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FAQ: Spousal & Child Support
Find out the answers to frequently asked questions ("FAQs") with regard to family law and other legal issues.
Support & Line 150 Income
When calculating a party’s child or spousal support obligation in family law, the payor’s obligation is based on his or her income as indicated on Line 150 of his/her Income Tax Return/Notice of Assessment (subject to certain adjustments which are specifically stipulated in the Federal Child Support Guidelines).
However, there are cases where a payor’s Line 150 income does not correctly convey how much money s/he is actually earning in a given year. Common examples of this surface when an individual owns a business or is self-employed. In these cases, recipients of support often argue that the payor is, in fact, earning more income than is reflected on Line 150 of their Income Tax Return and Notice of Assessment.
It is also interesting to note that there are cases where a party’s Line 150 income is overstated. In the case of Stober v. Stober, the Court notes that child and spousal support obligations are based on the income available to the payor and not on his/her Line 150 income without regard to any other evidence. Clearly, the evidence available to the parties and to a Court is crucial to any such an argument. In Stober, much to the wife’s dismay, Justice Weatherill decreased the husband’s income from $1,000,000.00 (stated as his Line 150 income) to $600,000.00. It appears that based on the accounting evidence presented, the Judge was convinced that the husband did not have $400,000.00 available to him in the relevant year.
It is, nevertheless, to be noted that it is rather rare for judges to determine that the income available to a payor is less than the income stipulated on his/her Line 150.
To learn more about Line 150 income as is relates to a payor’s support obligations in your case, schedule a consultation by telephoning 905.707.3370.
Calculating Child Support & Annuities
In Tookenay v. Laframboise, a husband and a wife had separated after a seven year marriage. They had two young children, being 8 and 4 years old at the hearing of the trial in this case. The husband and the wife had difficulties communicating when it came to the care of the children.
The following two issues came before Justice Newton in this case:
- Based on the particular facts of the case, was joint custody appropriate?
- When determining the father’s child support obligation, should an annuity he receives from a personal injury claim (settled when he was 2 years old) be included in determining his income for child support purposes?
Justice Newton rules that joint custody was not appropriate in these circumstances. Justice Newton specifically noted that “[f[or joint custody to be ordered I must be satisfied that the parties could work together. Given the communication issues between the parties I conclude that it is in the best interests that Ms. Tookenay have sole custody of the children.”
With respect to the second issue, the father’s position was that the annuity should not be included in his income because it was intended to repair the damage he had suffered from an accident.
Justice Newton found that the monies used from the settlement for ordinary expenses ought to be included as income. However, monies from the settlement, which were used for medical expenses or rehabilitation expenses should not be imputed to the father as income. Justice Newton ultimately finds that half of the monthly annuity payments were income.
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Imputation of Income – Reasonable Efforts
Child support and spousal support obligations are a function of the payor’s income. Given this, some payors attempt to conceal or undervalue the income he/she earns.
In those circumstances, the recipient of support may choose to bring a motion before the Court with respect to the imputation of income. In that case, the question is whether the payor is capable of earning more money and whether the payor is purposely under-earning with the intent to reduce their support obligations.
However, in a situation where the payor of support has not been in the workforce for many years and has, thus, made no reasonable efforts to secure employment, can a Judge rule in his/her favor with respect to the issue of imputation of income?
In the case of Toscano v. Toscano, Justice Blishen dealt with similar circumstances and rules as follows:
“Ms. Toscano was 46 years old at the time of trial, is in good health and has a Business Administration diploma. She had work experience both before marrying Mr. Toscano and with Talos Homes during the marriage. I recognize that Ms. Toscano has been out of the work force entirely for at least 13 years, and that her education and work experience continues to decrease each year she remains inactive. However, Ms. Toscano has presented no evidence that she has made any effort to obtain employment or upgrade her business administration skills in order to present a plan for her own support. Given that both children reside with Mr. Toscano, I find it reasonable that Ms. Toscano make all reasonable attempts to obtain employment perhaps in conjunction with re-training. I will impute income of $40,000 and order Ms. Toscano to pay $579 per month in child support for the children pursuant to the FCSG.”
To learn more about imputation of income as well as the services provided by Krol & Krol, call 905.707.3370 today.
Assessing Interim Support
When courts are faced with the tall task of assessing whether one of the parties to a matrimonial matter are entitled to interim support, two components will be analyzed; whether the applicant is in need of the support and whether the respondent has the ability to pay.
