Determination of income; disclosure of income

• Author: Julien D. Payne/Marilyn A. Payne
• Pages: 117-223

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   

DETERMINATIONOFINCOME;

1

DISCLOSURE OF INCOME

A. WHOSE INCOME?

e obligor’s income is the fou ndation on which the provincia la nd territorial tables f‌i x the

monthlyamountofchildsupport.eincomeoftheotherspousemayalsoberelevantin

casesinvolvingachildovertheageofmajorityorobligorswhoearnmorethan,per

year. In addition, the income of the other spouse and possibly that of his or her household

members will be relevantto claims for specialor extraordinary expensesunder section  of

the Federal Child Support Guidelines,tosituationsinvolvingsplitorsharedcustodyunder

sectionsandoftheGuidelinesandtoclaimsofunduehardshipundersectionofthe

Guidelines.

B. WRITTEN AGREEMENT AS TO ANNUAL INCOME

Where both spou ses agree in writing on t he annual income of a spouse, t he court may con-

sider that amount to be the spouse’s income for t he purpose of the Federal Child Suppor t

Guidelines, if the cou rt thin ks that the amou nt is reasonable havi ng regard to the income

information prov ided under section  of the Guidelines .

Where a father derives h is income from h is private corporat ion and the parents h ave

negotiated a separat ion agreement with compet ent independent legal advice wh ich pro-

 See V.Jennifer MacKinnon, “DeterminingIncome underthe Child Support Guide lines”(Paperpresented

toLawSocietyofUpperCanada,ChildSupportGuidelines: Recent and Import ant Caselaw,December

),on line: www.fami lylawcentre.com/cases-n-comments/articles/-det-income-under-CSG.

html;LawrenceS.Pascoe,“DeterminingtheIncomeoftheSelf-EmployedundertheChild Support

Guidelines,” September,, online:w ww.familylawcentre.com/cases-n-comments/articles/-

determining-the-income.html; NeilMaisel, “Determinationof Annual Incomeunder the Federal C hild

Support Guidelines:LookingBeyondPageoftheIncomeTaxReturn”(August)Money&Fam.L.

–; Michael S. Penner, Steve A. Ranot, & Harold Nima n, “Income Determination for Federa l Child

Support Guidelines”(June)Money&Fam.L.–.

 SOR/-,asamended,s.();SOR/-,asamended,s.();Myers v. Myers , [] N.S.J. No.  (S.C.); P.M.C. v. R.L.C.,[]

N.S.J. No.  (Fam. Ct.) (application under Family Maintenance Act and provincialguidelines);V. C. v .

J.D.B.,NSSC.

 CHILD SUPPORT GU IDELINES IN CANADA, 

vides a mechanism for ongoing f‌inancial disclosure and a determination of the father’s an-

nual income hav ing regard to the f act that the fat her’s tax year end does not coi ncide with

that of his corp oration, the court may uphold the agre ement pursuant to section () of the

Federal C hild Support Gu idelinesChild Support Guidelines even though thedif‌ference in the f‌iscalyear of the parent

and his corporation results in a one-year delay in the parent’s reporting of the receipt of

dividendsfromthecorporation.



ecourthasadutytoensurethatachildsupportorderref‌lectstheparent’strue

income. Spousal ack nowledgment of a specif‌ie d income in minutes of se ttlement does not

estop a party from subsequently asserting hidden income and may warrant an order for

further f‌inancialdisclosure, buta court should not sanctiona “f‌ishing expedition” and may

imposethepenaltyofcostsiftheallegationofahigherincomeisnotsubstantiated.



C. DETERMI NATION OF ANN UAL INCOME; USE OF CR A T

GENERAL FORM; STATUTORY ADJUSTMENTS

) General Obser vations

Subjecttosection()oftheFederal Child Support Guide lines which deals with written

agreements,sect ions  to  of the Guideli nes def‌ine how income is to be det ermined by

the court in order t o apply the Guidelines .For the purpose of those sections and also sec-

tion ,words and expressions used therein, which are not otherwise def‌ined in section 

oftheGuidelines,havethemeaningsassignedtothemundertheIncome Tax Act.

