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Child Support Guidelines - Income Imputed to a Spouse

August 31, 2021

Ontario

,

Canada

Issue

Will the court consider the effect of the COVID-19 pandemic on a parent's employment situation when determining whether to impute income to the parent?

Conclusion

Under section 19 of the Federal Child Support Guidelines the court may impute such amount of income to a spouse as it considers appropriate in the circumstances, including when the spouse is intentionally under-employed or unemployed, or it appears that income has been diverted which would affect the level of child support. ( Federal Child Support Guidelines)

In imputing income, the judge is required to consider the following three questions:

1. Is the spouse intentionally under-employed or unemployed?

2. If so, is the intentional under-employment or unemployment required by virtue of his reasonable educational needs?

3. If the answer to question #2 is negative, what income is appropriately imputed in the circumstances? (Drygala v. Pauli)

In Moulton v. LaSalle Turnbull J. agreed with the mother who was responsible for paying child support to the father that income from working in a restaurant from March 1, 2020 to June 30, 2020 was not to be imputed to her due to COVID-19 restrictions. The same monthly income as before March 1, 2020 was imputed to the mother from July 1, 2020 to December 31, 2020.

In Norris v. Morocco Gregson J. agreed with the father that the income to be imputed to him was lower than what the mother was seeking on the basis that father was not actively pursuing employment, as it had been only one year since the father's income had ceased as a result of COVID-19 restrictions.

In Simons v. Comrie, 2020 ONCJ 232 (CanLII) Spence J. took the pandemic into account in determining an appropriate amount of time to transition the father into an imputed income at minimum wage, as the pandemic has left many people either unemployed or with reduced employment. It was impossible for the court to predict how long it will be before employment levels begin to normalize, but Spence J. considered it reasonable to give the father 12 months to move from a 20-hour-a-week job to employment where he can work 30 hours per week.

In Goldsmith v Holden Macintosh J. concluded that it was reasonable for the father to open his own business after he had been laid off in the face of COVID-19. He did not agree that the father's income should be imputed at a higher level than it had been at the time of the making of the Final Order.

Law

Under s. 19 of the Federal Child Support Guidelines, SOR/97-175 the court may impute income:

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:

(a) 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;

(b) the spouse is exempt from paying federal or provincial income tax;

(c) the spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;

(d) it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines;

(e) the spouse’s property is not reasonably utilized to generate income;

(f) the spouse has failed to provide income information when under a legal obligation to do so;

(g) the spouse unreasonably deducts expenses from income;

(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; and

(i) the spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.

In Drygala v. Pauli, 2002 CanLII 41868 (ON CA) the Court of Appeal had set out the 3-part test for imputing income:

[22] The trial judge relied on s. 19(1)(a) of the Regulations Establishing Federal Child Support Guidelines, SOR/97-175 (hereinafter "Guidelines" or "Child Support Guidelines"), as amended, when imputing income. Section 19(1)(a) reads as follows:

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:

(a) the parent or 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 parent or spouse[.]

Application of Section 19(1)(a) of the Guidelines

[23] In my view, in applying this provision, the trial judge was required to consider the following three questions. [page718]

1. Is the spouse intentionally under-employed or unemployed?

2. If so, is the intentional under-employment or unemployment required by virtue of his reasonable educational needs?

3. If the answer to question #2 is negative, what income is appropriately imputed in the circumstances?

In Moulton v. LaSalle, 2021 ONSC 346 (CanLII) Turnbull J. agreed with the mother who was responsible for paying child support to the father that income from working in a restaurant from March 1, 2020 to June 30, 2020 was not to be imputed to her due to COVID-19 restrictions. The same monthly income as before March 1, 2020 was imputed to the mother from July 1, 2020 to December 31, 2020:

[8] At the time the order of Sherwood J. was made, Shian and Skylar were living with the respondent father, and the applicant mother was ordered to pay child support of $541 per month based on her purported income of $37,600 for 2013. Paragraph 8 of that order required the applicant to provide the respondent with a copy of her income tax return and Notice of Assessment no later than June 1st of every year starting in June 2014. She failed to do so. The evidence shows that she earned more than $37,600 in 2013 and each year thereafter. I have no doubt why she chose not to do so.

[...]

[12] The applicant has been gainfully employed at Autoneum Canada for over eight years. Her annual line 150 income from that employment is as follows:

• $43,236 for 2013;

• $49,854 for 2014;

• $52,694 for 2015;

• $49,955 for 2016;

• $45,008 for 2017;

• $51,146 for 2018; and

• $47,010 for 2019.

[13] The applicant swore that she had no other income from any other employment during the years 2013 to 2020.

Imputing Income to the Applicant

[14] The respondent alleges that in 2018, 2019 and 2020, the applicant worked “on the side” in three other income earning jobs and such income should be imputed to her. The respondent seeks an order imputing income of approximately $68,000 per year to the applicant based on the evidence of her work in a restaurant and other evidence found online that she is operating home businesses under the names of Modern Creations and Hot Spinz.

[...]

[18] I impute the same monthly income to her from January 1st to February 28, 2020. I am satisfied that she would not have been working in the restaurant from March 1, 2020 to June 30, 2020 due to COVID-19 restrictions. I impute the same monthly income from July 1, 2020 to December 31, 2020. Thus, for the year 2020, her imputed income is eight months at $380 per month, or $3,040 total.

In Norris v. Morocco, 2020 ONSC 4103 (CanLII) Gregson J. agreed with the father that the income to be imputed to him was lower than what the mother was seeking on the basis that father was not actively pursuing employment, as it had been only one year since the father's income had ceased as a result of COVID-19 restrictions:

[29] The father agreed he should be imputed a gross annual income of $30,000.00 based on minimum wage as of March 1, 2019 when his income ceased from his employer. The mother sought to impute the father an income of $55,000.00 considering the father had previously been earning the sum of $80,000.00 and it did not appear the father was proactively pursuing other employment. Despite same, I agreed with the father’s position considering it had only been one year since his income had ceased and as a result of new implications with COVID-19 (although COVID-19 was not raised during the trial as it pre-dated March 2020 when the pandemic was declared). I concurred with the father’s position regarding his imputation of income. He was the successful party on this issue.

In Simons v. Comrie, 2020 ONCJ 232 (CanLII) Spence J. took the pandemic into account in determining an appropriate amount of time to transition the father into an imputed income at minimum wage:

In Goldsmith v Holden, 2021 BCSC 1140 (CanLII) Macintosh J. took the pandemic into account when determining that the father's attempts to start his own business were reasonable in view of the COVID-19 - related closures and lay-offs:

[18] That record raises a concern that Mr. Goldsmith’s PrintMaker Studio business is an indulgent pursuit of a hobby at the expense of the Claimant earning money to support his children. However, I do not reach that conclusion at this stage from the available evidence. I do not find the career steps the Claimant has taken to be unreasonable, moving from photo lab manager at a London Drugs location, to Tricera Imaging, where he was laid off in the face of COVID-19, to opening his own business employing the same skills under the PrintMaker Studio name in March 2020.

[19] This Court will further scrutinize Mr. Goldsmith’s employment efforts in 2022, when the Final Order contemplates renewed child support applications. To this point, however, I am not satisfied that Ms. Holden has met the onus upon her of establishing that the Claimant’s income should be imputed to a higher level.

[20] There would certainly be no basis I can see on the evidence to impute an income higher than $48,000 in these times of COVID-19, and I select that figure because it was the Claimant’s annual income when the Final Order was made.

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