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Determining Income for Child Support

Determining Income for Child Support

In most cases, when determining income for child support in accordance with the Federal Child Support Guidelines, an applicant simply needs to take the income from their spouse’s most recent income tax return, look at the Child Support Table for their province, and find the correlating amount of child support for that income based on the number of children.

However, where the applying parent believes that the paying parent’s income tax return does not accurately reflect their actual income, they may ask the court to make an order that the paying parent’s income is a different value based on their evidence. The question is, how is the proper income determined if you don’t use the paying parent’s income tax returns?

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Determining Income for Child Support

First, the applying parent should be aware that it is their responsibility to prove that the paying parent’s income is different than what is reported on their income tax returns. This can be shown through paystubs, deposits into bank accounts, corporate income statements etc. Second, once it is shown that the income tax return is not a fair indicator of the paying parent’s income, the next step is to determine what income is appropriate.

Using the Paying Parent’s Income Tax Returns

The court may use a previous year’s income to estimate the current income of the paying parent if they had an unusually poor or successful year the year before. The judge may average the last three years of income reported on the paying parent’s income tax returns if their income varies widely per year. The court may include in the parent’s income all or part of the pre-tax income of a corporation in which the parent is a shareholder, director or officer and adjust pre-tax corporate income to add back salaries, wages, or management fees to non-arm’s length parties.

Income For Child Support- Imputing an Income

Determining income for child support can be difficult. The court may attribute an income to a paying parent if the income on their income tax returns does not appear to show an accurate picture of their yearly income. The court may impute an income to a party in the following circumstances:

  1. Intentional under-employment;
  2. Exemption from payment of income tax;
  3. The parent’s failure to make proper financial disclosure;
  4. A situation in which a significant portion of income is paid form dividends or capital gains; or
  5. The parent’s unreasonable deduction of expenses from income.

determining income for child support

What method the court uses in determining income for child support will depend on the circumstances. If you have questions about calculating income for the purposes of setting child support. Speak to one of our family lawyers in the Toronto office of ClearWay Law.

The Importance of Documenting Child Support Payments

You have promptly attended to paying your child support payment on time and in accordance with the Federal Child Support Guidelines.  You likely assume that your responsibility ends there. However, there is one extra step that all parents paying child support should take. This occurs after making their child support payments and that is ensuring that they have documented the payment.

Documenting your child support payment can take many forms. It depends on how you provide child support to the other parent.  When it comes to base child support, you can track your payments in a few different ways. First, if you pay through the Family Responsibility Office. A record will be created through their program.  Second, if you pay your spouse directly you can choose to make a payment with a paper trail.  Two common ways are through cheques and e-mail money transfer.

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If you write cheques each month, ensure that you put “[Month] Child Support” in the memo line. Include the month for which the payment will apply.  If you do e-mail money transfers, make sure that you put “[Month] Child Support Payment” in the Message Box. Print off a copy of the transaction and confirmation emails from the bank that the payment was received. If you pay your spouse directly with cash make sure to have your spouse sign a receipt stating the date. You will also need to make sure the amount of child support that was received is documented. Finally, the month that the child support payment will cover should be included. Then make sure that they sign the receipt to acknowledge they received payment.

It is important to document child support payments for two reasons

  1. If the other parent makes a claim that you haven’t been paying child support or makes a claim for retroactive child support (back pay for missed child support). The paper trail you have created evidencing your payments will be your defense to the other parent’s claim.
  2. Child support payments are not taxable. You still need to claim all support payments on your taxes. Having a written record of the amount of support you have paid can help ensure you capture all payments in your income tax returns.

Still have questions about documenting your child support payments or determining income for child support? Speak to one of our lawyers in the Toronto office of ClearWay Law. Our lawyers have experience assisting clients with child support matters.

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When Do Child Support Payments end?

The Divorce Act articulates that child support is payable for any “child of the marriage”.  A child of the marriage means a child of two spouses or former spouses who is under the age of majority (18) and who has not withdrawn from their parent’s charge or a child of the marriage who is over the age of majority (18) but is unable to withdraw from their parent’s charge due to illness, disability, or other cause.

The Family Law Act in Ontario restricts eligibility for child support to unmarried children who are under the age of majority or over the age of majority but is enrolled in full-time education and has not withdrawn from parental control.

If any children of the marriage fall under the parameters articulated in the Divorce Act or the Family Law Act, a parent may make a claim for child support. Once obtained, support will continue until the child is over the age of majority and is able to be independent. Often this occurs with the child turns 18 and child support will cease on the child’s 18th birthday.

The law presumes that after 18, the child is able to obtain gainful employment to support themselves. However, sometimes child support will still be payable after a child turns 18 if they are unable to withdraw from their parent’s care.  The most common reason for a child being unable to withdraw from their parent’s care is if they are enrolled in post-secondary education.

Examination of the Child’s Circumstances

In Ontario, if the child is over the age of 18 and continues to be enrolled in school the obligation to continue to pay child support generally continues until the first post-secondary education degree is completed. And sometimes, child support can even be payable through additional degrees. To determine whether a child should be supported through a second degree the court will examine any relevant factors, such as the financial standing of the parents, the child’s academic performance, the child’s career goals, and the family’s expectations for education (usually the expectations prior to separation).

Whether child support will be payable requires an examination of the child’s circumstances and their ability to support themselves independently.  Have questions about whether child support is still payable for a child over the age of majority? Speak to a family law lawyer.  Our lawyers in the Toronto office of ClearWay Law have experience assisting clients with child support matters. Having a hard time determining income for child support? Contact our office to set up an initial consultation.

FAQ’s

Can Spouse Income Be Used for Child Support?

Yes, it is part of the calculation. However, there are other factors as well.

What Is Considered as Income for Child Support?

This would be defined by the CRA. There are definitions for what counts as income. In short, it’s complex.

Can You Use Child Support as Income for a Mortgage?

That is up to the bank to decide. It’s not a legal question.