When will a court set a payor’s average income under s. 16 of the Income Tax Code?
British Columbia, Canada
The following excerpt is from M.Y.T.C. v L.H.N., 2018 BCSC 1174 (CanLII):
In evaluating fairness, it is crucial for the court to consider the reasons which gave rise to the difference between the two figures and for the court to examine whether any increases or decreases in income are likely to be permanent. If there is a degree of permanence associated with an increase or decrease in income, the s. 16 determination of income may be the fairest determination: Fuzi v. Fuzi. Conversely, if the court concludes that s. 16 would not fairly determine a payor’s annual income, the court may set the income at an amount it deems fair and reasonable: Grossi v. Grossi, 2005 BCCA 47 at para. 25. If a payor’s income historically fluctuates, is unpredictable, or the estimate of current income is not reliable, the usual approach endorsed by the authorities is to average income in accordance with s. 17: J.E.H. v. P.L.H., 2013 BCSC 752 at para. 167.
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