An exami nation of sect ions  to  and Schedule I II of the Federal Child Support

Guidelines makes it abundantly clear that the calculation ofincome for the purpose of ap-

plying the Gu idelines can be ext remely complex. e degree of complexit y will var y accord-

ing to the source of income and the particular circumstances of the case. Relevant factors

includewhetherthespouseorformerspouseisself-employedorearnscommissionincome,

investment income, or d ividend income and whether he or she has received capit al gain s.

e dif‌f‌iculties will be compounded when the spouse or former spouse has voluntarily re-

linquishe d employment or is underemployed, or faile d to realize the income ea rning poten-

tial of propert y. e time has come when law yers and judges must use c omputer softwa re

programs i n order to determine the appropriate a mount of child support. Gone a re the days

of free wheeling negotiations and submissions premised on supposed going rates. Now, the

arithmet ical calc ulations must b e precisely applied a nd access to a reliable comput er data

base or an accountant is essential if errors are to be avoided in the more complexca se.

Miner v. Miner,[] O.J.No.(C.A.).SeealsoCrabtree v. Crabtree,[] O.J.No.(S.C.J.).

Guarino v. Guarino,[] O.J.No.(S.C.J.).

 SeeSectionB,aboveinthischapter.SeeSectionB,aboveinthischapter.

Snow v. Wilcox, [] N.S.J. No.  (C.A.).

 SectionoftheSectionoftheFed eral Child Suppor t Guidelines def‌ines the f‌inancial d isclosure obligationsof a spouse

whoisapplyingforachildsupportorderandwhoseincomeinformationisnecessarytodeterminethe

amount of the order.

Federal Child Suppor t Guidelines,SOR/-,s.();Bhandari v. Bhandari,[] O.J. No.  (S.C.J.).

Reid v. Reid, [] B.C.J. No.  (S.C .);Meuser v. Meuser, [] B.C.J. No.  (C.A.).

Determinat ion of Income; Disclosure of In come 

Fluctuation s in income durin g the year are only releva nt to the determi nation of the

obligor’s annual income; they do not permit parties or the courts to reassess the monthly

amountof child supporton a regular ongoing basis during the year.

Section  of the Federal Child Support Guidelines call s for a f‌lexible approach that i s

based on fairness to both parties. Accounting procedures applicable for the purpose of the

Income Tax Act are not necessari ly the same for the Guidelines.

Where the obligor’s income t ax liabilities play a sig nif‌icant role in the determ ination of

hisorherincome,thecourtmaygrantanorderforchildsupportontheassumptionthat

theobligor’sclaimtoahighdeductionfortaxesislegitimate,whilereservingjurisdiction

toadjusttheorderinlightofanynewinformationthatmaybereceived.



A determination ofincome should bebased on demonstrated earning capacity and not

on self-servi ng speculation. e court mus t take account of income recei ved for overtime

and standby hours.

e fact that the obligor’s income is derived from intensive and physically demanding

labour does not wa rrant any adjust ment to that income under the Gu idelines. Alt hough

such income may not be sust ainable over the long ter m, children are entitled to a level of

supportthatref‌lectstheobligor’sactualincome,regardlessoftheeaseordif‌f‌icultyinearn-

ing it.

Remuneration from public s ervice or from secondar y employment is not excluded from

an obligor’s income in assessing the amount of child support that is payable.

Money paid to a spouse for the foster care of child ren may be segregated into expenses

and a fee for service. A distinction should be drawn between costsdirectly incurred by the

spouse for the children and costs “allocated” to the children by the administrators of the

foster care progr am. Notional rent al income should be d isallowed where t here is no evi-

dence that rental cost s would be lower,i f foster children were not present in t he home. After

deducting the appropriate expenses a nd determin ing the fee for serv ice component of the

money received, the consequential income must be grossed up for income tax in order to

determine the spouse’s total income for the purpose of assessing the amount of child sup-

port to be ordered.

) Basic Steps for Determining Income

In Olchowecki v. Olchowecki, WilkinsonJ.,asshethenwas,states:

e basic approach in the deter mination of income is therefore:

 Lachapelle v. Vezina, [] O.J. No. (S.C.J.).

 Grif‌f‌in v. Grif‌f‌in,[]B.C.J.No.(S.C.).

 Kaderly v. Kaderly, [] P.E.I.J. No.  (T.D.).

 Asadoorian v. Asadoorian, [] O.J.No.  (Gen. Div.).

 Baddeley v. Baddeley,[]B.C.J.No.(S.C.)(overtimeincomeincludedinlightofhistoricalpattern

butamountadjustedtoref‌lectaccesstochildeveryotherweekend).

 Yagelniski v. Yagelniski,[]S.J.No.(Q.B.).

 Youn g v. Young, [] B.C. J. No.  (S.C.).

 Kovich v.Kreut,[]B.C.J.No.(S.C.).

  SKQB , [] S.J. No. at pa ra.. See also Gursky v. Gursky,[] S.J. No.  (Q.B.);

Kardash v. Kardash,SKQB,[]S.J.No..