What is imputation of income as it relates to child support and spousal support obligations?
Imputation of income is income that is attributed to a support payor or someone who has obligations to pay child or spousal support, when their income is expected by the courts to have been greater and some factor has reduced it, perhaps intentionally. For example, this could be the case where a support payor intentionally quits their job to reduce their income and therefore child support or spousal support obligations. This could also be the case when a support payor voluntarily retires or is voluntarily under employed (takes a job that pays less to reduce support obligations) or voluntarily unemployed. Once these issues are explored and the Court makes a finding that the support payor should have income attributed or imputed to them, even if the payor’s income is a specific amount, the Court will add income or impute income to the payor and order support based on the imputed income.
The Courts have been clear that the reason as to why income is imputed matters and that imputation of income is a matter of fact, not guess or a provisional amount while waiting for disclosure or further review.
Here are the non-exhaustive list of nine enumerated categories to impute income which include:
(a) the spouse is intentionally under-employed or unemployed, other than where the
under-employment or unemployment is required by the needs of a child of the
marriage or any child under the age of majority or by the reasonable educational or
health needs of the spouse;
(b) the spouse is exempt from paying federal or provincial income tax;
(c) the spouse lives in a country that has effective rates of income tax that are
significantly lower than those in Canada;
(d) it appears that income has been diverted which would affect the level of child
support to be determined under these Guidelines;
(e) the spouse’s property is not reasonably utilized to generate income;
(f) the spouse has failed to provide income information when under a legal obligation
to do so;
(g) the spouse unreasonably deducts expenses from income;
(h) the spouse derives a significant portion of income from dividends, capital gains
or other sources that are taxed at a lower rate than employment or business income or
that are exempt from tax; and
(i) the spouse is a beneficiary under a trust and is or will be in receipt of income or
other benefits from the trust.
However, the list above is not exhaustive and the Court could always find new circumstances to impute income.
The Ontario Court of Appeal has been clear that imputing income ensures the joint and ongoing obligations of parents to support their children and this obligation must be met by both parents earning what they are capable of earning. The court has also been clear that the fundamental obligation of a parent to support their children is paramount to the parent’s own interests and choices.
If you are a support payor and are considering making changes to your job or income, or if you are a support recipient that is not receiving support based on what your separated spouse, partner or parent of your children could be earning, please call one of our Toronto Child Support Lawyers today for a consultation.
By: Solmaz Separy, Managing Lawyer