Imputed Income and Child Support in Ontario: When a Judge Assumes More

Child support under the federal tables depends mainly on the paying parent's income. That raises an obvious question: what if a parent is out of work, or earning much less than they could, and it looks deliberate? Or what if you are that parent, and your circumstances have a good explanation?

This article explains in plain language when a court may impute income, what it looks at, and the limits on that power. The rules below come from the federal Child Support Guidelines. Unmarried parents are dealt with under Ontario law, which generally follows the same approach, so a lawyer can confirm how it applies to you.

What imputing income means

Income for child support is normally a parent's annual income, which starts from the Total income line on the T1 General tax return and is then adjusted. Imputing income means a court uses a higher figure than the one on paper because it finds the real earning capacity or real income is greater.

The table amount depends on the paying parent's annual income, the number of children and the province where the paying parent lives. So even a modest change to the income figure can change the monthly amount.

When a court may impute income

The Guidelines allow a court to impute income on several grounds. Two of the most common are where a parent is intentionally under-employed or unemployed, and where a parent unreasonably deducts expenses from income, such as business write-offs.

For corporations, this can capture earnings kept inside the company rather than paid out to the owner.

Exceptions: when income should not be imputed

A court does not impute income for under-employment or unemployment where it is required by the needs of a child, or by the parent's reasonable educational or health needs. For example, a parent who has reduced work hours because of a real health condition is in a different position from a parent who simply chooses not to work.

Whether a situation fits the exception depends on the facts and the evidence. Medical records, school enrolment and job-search records often matter, and a lawyer can help you decide what to gather.

Disclosure and proof of income

A parent whose income is in issue must provide personal income tax returns for each of the three most recent tax years. A self-employed parent must also provide three years of financial statements and a breakdown of payments to people not at arm's length.

If you were unemployed in the last three years, Ontario guidance says you must also file a Record of Employment or other proof, and a statement of any benefits still owed, such as severance. On written request, no more than once a year, the paying parent must provide updated income documents within 30 days, or 60 days if living outside Canada and the U.S..

Gaps in disclosure make it harder to explain your situation. A parent who hides or delays income information gives the other side and the court more reason to doubt the figures.

What to do next

• Collect your last three years of tax returns and notices of assessment.
• If unemployed, gather your Record of Employment and details of any severance or benefits still owed.
• If self-employed or incorporated, gather financial statements and records of payments to relatives or other related people.
• Keep records that show why your work situation is what it is, such as health or child-care needs.
• Speak with a lawyer before filing or responding, especially if imputed income is likely to be raised.

In court, Ontario uses Form 8 to set up child support, Form 15 to ask for a change without the other parent's consent, and Form 15D where both consent, along with a Form 13 financial statement and a Form 13A certificate of financial disclosure. The online Child Support Service is not available where the order involved imputed income, or where the payor is self-employed or a partner or majority shareholder in a business.

Frequently asked questions