Do Courts Adjust Support for Temporary Income Fluctuations?
The calculation of the amount of child support payable by one parent to the other has been made easier by the Child Support Guidelines, which provide a formula based on income. And, as I’ve written in a post recently Income for Child Support Purposes , “income” is a relatively static number, based primarily on income as reported to the Canada Revenue Agency.
However, unfairness can arise – either to the paying parent or the recipient – when income levels fluctuate unexpectedly throughout the tax year. For example a paying parent’s income may temporarily drop due to illness or other unforeseen cause, to the point where he or she will have markedly less actual income for a period, than the actual income figure on which the child support payments are based.
This kind of income fluctuation was the focus of a recent case before the Ontario court called Simms v. Brown. The parents had joint and shared custody of their children. However, in the past few years and for several extended periods of time the father had been off work for medical reasons. As a result he claimed that his income tended to fluctuate, and when at their lowest he had difficulty meeting his ongoing monthly child support payments.
The father went to court to ask to have his $13,000 in support arrears reduced to zero.
The mother, in contrast, not only resisted the reduction of arrears, but wanted a retroactive adjustment as well as an upward adjustment to his going-forward obligations. She insisted that the father actually earned more than the income that had been used to calculate the Guidelines amounts.
To support this, she provided a chart showing the father’s actual income from 2010 through 2012, versus the income on which the father was ordered to pay support based on the Guidelines. It also showed the point at which the parents’ custody obligations changed to a shared-custody arrangement. For example, for 2010 the mother had sole custody, and the father was paying support based on reported income of $74,000 per year. However, it turned out his actual income for that year was $86,000. The mother was asking for retroactive support of $1,800 for that year, to make up the difference and reflect what he should have been paying. Similarly in 2011, the father paid support based on reported income of $76,000, but his actual income for that year was $106,000 because of a one-time severance retirement package he received.
The mother added that the Director of Family Responsibility Office had refused to enforce the prior support order because it was “too confusing”.
The court considered these figures in great detail. It observed that, generally speaking, it was not realistic that the father’s child support obligations should be re-adjusted anytime there is a short-term change in his income. Rather, for the purposes of calculating support “income” is the amount reflected on Line 150 of the father’s annual Notice of Assessment from Canada Revenue Agency. The court also acknowledged that this meant that any short-term changes in income would not be reflected on Line 150, and that realistically any child support order would often be several months behind any temporary changes in the father’s income in any event.
Nonetheless, in this case the court made some complex mathematical adjustments to support; this included an adjustment to account for the fact that, before the parties started their shared parenting arrangement, the mother had sole custody of the child and was legally entitled to receive appropriate child support from the father for that period. The court also streamlined the support amount to take into account various credits, setoffs, adjustments relating to child support and extraordinary expenses, and factored in retroactive support owed by the father as well.
In terms of going-forward, the father advised the court that he was back to earning a full salary of $80,000 per year – but he was planning to make a claim for disability which would once again reduce his income somewhat. The court pointed out that this would mean his final income for 2013 would again be difficult to predict in advance, but it set an amount based on his 2012 income, for the time being.
For the full text of the decision, see:
Simms v. Brown, 2013 ONSC 6854 http://canlii.ca/t/g1qtk