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Imputing Income for Child Support Purposes: Under-Employed or Unemployed Payors

Leslie Taylor

Often times, calculating base child support is a straight forward task which uses the payor’s income and the number of children of the relationship to determine the monthly child support amount pursuant to the Federal Child Support Tables.

In some situations however, the Court may intervene to “impute” an income higher than the payor’s actual employment income for the purposes of calculating the monthly child support amount, see section 19(1) of the Federal Child Support Guidelines, SOR/97-175:

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.

The Alberta Court of Appeal in Keating v Keating, 2017 ABCA 428 clarified the test in Alberta for imputing an income to a payor who is intentionally under-employed or unemployed (section 19(1)(a) above): the circumstances must permit the inference that the payor took unreasonable actions to “undermine or avoid” his/her support obligations, at para 11, citing the decisions of Hunt v Hunt-Smolis, 2001 ABCA 229 and DBF v BF, 2017 ABCA 272.

The Court of Appeal upheld the trial judge’s decision to impute an income to the payor having found that it could be inferred from the payor’s overall conduct that he was attempting to undermine or avoid his support obligations. In doing so, the Court of Appeal relied up the following actions of the payor:

  • he failed to take steps to regain the driver’s license which he lost for failing to pay child support, which prevented him from working;
  • he provided no satisfactory explanation for why he did not pursue reinstatement of his driver’s licence; and
  • he chose not to make support payments when he had the financial resources to do so.

The Court of Appeal also addressed the issue of determining the appropriate amount of income to be imputed: “when income is imputed, it should reflect what the payor could reasonably have earned. Factors to consider include the payor’s capacity to earn income in light of his or her age, education, experience, skills, health, work history, ability to be trained, other obligations and work availability”, at para 14, citing the decision of Marquez v Zapiola, 2013 BCCA 433 at para 37.

The Court of Appeal reduced the amounts imputed by the trial judge, relying upon the timing of the parties’ separation, the downturn in the Alberta economy, the reduced work available in Alberta and the payor’s child care responsibilities. In concluding that the payor could, however, potentially earn substantially more than that imputed to him, the Court of Appeal noted that he would first need to re-establish himself in the profession.

2018-10-16T11:03:42-06:00September 18th, 2018|

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