Determination of income; disclosure of income
| Author | Julien D. Payne - Marilyn A. Payne |
| Pages | 117-248 |
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 .¹
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 the court think s that the amount is reasonable having regard to the income
information prov ided under section of the G uidelines.²
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 determination of the father’s an-
nual income having regard to the fact that the father’s tax year end does not coincide with
that of his corporation, the court may uphold the agreement pursuant to sect ion () of the
Federal Child Support Guidelines even though the d ifference in the fiscal year of the parent
Auer v. Auer, ABQB .
SOR/-, as amended, s. (); Hayden v. Hayden , ABQB ; P.H.H. v. N.R.Y., BCSC ;
Woodford v. Horne, NSSC .
CHILD SUPPORT GUIDELINES IN CANADA, 2017
and his corporation results in a one-year delay in the parent’s reporting of the receipt of
dividends f rom the corporation.³
e court has a duty to ensure that a child support order reflects the parent’s true in-
come. Spousal acknowledegment of a specified income in minutes of sett lement does not
estop a party from subsequently a sserting hidden income and may warrant 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.⁴
C. DETEMINATION OF ANNUAL INCOME; USE OF CA T1 GENEAL
FOM; STATUTOY ADJUSTMENTS
) Gener Observtions
Subject to section () of the Federal Child Support Guidelines which deals with writ ten
agreements,⁵ sections to of the Guidelines define how income is to be determined by
the court in order to apply the Guidelines.⁶ For the purpose of those sections and also sec-
tion ,⁷ words and expressions used therein, which are not otherwise defined in section
of the Guidelines, have the meanings a ssigned to them under the Income Tax Act.⁸
An examination of sect ions to and Schedule III of the Federal Child Support
Guidelines makes it abundantly clear that the calculation of income for the purpose of ap-
plying the Guidelines can b e extremely complex. e degree of complexity w ill vary accord-
ing to the source of income and the particular circumstances of the case. Relevant factors
include whether the spouse or former spouse is self-employed or earns commission income,
investment income, or dividend income and whether he or she has received capital gains.
e difficulties wi ll be compounded when the spouse or former spouse has voluntarily re-
linquished employment or is underemployed, or failed to realize t he income earni ng poten-
tial of property. e time has come when lawyers and judges must use computer software
programs in order to determine the appropriate amount of child support. Gone are t he days
of freewheeling negotiations and submissions premis ed on supposed going rates. Now, the
arithmetical calculations must be precisely applied and access to a reliable computer data
base or an accountant is essentia l if errors are to be avoided in the more complex case.⁹
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.¹⁰
Mi ner v. Miner, [] O.J. No. (C.A.).
Guarino v. Guarino, [] O.J. No. (S.C.J.).
See Section B, ab ove in this chapter.
Snow v. Wilcox, [] N.S.J. No. (C.A .).
Se ction of the Federal Child Suppor t Guidelines defines the fi nancial disclosu re obligations of a spouse
who is applying for a chi ld support order and whose income in formation is necessary t o determine the
amount of the order.
Fede ral Child Support Guidelines, S OR/-, s. (); Bhandari v. Bhandari, [] O.J. No. (S.C.J.).
Meuser v. Meuser, [] B.C.J. No. (C.A.).
Lachapelle v. Vezina, [] O.J. No. (S.C.J.).
Chapter 4: 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.¹¹
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 legitimate, while reserving jurisdiction
to adjust the order in light of any new information that may be received.¹²
A determination of income should be based on demonstrated earn ing capacity and not
on self-serving speculation.¹³ e fact that the obligor’s income is derived from intensive
and physically demanding labour 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.¹⁴
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.¹⁵
) Bsic Steps for Determinin Income
In Olchowec ki v. Olchowecki,¹⁶ Wilk inson J., of the Saskatchewan Court of Queen’s Bench,
stated:
e basic approach in the determin ation of income is therefore:
() to employ s. to determine annual income for the year i n which the application is
heard, using the most cu rrent source(s) of income information available;
() the combi ned effect of ss. and dictates that i f there is a material di fference be-
tween the histor ical pattern of income and t he determination under s. , the lat ter
should be questioned for fair ness;
() mere fact of d ifference does not make the s. determi nation unfai r. e degree of
permanence associate d with the difference, the quality of t he change in i ncome from
historical level s, and the reasons giving ri se to the change must all be considered: See:
Fuzi v. Fuzi, [] B.C.J. No. (B.C.S.C.);
() there is an additional test of fairness appl ied to a s. determination of income if s.
is implicated. If t he income earner is a shareholder, director or officer of a corporation,
the determi nation of income may include:
(a) all or part of the pre-tax i ncome of the corporation or any related corporation for
the most recent taxation yea r; or,
(b) an a mount not exceeding that pre-ta x income which is commens urate with the
services prov ided to the corporation.
Added to the pre-tax income are any a mounts paid to or on behalf of persons who are not
at “arm’s length” unless the pay ments are proved to be reasonable;
Griffin v. Griffin, [] B.C.J. No. (S.C.).
Kaderly v. Kad erly, [] P.E.I.J. No. (T.D.).
Asadoorian v. Asadoorian, [] O.J. No. (Gen. Div.).
Yage lnisk i v. Yag elni ski, [] S.J. No. (Q.B.).
Youn g v. Yo ung , [] B.C.J. No. (S.C.).
SKQB at para. .
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