In the case of Knowles v. Lindstrom, Justice Penny deals with the issue of assessing interim support and states as follows:
The parties agree that “need” in cases such as this relates not only to basic shelter and necessities but to a lifestyle that is commensurate with the lifestyle enjoyed during the relationship, provided the other spouse has the ability to pay. Thus, the accustomed standard of living during a relationship is the appropriate content in which a payee spouse’s need should be assessed.
Justice Penny further explains that an applicant who presented a modest expense budget in his/her Financial Statement, should not be penalized for failing to spend beyond their means or for failing to advance, as their monthly budget, lavish expenses they’re not actually incurring. In that regard, Justice Penny stated as follows:
The applicant has presented a modest expense budget of approximately $76,000. As noted above, I do not think the applicant should be penalized for failing to spend beyond her means or for failing to advance, as her monthly budget, lavish expenses she is not actually incurring. By the same token, I agree with the respondent that while the parties’ lifestyle during the relationship is relevant to the context for establishing the applicant’s needs, it is within the court’s discretion to draw the line at certain types of lavish expenditures, such as private jets.
To learn more about assessing interim support as well as the services provided by Krol & Krol, call 905.707.3370 today.
Imputing Income – Self-Employed contractors
Many parties find themselves in a situation where their income has fluctuated from one day to the next. For example, a self-employed contractor who has just received notice that his contract has terminated.
In Ontario, family law practitioners have often found themselves at odds with opposing counsel with respect to the determination of the income of a party whose contract has recently terminated and is left unemployed.
The issue arises in terms of both, child support and spousal support. Thus, it is left in the hands of the Court to determine whether the unemployment was caused intentionally; so as to avoid paying a higher amount of child and spousal support.
Professor Lewis Becker, in his book titled “Spousal and Child Support and the ‘Voluntary Reduction of Income’ Doctrine”, explores three ways that a Court will decipher whether a party has voluntarily reduced his/her income.
(i) a good faith test, which considers the actual earnings of a party rather than earning capacity, so long as he or she did not act primarily for the purpose of avoiding a support obligation;
(ii) a strict rule, which disregards any income reduction produced by voluntary conduct, as a parent or spouse has an obligation to earn to his or her capacity in order to pay support;
(iii) an intermediate test, which looks at various factors in determining whether to use actual income or earning capacity in making a support determination.9
Alternatively, the Court will be faced with a case where the party was merely a victim of circumstances, and thus the question of imputing income ought not to be applied.
If the party is proven to have terminated his employment by his own will, a Judge will have every reason to impute additional income and ultimately rule in favor of the support recipient.
To learn more about imputing income as well as the services provided by Krol & Krol, call 905.707.3370 today.
Gifts and Imputing Income
In order to determine the quantum of child support for a payor in Ontario, one must refer to the Child Support Guidelines.
A recipient of child support may not be satisfied with the financial disclosure of the opposing party, and may wish to impute income to the other party/child support payor.
The case of Horowitz v. Nightingale referred to the decision in Bak v. Dobell with respect to whether gifts should be included in income and whether the recipient of the gift should be imputed income.
In Bak v. Dobell, the Court of Appeal reasoned that gifts were not to be included in income. However, the Court did note that certain extraordinary gifts may call for the imputation of income. The Court stated as follows:
Since the legislature did not include gifts within the ambit of imputed income, it can be presumed, in the normal course, that the legislature did not intend the receipt of gifts to be “appropriate circumstances” in which to impute income. For this reason, usual gifts such as those given to mark a special occasion are not included as income . . .
Although it seems the legislature intentionally did not include the receipt of gifts given in the normal course in presumptive income, or as an example of an appropriate circumstances under s. 19(1), a court will consider whether the circumstances surrounding the particular gift are so unusual that they constitute an “appropriate circumstance” in which to impute income.
To learn more about gifts and imputing incomet as well as the services provided by Krol & Krol, call 905.707.3370 today.
Child Support Arrears – Rescinding
When a spouse brings a motion before the Court to rescind child support arrears, the Court will analyze many factors in its determination as to whether the support payor should be relieved of his child support arrears.
The Court will generally focus its attention on whether the previous order that compelled the payor to provide child support at a specific quantum, was unjust or too burdensome based on the payor’s circumstances at the time of the judgment.
An interesting point brought forth by Justice Sherr in Baxter v. Beharry was whether the legal concept of Res Judicata applied.
Justice Sherr stated that in cases where income was imputed to the payor spouse, a motion to rescing child support arrears could possibly elead to problems associated with Res Judicata.
