The Ins and Outs of “Income”
If you are the person obliged to pay child support, you likely know that one of the basic principles of Family Law is that the amount you are required to pay under the Canadian federal Child Support Guidelines is directly related to your income. It sounds simple enough; however there are some important points to know:
• For these purposes, your “income” means annual “total income” which is usually the amount found on the T1 General form as issued by the Canada Revenue Agency.1
• However – as discussed below – in some circumstances this amount may be adjusted by a court, or a different year’s tax return may be used.
• Also, the law recognizes that the amount disclosed on the tax return is not necessarily the same as the income that is calculated using the various listed “sources of income,” as those various categories are set out on the T1 tax return.2 (Usually they are the same, but not always – e.g. if you have not yet filed a return, or if the one you filed is not proper). So it is the latter amount that governs for Guidelines purposes.
There are some additional exceptions and qualifiers to this general rule:
• The Guidelines do not require that “income” is the figure on the last income tax return in every single case. Perhaps you have had an unusual year – your income may be higher or lower for that year due to some unique circumstances. In such cases, the court had the discretion to “consider more than a single number on a tax return”.3
• You and your spouse can also agree to some slight modifications to the general rule. For example:
o You may agree by way of separation agreement to use a prior year’s line 150, rather than the current one; the court may uphold this kind of adjustment if appropriate.4
o With some restrictions you may agree to use a different date from the one otherwise used for the taxation year. 5
• Finally, a court can itself make adjustments to the “income” amount in the right circumstances:
o For example, it can use an average of the past few years, if that is more representative determination of the amount.6
o Similarly, in unusual situations a court may add to your “income” – for example by adding back the amount of voluntary charitable donations you make in a year.7
Note that if for some reason you feel that the line 150 income amount is not the fairest determination of your income, then you have the burden of showing that this is the case.
For the full text of the decisions, see:
1. Bak v. Dobell, 2007 ONCA 304
2. Henry v. Henry (1997), 1997 CarswellOnt 4399 (Ont. Gen. Div.)
3. Clark v. Clark, 2012 ONSC 1026; additional reasons 2012 ONSC 1965
4. Hodge v. Jones, 2011 CarswellOnt 2582, 2011 ONSC 2363 (S.C.J.)
5. Crabtree v. Crabtree, 70 R.F.L. (6th) 371, 2009 CarswellOnt 1918 (S.C.J.)
6. Toon v. Toon, 2011 CarswellSask 511, 2011 SKQB 281 (Q.B.)
7. Zubek v. Nizol, 2011 CarswellBC 1481, 2011 BCSC 776 (S.C.)
At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at www.RussellAlexander.com.