Once parents with children separate, the issue of support for the children needs to be dealt with as quickly as possible. .
During the separation process (whether culminating in a divorce or not), a child will likely spend most of his or her time at one parent’s home versus the other. When a child spends most of their time at one home, the parent in that home will likely rack up higher expenses for raising the child. That parent isn’t left out in the cold as they must get help from the other parent. The other parent must pay money to the parent/primary caregiver to help with the expenses of child raising; this is called child support.
There is a legal duty for parents to support their dependent children. The law defines a dependent child as anyone under the age of 18 unless they have married or have voluntarily withdrawn from parental control and became independent by the age of 16. In the case that a child is enrolls in a full-time post-secondary degree and/or has a disability, child support may extend beyond the age of 18.
Parents/caregivers can work out a support agreement for themselves. When this is not possible, getting legal services (which we can certainly provide) can help hammer an agreement out that both parents can agree upon or pave the way for an order of support. A parent can apply to court for an order of support. An order of support is the main way in which child support becomes legally binding.
Information required to determine Child Support Payable
Naturally, financial information is required including things like income tax returns, statements of earnings from employer (or from the parent if they own a business), and notices of assessment/reassessment. The parent paying (payor) the child support must update their financial information if the other parent requests it. Generally, updates can be requested once a year.
The Family Responsibility Office
The Family Responsibility Office of Ontario (FRO) is the legal enforcer of payments. In several ways, the FRO acts as a buffer or intermediary for the courts and each parent by handling things between the parties such as receiving and forwarding payments, taking necessary action where payments are missed and collecting payments from payor parents outside the jurisdiction. The court automatically files all support orders with the FRO.
Child Support Guidelines
The Child Support Guidelines is used in determining how much a payor parent should pay for child support. The Child Support Guidelines has a table for each province and territory which shows how much support should be paid, based on the payor parent’s gross income.
If you are a step-parent, the court may order that you pay an amount lower than the Table Amount.
Also, in Shared Custody situations an amount less than the Table amount may be ordered. In these cases, the court will figure out the Table amount payable by each amount and will subtract the smaller amount form the larger amount. The same could also apply in Split Custody situations.
Special or Extraordinary Expenses
In addition to paying support according to the table amount, payor parents may have to contribute towards expenses such daycare, medical or dental insurance premiums, medical expenses, extra-curricular activities, etc.
Which Table applies to me?
The table amount to be applied depends on the circumstances. For example: if the payor parent lives in Saskatchewan and the child lives in Ontario, the Table for Saskatchewan will apply. If both parents live in Ontario, then the Ontario Table will apply but if the payor parent lives in the United States as an example, and the other parent lives in Ontario then the Table for Ontario will be used.
The Child Support Guidelines allows the courts to imput income to a parent in certain circumstances, most often where a parent is intentionally unemployed or underemployed. The relevant provision reads as follows:
- 19. (1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following:
- (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.
Child Support and Access
Lastly, payment of child support is not dependent on whether a person gets access to the child or not. A parent may be obligated to pay child support even if they have zero access to the child. Conversely, a parent can continue to have access to a child even where child support payment is owing.
Imputing income for Child Support
One of the most fundamental issues that accompanies a separation/ divorce for parties with children is the matter of child support. In Canada, a judge can effectively ‘impute’ the income of a parent to be paid for child support purposes. Parents have an obligation to jointly support their children based on their income and ability pursuant to Section 26.1(2) Divorce Act.
Family lawyers are experts when determining how much of a parent’s income is accountable for child support. This is based on the payor parent’s gross income compared to the value in the corresponding Federal Child Support Table. The judge has the discretion to establish the amount of income to be imputed based on that parent’s earning capacity and not necessarily what that parent currently earns. This is a result of complications that can arise in situations when a parent is self-employed and their income tax documents do not accurately emulate their income or when the payor parent intentionally chooses to be unemployed or in a position with a low salary in order to avoid their moral and legal obligation to pay child support.
Section 19 of the Federal Child Support Guidelines (“the Guidelines”) outlines situations that a judge can order income imputed to a parent. As the court has the autonomy to use their discretion in such scenarios, income can also be imputed in situations not listed in Section 19 of the Guidelines. Courts will always place the interests of the child first and place precedence on the child’s right to support over the parents interests. Therefore, should child support payments become an issue in a family law matter, the court can effectively intervene and critically analyze a parent’s career decision and/or how they operate their business. The onus of proof will be placed upon the parent owing child support payment.
When is income likely to be imputed to a payor?
Section 19 of the Guidelines states that imputed income can occur in any of the following nine scenarios. Note that this is a non-exhaustive list:
- The payor parent is exempt from paying federal or provincial income tax.
