Vancouver Calgary High Business Income Support Lawyers

Vancouver Calgary High Business Income Support Lawyers help clients who are spouses and owners of family businesses, partnerships, professional practices, and other lucrative ventures obtain their fair share of the income the company generates.

Winning Vancouver Calgary High Business Income Support Lawyers

Lorne MacLean, QC of MacLean Law has just obtained two recent reported court successes where between $24,000 plus and $90,000 plus per month were ordered in cases of a professional practice on the one hand and a manufacturing company on the other. These victories resulted from a careful forensic type analysis of the real income available to the business owner. If you have a high stakes high net worth support cases as the owner or the spouse seeking support make sure you hire someone who knows how to calculate the true income so you are not short changed on support.

MacLean Law has offices in downtown Vancouver, Calgary, Surrey, Kelowna, Richmond and Fort St John, BC.

Vancouver Calgary High Business Income Support Lawyers Know The Business Owner’s Tax Return Isn’t Accurate

Lorne N. MacLean, QC leader of our Vancouver Calgary High Business Income Support Lawyers brings a sound understanding of how owners of companies can obfuscate their true profits in support and business valuation.

Vancouver Calgary High Business Income Support Lawyers Audit The Real Income To Obtain Justice

Lorne MacLean, QC and his team of business savvy family lawyers root out the truth by aggressively auditing key areas:

pre-tax profits
personal benefits run through the company
tax free shareholder loan withdrawals
non arm’s length excessive payments
director fees
management salaries
amortization
intercompany transfers
delayed billings and collections to underreport income
cash payments

and more to ensure the court gets the real picture of what is available to pay fair child and spousal support.

In our latest success in JWLP v AP on behalf of the wife who was the traditional stay at home mother we found withdrawals for a new home and other expenses as well as repayments of shareholders loans and director’s fees. We also corrected the company financial statements for the true value of land and investments. The court noted the onus is on a business owner to substantiate that not all of the pretax profits should be added to wages and draws taken out to come to a correct total.

Vancouver Calgary High Business Income Support Lawyers Hard Work Pays Off

Lorne N. MacLean, QC also analyzed who really ran the company in JWLP v AP and the results were as follows:

[88]         In light of my findings about Mr. P.’s effective control of this business, the “corporate income” method alluded to by Huddart J.A. is the more appropriate one in this case. Thus the court must determine “what an objective well-informed parent would make available for child support in the circumstances of a particular business over which the parent exercised control.”

[89]         The Court of Appeal in Hausmann has more recently clarified that the onus is on the paying spouse to justify retaining earnings in the company rather than drawing them out to pay support. There, Kirkpatrick J.A., writing for the Court, stated as follows (at paras. 51-52 and 61):

[51]  While the purpose and application of s. 18 were outlined in Kowalewich, this Court has not heretofore established an onus test. Some post Kowalewich authorities from this province, however, have concluded that there is an “emerging presumption” that pre-tax corporate income will be assumed to be available to a payor unless evidence is led to the contrary. These authorities state that the onus in the circumstances is on the payor. As discussed in Jeffery v. Motherwell, 2006 BCSC 140, 36 R.F.L. (6th) 377, at para. 13:

Kowalewich has been applied on other occasions by judges of this court and is binding authority. One of those cases Bartkowski v. Bartkowski(2003), 37 R.F.L. (5th) 242 (B.C.S.C. [In Chambers]), albeit dealing with very different factual circumstances in that the payor contended that his line 150 income was inflated to take advantage of tax benefits, the court said this about the authorities post Kowalewich:

I am of the view that these cases reveal an emerging presumption that the corporation’s pre-tax income will be assumed to be available to the shareholder payor for the payment of child support unless compelling evidence is led by the payor spouse to support the conclusion that re-investment is necessary to sustain the company as a viable enterprise. … (para. 51)

The onus is on the payor to provide the necessary evidence that the corporation’s pre-tax income is not available to the payor. The court should not have to ferret out the necessary information from inadequate or incomplete financial disclosure. While Bartkowski says the evidence of the payor must be compelling, I prefer to use the word clear when discussing the necessary evidence of business circumstances as the former word might be taken to suggest a higher standard of proof than is called for by Kowalewich.

[52]   I respectfully agree with the above comments in Jeffery v. Motherwell.

…

[61]  As I have noted, the evidence tendered by Mr. Klukas as to the needs of the company is unclear and unsubstantiated. At the hearing of the appeal we asked counsel for Mr. Klukas on at least two occasions to identify the legitimate calls on Pioneer’s pre-tax corporate income, with no satisfactory answer. In these circumstances, the court is left with essentially two options: attribute all of the pre-tax corporate income to Mr. Klukas in keeping with the onus developed in the cases referred to above, or refer the matter back to the Supreme Court for a re-hearing.

