 113-252 |
CHAPTER 4
DETERMINATION OF INCOME;
DISCLOSURE OF INCOME
A. WHOSE INCOME?
e obligor’s income is the foundation on which the provincial and territorial tables fix t he
monthly amount of child support. e income of the other spouse may also be relevant in
cases involving a chi ld over the age of majority or obligors who earn more tha n , per
year. In addition, the income of the other spouse and possibly that of his or her household
members will be relevant to clai ms for special or extraordinary expens es under section of
the Federal Child Support Guidelines, to situat ions involving split or shared c ustody under
sections and of the Guidelines and to claims of undue hardship under sect ion of the
Guidelines .
B. WITTEN AGEEMENT AS TO ANNUAL INCOME
Where both spouses agree in wr iting on the annual income of a spouse, the court may con-
sider that amount to be the spouse’s income for the purpose of the Federal Child Support
Guidelines, if t he court think s that the amount is reasonable having regard to t he income
information prov ided under section of the G uidelines.
Where a father derives his income from his private corporation and the parents have
negotiated a separation agreement with competent independent legal advice which pro-
vides a mechanism for ongoing financia l disclosure and a determi nation of the father’s
annual income having regard to the fac t that the father’s tax year end does not coincide
with that of his corporation, the cour t may uphold the agreement pursuant to section ()
of the Federal Child Support Guidelines even though the d ifference in the fiscal year of the
Auer v Auer, ABQB .
SOR/-, as amended, s (); Hayden v Hayde n, ABQB ; PHH v NRY, BCSC ; Wood -
ford v Horne, NSSC .
CHILD SUPPORT GUIDELINES IN CANADA, 2020
parent and his corporation results in a one-year delay in the parent’s reporting of the receipt
of dividends f rom the corporation.
e court has a duty to ensure th at a child support order reflects the parent’s true
income. Spousal acknowledgement of a specified income in minutes of settlement does not
estop a party from subsequently a sserting hidden income and may warr ant an order for
further fina ncial disclosure, but a court should not sanction a “fishing exped ition” and may
impose the penalty of costs i f the allegation of a higher income is not substantiated.
C. DETEMINATION OF ANNUAL INCOME; USE OF CA T1 GENEAL
FOM; STATUTOY ADJUSTMENTS
) Gener Obser vtions
Subject to section () of the Federal Child Support Guidelines which deals with writ ten
agreements, sections to of the Guidelines define how income is to be determined by
the court in order to apply the Guidelines. For the purpose of those sect ions and also sec-
tion , words and expressions used therein, which are not otherwise defi ned in section
of the Guidelines, have the meanings a ssigned to them under the Income Tax Act.
An examination of sect ions to and Schedule III of the Federal Child Support
Guidelines makes it abundantly clear that the calcu lation of income for the purpose of
applying the Guidelines can be ex tremely complex. e degree of complexity will var y
according to the source of income and the particu lar circumst ances of the case. Relevant
factors include whether the spouse or former spouse is self-employed or earns commis-
sion income, investment income, or dividend income and whether he or she has received
capital gains. e di fficulties wil l be compounded when the spouse or former spouse has
voluntarily relinquished employment or is underemployed, or failed to reali ze the income
earning potential of propert y. e time has come when lawyers and judges must use com-
puter software program s in order to determine the appropriate amount of child support.
Gone are the days of freewheeling negotiations and submissions premi sed on supposed
going rates. Now, the arithmetical calcu lations must be precisely applied and access to a
reliable computer database or an accountant is essential if errors are to be avoided in the
more complex case.
Fluctuations in income during the year a re only relevant to the determination of the
obligor’s annual income; they do not permit parties or the court s to reassess the monthly
amount of child support on a regular ongoing ba sis during the year.
Miner v Miner, [] OJ No (CA).
Guarino v Guarino, [] OJ No (SCJ).
See Section B , above in this chapter.
Sno w v Wilcox, [] NSJ No (CA).
Section of the Fede ral Child Support Guidelines de fines the financial d isclosure obligations of a spou se
who is applying for a chi ld support order and whose income in formation is necessary t o determine the
amount of the order.
Fe deral Child Support Guideline s, SOR/-, s (); Bhandari v Bhandar i, [] OJ No (SCJ).
Meuser v Meuser, [] BCJ No (CA).
Lachapelle v Vezina, [] OJ No (SCJ).
Determination of Income; Disclosure of I ncome
Section of the Federal Child Support Guidelines cal ls for a flexible approach that is
based on fairness to both pa rties. Accounting procedures applicable for the purpose of the
Income Tax Act are not necessarily the same for the Guidelines.
Where the obligor’s income tax liabilities play a signi ficant role in the determination of
his or her income, the court may grant an order for child support on the assumption that
the obligor’s claim to a high deduction for taxes is legiti mate, while reservi ng jurisdiction
to adjust the order in light of any new information that may be received.
A determination of income should be based on demonstrated earn ing capacity and not
on self-serving speculation. e fact that the obligor’s income is derived from intensive
and physically demanding labou r does not warrant any adjustment to that income under
the Guidelines. Although such income may not be susta inable over the long term, child ren
are entitled to a level of support that reflects the obligor’s actual income, regardless of the
ease or difficult y in earning it.
Remuneration from public service or from secondary employment is not excluded from
an obligor’s income in assessing the amount of child support th at is payable.
) Bsic Steps for Determinin Income
In Chan-Henry v Liu, Kent J of the British Columbia Supreme Court set out the following
three-step process for determining a pa rent’s income for child support purposes (para
references “line ”; please see Vincent v Vincent):
[] First, reference is made to the spou se’s “total income” as set out in line of a standard
form Income Tax Return (“ITR”). at ITR require s the spouse to itemize i ncome from a
wide variety of s ources including:
• employment income;
• pensions;
• disabilit y benefits;
• (un)employment insurance benefits;
• dividends f rom corporations;
• interest and other invest ment income;
• rental income;
• taxable capita l gains;
• income received from RRSPs;
• social assist ance payments; and
• any “other income.”
[] e second step i s to adjust the l ine total income of a spouse i n accordance
with Schedule III of t he Guidelines. Among other thin gs, adjustments are made respectin g:
• certain employment ex penses;
Griffin v Griffin, [] BCJ No (SC).
Kaderly v Ka derly, [] PEIJ No (TD).
Asadoorian v Asadoorian, [] OJ No (Gen Div).
Yage lnisk i v Yag elnis ki, [] SJ No (QB).
Youn g v You ng, [] BCJ No (SC).
BCS C at paras –; AJ v MRJ, BCSC .
Vincent v Vincent, BCC A at para ; REQ v GJK, BCSC ; Reid v Faubert, NSCA .
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