- The payor parent receives their income from a trust that they are a beneficiary of.
- The payor parent did not comply with their legal obligation to disclose income information.
- The payor parent is unreasonably deducting expenses from their income.
- The payor parent is not reasonably generating an income from the use of their property.
- The payor parent intentionally continues to remain unemployed or under-paid in their employment.
- The payor parents lives in a country where the tax rates are much lower than Canada’s.
- The payor parent is diverting their income to alter the amount of child support paid.
- The payor parent acquires a portion of their income from dividends, capital gains and/or other sources that have a lower tax rate or are exempt from tax.
- In the case of Risen v. Risen (1998) AC.W.S (3d) 669 (Ont. Ct.) (Gen Div), the court stated that although Section 19 of the Guidelines sets out a non-exhaustive list, and the court has the discretion to deviate from it, the case must bear some similarity to the scenarios enumerated. Also inMascarenhas v. Mascarenhas (1999), 44 R.F.L. (4th) 131 (Ont. Ct.)(Gen Div), the court held that any scenarios where the court must use their discretion outside of the list enumerated in Section 19, should bear some resemblance.
In the case of Risen v. Risen (1998) AC.W.S (3d) 669 (Ont. Ct.) (Gen Div), the court stated that although Section 19 of the Guidelines sets out a non-exhaustive list, and the court has the discretion to deviate from it, the case must bear some similarity to the scenarios enumerated. Also in Mascarenhas v. Mascarenhas(1999), 44 R.F.L. (4th) 131 (Ont. Ct.)(Gen Div), the court held that any scenarios where the court must use their discretion outside of the list enumerated in Section 19, should bear some resemblance.
Case law is imperative to the matter of imputed income as the courts have a broad discretion on determining the amount of child support to be paid.
In Contino v Leonelli-Contino 2005 SCC 63, the court initially imputed the father’s income according to the Federal Child Support Table. However, after analyzing the child’s custody and access, the court determined that the father owed less than what was specified in the table because the child lived with the father approximately 50% of the time.
Another case that displays the courts discretion is Quintal v. Quintal 1997 9576 (ON SC) where a father who was forced to resign for his retirement asked the court to vary his child support payments because his income significantly plummeted from $51,577 to a pension of $12,288. The court reduced his child support payments for six months as he stated he was actively seeking employment elsewhere and therefore unable to make his child support payments. Actively seeking employment is a debateable point in almost all cases as the father could have intentionally been unemployed. However, the court granted him six months until his payments increased again whether he was employed or not because his health, desire and expectation to find employment justified imputing income to him in the reasonably foreseeable future, if not immediately.
The main issue among all imputed income cases is that the court will always place the child’s interest first as it is not fair for them to bear the financial consequences of a parent’s misconduct.
One of the most popular circumstances where a court will impute income as mentioned above is when a parent intentionally leaves a secure employment to pursue self-employment. This can be for whatever reasons the parent chooses as they have the autonomy to do so. However, the parent must be responsible to still maintain their child support payments regardless of their endeavours. The court can exercise their discretion and may vary support payments for a specific time period.
In Depace v. Michienzi(2000), 5 R.F.L. (5th) 40 (S.C.J.), the court stated that they may allow a “grace-period” to account for start-up loses a parent may face.
Further expressed in Visnjic v. Visnjic (2000), 7 R.F.L. (5th) 195 (S.C.J.), the court held that if a parent wishes to engage in self-employment they must continue to meet their financial responsibilities out of their capital or through borrowing. Where a parent chooses to venture into a self-start-up career outside of their usual domain, a court will most likely impute income as displayed in Le Page v. Porter (2000), 7 R.F.L. (5th) 335 (S.C.J.) where the parent left working as a social worker to engage in stock speculation and real estate investing. The parent did not speculate that his income would plummet as much as it did; however, pursuant to Section 26.1(1) Divorce Act, he had an obligation to pay child support and his income was imputed effectively.
A court can impute income from a parent in many different scenarios based on their discretion. There are many different circumstances that will warrant an income to be imputed, as displayed above, and many that are reasonably foreseeable based on the non-exhaustive list under Section 19 of the Guidelines.
It is important to be prepared in such matters and to know if income may be imputed to you. At A. Princewill Law Firm, we have many years of experience and know what the court is looking for when they are determining whether or not to impute income to a parent. We can represent and assist you should you find yourself in a vulnerable position and either require child support payments from a spouse or are the spouse owing child support payments.
Contact us online, by email at firstname.lastname@example.org, or call 289-622-7662.