Our top rated* BC Support Guidelines Income Lawyers 1-877-602-9900 help you correctly calculate support payments for self employed persons and professionals!
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Our top rated* BC Support Guidelines Income Lawyers explain that a new 5 year average of income calculation was handed down recently by our highest court. It has a critically important impact on a self employed business person’s or professional’s income and can make a huge difference for our high net worth and income earning clients.
BC Support Guidelines Income Lawyers See 3 Year and 5 Year Averages Being Used in Fluctuating Income Cases
Self-employed in BC with fluctuating incomes, and facing a divorce? BC Support Guidelines income lawyers at MacLean Law understand the intricacies of how a parent’s fluctuating income will affect his or her obligations to pay child support under the Federal Child Support Guidelines. This is particularly important to divorcing parents who are self-employed and whose annual incomes tend to fluctuate significantly on a yearly basis.
BC Support Guidelines Income Lawyers Explain Averaging Incomes
This adds another dimension of complexity to their divorce when it comes to calculating their child support obligations under the Support Guidelines, because the court has the discretion to base the calculation on the average of a parent’s annual incomes in the few years—usually three—leading up to the time of determination. As the B.C. Court of Appeal’s recently handed down its judgement in Harras v. Lhotka, 2016 BCCA 246, where the court confirms unanimously that “where a payor’s income fluctuates significantly, depending on the facts, guideline income may be based on a three-year or five-year average,” this complexity—and your need to find the best BC support Guideline incomes lawyer for your case—is now greater than ever.
BC Support Guidelines Income Lawyers Explain The Support Issue When Income Changes Year to Year
Before you can calculate the correct amount of child and spousal support you need to know the correct amount of each parties guideline income. BC Support Guidelines Income Lawyers understand this is easy for employees but complicated for self employed persons or underemployed persons. In a recent court of appeal decision and father’s and husband’s income varied widely over the past several years. Sometimes a person’s income is steadily increasing or declining but in some cases it goes up and down in no predictable fashion. What’s a judge to do?
In Harras v. Lhotka, it is undisputed that Mr. Lhotka’s incomes from 2009 to 2013 are as follows:
2013: $ 67,000
2012: $384,611
2011: $252,601
2010: $251,209
2009: $ 27,603
The singular issue before the appellant court is whether the chambers judge erred in settling Mr. Lhotka’s income on the basis of a three year average.
BC Support Guidelines Income Lawyers Explain Court’s Analysis on the Guideline
Justice Nicole Garson, on behalf of a unanimous court, provided a thorough analysis of section 15, 17 and 19(1) of the Guidelines:
[20] Section 15 of the Guidelines stipulates that a spouse’s annual income is to be determined in accordance with ss. 16-20. Accordingly, the starting point in the determination of income is s. 16, which reads as follows:
Subject to sections 17 to 20, a spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T1 General form issued by the Canada Revenue Agency and is adjusted in accordance with Schedule III.[21] The Guidelines provide courts with the discretion to adjust income based on the preceding three years, in the event that annual income under s. 16 does not represent the “fairest” determination of income. Section 17(1) reads as follows:
If the court is of the opinion that the determination of a spouse’s annual income under section 16 would not be the fairest determination of that income, the court may have regard to the spouse’s income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years.
[22] The test in s. 17(1) is what is “fair and reasonable”, having regard to the payor’s income in the preceding three years: Marquez v. Zapiola, 2013 BCCA 433 (CanLII) at para. 53.
[23] Section 19(1) provides the wide discretion to impute income to a spouse as it considers appropriate. Section 19 is not subject to the restrictions set out in ss. 16, 17 and 18: Oulette v. Oulette, 2012 BCCA 145 (CanLII) at para. 66.
[24] While s. 17 allows the court to examine income over the previous three years, there is nothing in the language of the section that requires the use of averaging in setting income. This makes sense; accepting that one of the goals of the Guidelines is the fair determination of the amount available to pay child support, fairness is unlikely to be achieved by the mechanical application of averaging.
The judge then went on to consider “when averaging is considered appropriate,” referring to the language used in s.19 (1) of the Guidelines. After analyzing a handful of cases, it arrived at the following conclusion:
[35] In summary, the averaging approach to income determination under s. 17 is very fact specific. Generally speaking, averaging will be applied where income fluctuates, or where the payor has not demonstrated a lasting decline in earnings. Ultimately, it depends on fairly calculating the amount of income reasonably available to pay child support. Depending on the reasons for a pattern of fluctuating income (or, as in Grossi, declining income), averaging may be more or less appropriate. If, for example, a substantial increase in income in one of the three previous years is due to receipt of what might be fairly viewed as a non-recurring amount, averaging may be inappropriate. If, however, the nature of a payor’s employment or business is such that wide fluctuations in income are normal and expected, averaging may be more appropriate. As the Court stated in Jakob at para. 46, “[w]here income has fluctuated in previous years, in the sense that it has increased and decreased over a fixed period of time, and it is anticipated that it will continue to fluctuate in that manner, it may be appropriate to take an average of fluctuating income for a fixed number of years” to determine current income.
[36] Outside the context of s. 17, in rarer cases, courts have upheld the use of averaging of income over a period of longer than three years. In Oulette, the payor spouse earned income through his involvement in a trucking and excavation business, as the owner of a holding company which operated in partnership with a company owned by his brother. In determining prospective child support, the trial judge noted that revenues were declining, but held that a five year average of the income available to the payor would be the fairest method of determining his Guideline income. The payor appealed on the basis that s. 17 does not permit averaging outside of a three year period. This Court upheld the five year average approach as an exercise of the broad discretion available under s. 19(1).
[37] Thus, averaging over a five year period may be an appropriate exercise of the court’s discretion under s. 19 where it would more accurately reflect the income available to a payor spouse than a three year average would.
And finally, applying the above law to the case at hand, Justice Garson ruled:
[41] In my view, the fairest manner to assess Mr. Lhotka’s income for 2013 is to apply the same type of formula that the parties agreed to in the separation agreement; that is, a five year average, for the years 2009-2013. The result of that calculation is $196,604. This is not a case where there is evidence of a year-over-year decline in earnings that would justify the use of current-year income for support purposes. Indeed, Mr. Lhotka expressed optimism in his affidavit evidence that the film industry would improve in 2014 and he would find employment.
Our Top Rated* BC Support Guidelines Income Lawyers Can Help
As the B.C. Court of Appeal took a solid step in widening its discretion in determining Guidelines supports in the “rarer cases” where payor’s income fluctuate greatly, people in the midst of a divorce—especially those who are self-employed and whose pattern of incomes are similar to that in the above-mentioned case—should be more alert than ever that their Support Guidelines income can no longer be determined with certainty by simple math, but rather require careful tactics, real experience and skillful arguments in and outside the court room.
BC Support Guidelines Income Lawyers 1-877-602-9900 have 5 offices across BC in Vancouver, Surrey, Kelowna, Richmond and Fort St. John.
We also help high net worth oil patch clients in Calgary.
Its BC Support Guidelines Income Lawyers are capable, personable, and keenly passionate about providing you the top quality legal service you deserve, particularly in a complex and high-impact issue such as determining your Support Guidelines income when you are self-employed and your incomes highly fluctuating.
Contact us toll-free at 1 877 602 9900 or request a consult, and we would be happy to meet with you in one of our six offices across B.C. and in Calgary to see how we can best help you in your case. We also provide legal services in Mandarin and Cantonese—visit our Chinese website.
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