Calgary Vancouver Imputed Income Support Lawyers deal with section 18 and 19 of the Child Support guidelines which are two key paragraphs from our Child Support Guidelines that govern income determination for both spousal and child support cases. Our Calgary Vancouver Imputed Income Support Lawyers know that without a proper income calculation, fair spousal and child support will be unable to be properly awarded. A recent Alberta Court of Appeal decision focused on ensuring undeclared tax free income was properly taken into account in a child and spousal support dispute.
MacLean Law’s top rated* Calgary Vancouver Imputed Income Support Lawyers routinely help courts get to the bottom of hidden or artificially reduced incomes of paying and recipient spouses including recent wins involving the discovery of millions of dollars of hidden income.
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In Durfey v Durfey an appeal of a spousal and child support order was allowed on the basis that inadequate evidence of income for a spouse and the child’s educational costs and funding from loans, scholarships and bursaries were not properly before the court. The court relied on section 19 of the Child Support guidelines for the proposition tax free income needed top be grossed up. Here is CSG section 19 with the most often used portions bolded:
Imputing income
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:
1. 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;
2. the spouse is exempt from paying federal or provincial income tax;
3. the spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;
4. it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines;
5. the spouse’s property is not reasonably utilized to generate income;
6. the spouse has failed to provide income information when under a legal obligation to do so;
7. the spouse unreasonably deducts expenses from income;
8. 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
9. the spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.
SOR/2000-337, s. 5
Reasonableness of Expense
(2) For the purpose of paragraph (1)(g), the reasonableness of an expense deduction is not solely governed by whether the deduction is permitted under the Income Tax Act.
Calgary Vancouver Imputed Income Support Lawyers Onus To Properly Disclose
[5] However, throughout the marriage, both parties, and in particular, the respondent, had numerous other jobs, and the income earned from those sources is not clear. Each side now accuses the other of not being forthcoming with regard to that income. Complicating matters, most of the “home based” businesses generated income on which no tax was paid, and so the parties argued that that income should be grossed up when considering the proper amount of spousal support and whether the appellant’s past spousal support and child support contributions were excessive.
[15] With regard to spousal support, the appellant argues that the trial judge erred in arbitrarily imputing only $10,000 to the respondent’s income when her bank records indicated unexplained deposits in the range of $50,000 to $70,000 over the three years in question.
[16] The respondent’s bank account showed unexplained deposits, and her expenditures appeared to exceed her claimed income. The trial judge found that her evidence on these deposits was “less than precise”, and that she could not recall the source of many of them. However, he found that the respondent “tried to answer honestly and forthrightly”, and “did not try to mislead the court” even though she could not be specific as to the source of the deposits. The trial judge concluded that it would be reasonable to impute an additional $10,000 to the respondent’s income.
[17] The credibility of the witnesses is obviously important but does not answer the essential issue. Family law litigants are expected to keep reasonable records of their income and expenses, especially post-separation, and especially when they are involved in claims for support. A litigant with unexplained income or expenses cannot simply fall back on an honest inability to provide particulars. Generally, an inability to explain income and expenses will result in an adverse inference being drawn, or will preclude that litigant from meeting the burden of proof. Meade v Meade, (2002) 2002 CanLII 2806 (ON SC), 31 RFL (5th) 88 at para 81.
[18] With respect, the trial judge erred in attributing only the amount he did to the respondent when her records demonstrated that she had actually earned substantially more. Furthermore, the respondent’s subsequent remarriage was unforeseen at the time of the order and clearly qualifies as a change of circumstance.