[90]         Likewise, in Chapman v. Summer, 2010 BCCA 237, Chiasson J.A., writing for the Court, held as follows:

[33]   I do not think the husband’s income should be limited to his drawings. His income, for the purpose of calculating support, must recognize the money that is available to him from the companies’ income. There is no persuasive evidence to support the contention that the companies were required to retain a portion of their current earnings during the material period, but, in view of the volatility of the companies’ earnings, I do not think it would be appropriate to fix the husband’s income on the basis that his share of every dollar earned by the companies is available to him.

[94]         I generally agree with Ms. P. about the quality of Mr. P.’s evidence on that point. In Vincent v. Vincent, 2012 BCCA 166, Huddart J.A., writing for the Court, upheld a decision of the chambers judge who appears to have rejected evidence that was similar to that adduced by Mr. P. in favour of preserving high retained earnings in a family business (at para. 84):

[84]  Nevertheless, I am not persuaded the chambers judge erred in including all the Robannah pre-tax profit in 2007. The father’s evidence of Robannah’s need is unpersuasive. Robannah was doing well without any additional investment. Retained earnings increased to $196,631 from $72,367 in 2006; the father had chosen to invest in it all the monies he received on the winding-up of 557571. It is important to note that annual income is a measuring rod for child support. Inclusion in a measuring rod does not mean most of the money is not available for investment purposes. The corporate profit was available for child support, just as it was for investment.

[95]         Similarly, in Soucie v. Soucie, 2010 BCSC 1783, Fenlon J. rejected, in part, the payor spouse’s bald assertions as to the need to retain earnings where they were vague and unsupported by specifics (at para. 23):

[23]  With the exception of 2010, the company’s retained earnings have grown steadily. Mr. Soucie argues that the company needs to retain all of its pre-tax income because of bonding requirements, repairs, maintenance, amortization and the loss experienced in 2010. No evidence was provided on the amount needed for bonding. Repairs and maintenance are built into the annual expenses of the company: $255,373 in 2008; $306,838 in 2009; and $327,000 in 2010. Amortization of $116,465 was included in 2008; $157,227 in 2009; and $191,480 in 2010. The company suffered a loss in 2010, but it continues to have significant retained earnings. While there is no persuasive evidence that the company needs all of its pre-tax income, the economic downturn in Stewart and losses in 2010 support retention of some earnings. I therefore find that most, but not all, of Mr. Soucie’s share of the pre-tax income of the company should be attributed to him and I set that sum at 17%, reflecting a notional retention of 1/3 of the company’s pre-tax income for corporate objectives.

[96]         Having regard to the evidence adduced in this case in light of these authorities, it is fair to say that, as in Kopp, Vincent, and Soucie, Mr. P.’s evidence as to the need to retain earnings in the company is thin. I am not prepared to conclude, however, that no earnings whatsoever should be retained in the business for this interim period.

Vancouver Calgary High Business Income Support Lawyers Reality OF Business Matters

[97] This is not a case where the company is just a hollow vehicle for tax planning. It is an active business with 70 employees and real capital needs. It just sold its plant and needs to lease it back from the purchaser, which is a new expense. It must close on the land purchase in Surrey and build a new plant there. While I accept that the proceeds of sale from the Derwent Way property may be available to satisfy those needs in whole or in part, it would be inappropriate on this interlocutory application to embark upon a detailed analysis of the capital needs of the business. It is sufficient for present purposes to conclude that they are real and substantial.

[99] I am satisfied that the business should be permitted to continue to retain a significant portion of its income, but the evidence adduced by Mr. P. as to the business’ needs does not justify retaining this year’s earnings for this interim period at the levels at which they have been retained historically. I make no finding as to Mr. P.’s actual income, which can be left for trial, except that it is at least sufficient to allow him to provide child and spousal support at a level sufficient to maintain the family’s pre-separation income between now and the trial. For that purpose alone, I fix his guideline income at $650,000.

Vancouver Calgary High Business Income Support Lawyers Must Also Protect Pre Tax Profits In The Company

The court then capped the husband’s draws at the level of $650,000 so the wife’s share of family profits would grow in the company pending settlement or trial of the action. The husband had to also make ongoing corporate financial disclosure and seek the wife’s approval for expenditures over $25,000 per item.

To ensure the real money available for support is before the court it is crucial your family lawyer has a head for business and tax consequences. Even after support is obtained on a realistic income, our top rated* Vancouver Calgary High Business Income Support Lawyers will also protect the business profits kept in the company pending the property division of same.