Justice Sherr explained as follows:
It is well settled law that, if income is imputed, then the issue will generally be res judicata on a motion to vary or change support. See: Bemrose v. Fetter, 2007 42 R.F.L. (6th) 13. Although the court always has discretion with respect to the issue of res judicata and can consider fraud, fresh evidence, additional disclosure or issues of fairness, the principle of res judicata provides that generally, a matter cannot be re-litigated once it has been determined on its merits.
To learn more about child support arrears as well as the services provided by Krol & Krol, call 905.707.3370 today.
Imputing Income – Deadbeat Dads
The case of Tillmanns v. Tillsmanns is a crucial case for the sole purpose that it educates the reader about the concept of imputing income.
When a spouse learns that his/her (former) spouse is claiming to be earning less money than what he/she really earns or, alternatively, if the former spouse is earning less money than what he/she is actually capable of earning, a court has the discretion to impute income to that spouse.
There are many different factors that a court takes into account before ruling on the issue of imputing income. One of which, perhaps the most vital factor a judge will consider before imputing income, is whether the it is in the best interests of the children. Often, the case will convey that if one party is to have a higher income attributed to him/her, their former spouse will thereby obtain a reduction in child support. A judge may view this sequence of events as being contrary to the children’s best interests.
In Tillmanns, Justice Pazaratz explained the common theme that courts review in cases dealing with the imputation and attribution of income:
All of these principles have a common theme: reasonableness. Parents are required to act responsibly when making financial decisions that may affect the level of child support available. They must not arrange their financial affairs so as to prefer their own interests over those of the children. Stewart (supra).
In light of the above, the Court ruled that the father’s decision to go back to school once he has lost his job/career, was reasonable. The decision to take a break from earning a livelihood by going back to school and creating a better future for himself and his children, should not be equated to that of a deadbeat dad, and he should not be punished by attributing more income to his current financial statement.
To learn more about imputing income to deadbeat dads as well as the services provided by Krol & Krol, call 905.707.3370 today.
Child Support – Including Pensions in Income
The issue of whether to include the income derived from a pension when calculating the quantum for child support, has been the topic of conversation since the decision in Manuge v. R.
The question is also posed as to whether the court should gross up the child support payor’s income based on the fact that certain pensions are not taxable.
The leading case in Alberta, Storey v. Simmons, held that pensions were not to be included in income as they are classified as property (despite the fact that they are paid on a monthly basis). There, Justice Veit’s analysis concentrated on the fact that pensions do not function to replace income but are compensation mechanism that deal with the loss of amenities of life.
However, since then, cases such as Darlington v. Moore and Ste-Marie v. Ste-Marie have come down with decisions that consider pensions as income replacement tools that are to be included in the income of a child support payor.
Furthermore, in the former case, the Court held that since the pension was a Veteran’s Affairs Canada Pension, the fact that it is not taxable should be accounted for when determining the quantum of child support. Thereby, the Court ruled that the disability income should be grossed up.
To learn more about child support and pensions as well as the services provided by Krol & Krol, call 905.707.3370 today.
Adult Child Support
Do parents have to pay for their children’s post-secondary tuition? If so, is this an absolute right whereby the children are automatically entitled to support payments upon enrolment?
The case of Lewis v. Correja dealt with the issues noted above, and stands for the principle that a parent paying support is not an automatic wallet with no rights.
In Lewis v. Correja, a father found himself paying for his unappreciative daughter’s post-secondary tuition. The father was not convinced that his daughter was continuously attending class, and therefore requested updated transcripts from his daughter. The daughter refused to provide her father with her grades, and eventually the father applied to the courts to compel his daughter to submit regularly updated transcripts.
Justice Veit stated in his decision that:
A minor child on whose behalf s.7 expenses are claimed for attendance at post-secondary educational institution must provide basic information to establish active attendance in the program; it is not sufficient for the debtor parent to be provided with information that their child is enrolled in a post-secondary education program. A requirement to provide information is not equivalent to requiring the child to maintain a filial relationship with the support debtor.
In his ruling, Justice Veit determines that proof of enrolment does not suffice with respect to the daughter’s ongoing obligation to provide information to her father.
Furthermore, Justice Veit states that an adult child that is not merely looking to be awarded s.7 expenses but also ongoing financial support, must definitely provide the father with her updated transcripts.
The Court also recognized that adult children may be obligated to pay for a portion of their s.7 expenses if they have an opportunity to work part-time.
To learn more about adult child support as well as the services provided by Krol & Krol, call 905.707.3370 today.