Surrey Vancouver Guideline Support Income disputes involve a careful analysis of different forms of income and their tax consequences in properly calculating child and spousal support. Surrey Vancouver Guideline Support Income disagreements also require an analysis in cases involving businesses, partnerships and professional practices of whether that source of income is available to a parent or spouse for child and spousal support purposes. MacLean Law is a multiple winner of top Vancouver and Surrey family lawyer awards and we have offices across BC in Vancouver, Surrey, Richmond, Kelowna, Fort St John and Dawson Creek and in downtown Calgary.
Surrey Vancouver Guideline Support Income
The worst mistake we see in cases involving self-employed persons is that people wrongly assume a personal tax return accurately sets out that self-employed person’s true income. In today’s blog on Surrey Vancouver Guideline Support Income from our top-rated Surrey family lawyers, we will help you avoid the number 1 mistake in child and spousal support cases of using the wrong income figure for purposes of calculating proper child and spousal support. Manbeen Saini of our Surrey office handles medium to high net worth child and spousal support and property division cases and is fluent in Punjabi.
Role of Dividends in Calculating Child and Spousal Support Payments
This blog on Surrey Vancouver Guideline Support Income calculation explains how spousal and child support payments are calculated when the support payor receives a significant part of his/her income as dividends (amount paid out to shareholders from a company’s profits (after corporate tax is paid)). In other words, should dividends be included as income in calculating support payments?
The Federal Child Support Tables set out the basic monthly amounts of child support under the Federal Child Support Guidelines (the “Guidelines”). The Guidelines use a support payor’s gross income in determining the monthly amount of support. When a support payor receives part of his income as dividends, the Guidelines give the courts the discretion to add the amount of dividends to the annual income of the support payor.
Section 19 (1) (h) of the Guidelines states:
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:
(h) 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.
In the recent decision of Foster v. Sauvé, 2019 CarswellBC 2827 (“Foster”), the British Columbia Supreme Court (the “BCSC”) was required to determine the husband/payor’s income for calculating spousal and child support payments. The parties were in disagreement as to how the husband’s income should be calculated because part of his income included a dividend.
The husband argued that the dividend should not be available for support purposes and should not be included in his income for support purposes. He relied on the following facts:
- He had been invited to acquire a partnership interest in the firm he worked at and his only options were to participate on the terms offered by the partnership or find employment elsewhere.
- To acquire the said partnership, he was required to pay approximately $40,000 per year to the partnership.
- The partnership issued a dividend, in the actual amount of $25,000 to him so that he could pay it back to the firm.
- He needed a loan to top up the required amount and had no disposable income from which he could make the required payments except the dividend and debt.
- He did not have the option of using the dividend for any other purpose and he would not receive the dividend if it was not going back to the partnership.
The wife, on the other hand, stated that the dividend should be included in the husband’s income for support purposes. She relied on Boniface v. Boniface, 2007 CarswellBC 1140 (B.C. S.C.) in which the courts found that dividend as income.
Surrey Vancouver Guideline Support Income – The Rules 1 877 602 9900
In distinguishing Boniface, Master Elwood in Foster accepted the facts relied upon by the husband and provided the following reasons as to why the dividend in Foster should not be included as income to the husband:
- In Boniface, the dividend was paid to Mr. Boniface’s corporation which he controlled and that money was available to him whereas, in Foster, the dividend issued to the husband could only be used to pay back to the firm and for no other purpose.
- In Boniface, the husband had arranged his contractual obligations in a way to keep his true income secret from his wife; there was no such finding in Foster.
- In Boniface, Mr. Boniface was able to fully fund the purchase of his interest in the partnership from income derived from the substantial retained earnings remaining in his personal corporation whereas, in Foster, the husband had to borrow the remaining amount to make up for the $40,000 required to purchase his interest in the partnership.
Determining when dividends should be included as income and when they should not be included can be complicated. Contact our family law offices for answers to your questions on Surrey Vancouver Guideline Support Income should be calculated for the purposes of support payments.