Imputing Income for Child Support Calculations in Alberta

By Daniella Marchand, Family Lawyer, Calgary

If you are going through a separation or divorce and have a child with your ex-partner, child support must be addressed. Typically, child support is a fairly straightforward issue to figure out. Once you have a parenting plan in place, you can usually use the Federal Child Support Guidelines to help determine the amount of child support that should be paid based on parenting time and each parties’ guideline income. You might also use Coach My Case’s free child support calculator to help determine a starting point.

The first step in determining each parties’ guideline income is exchanging disclosure, which is in effect the parties’ income information. In any family law matter involving child support or spousal support, both parties need to exchange and receive fulsome disclosure, which must be complete and up-to-date and includes the parties’ income, assets, and debts. Disclosure allows everyone to be working from the full financial picture.

But what if your spouse is refusing to disclose their income, or what if their income changed drastically after separation? Maybe even after you received disclosure from your partner, you have evidence that they are likely making more than what they are disclosing (such as buying brand new cars, or going on fancy vacations), or that their income drastically reduced with no reason.

You may have to ask the court to impute your partner's income, as per section 19 of the Federal Child Support Guidelines.

If you are considering applying to the court to impute income to your ex, it is important to know that the law in Alberta has recently changed in this area.

The test to impute income

Previously, the test to impute income required that the applicant (or the person who is asking the court to consider imputing income to their ex) would have to demonstrate or provide evidence to the court that it was their exes intention to evade or undermine their child support obligations. However, with the Court of Appeal’s decision in Peters v Atchooay, 2022 ABCA 347, the law regarding imputing income is now in line with the rest of Canada, where an intention to avoid paying child support is no longer specifically required. The Court of Appeal set out that the test to determine whether someone’s income should be imputed is as follows:

  1. Is the parent in question intentionally underemployed or unemployed?
  2. Do the listed exceptions to imputation under s. 19(1)(a) apply?
  3. Should judicial discretion to impute income be exercised?

These are discussed in further detail below.

This test applies to income payable under both section 3 of the Guidelines, as well as section 9. So, what are some of the things to consider under each branch of this test?

Is the parent intentionally underemployed or unemployed?

You cannot apply to have someone’s income imputed if the circumstances of their under or unemployment are outside of their control. This could include things where someone has been laid off or terminated without cause from their job. If a payor can show that they are actively searching for employment that aligns with their skills and educational experience, but truly cannot find adequate work in their field, it may not be an appropriate situation to impute their income. However, if someone was laid off from their job, and a significant period of time has passed without them looking for alternative or similar employment, then it may be a situation where the court would consider imputing their income.

Do the listed exceptions to imputation under s. 19(1)(a) apply?

Section 19 of the Federal Child Support Guidelines states that if someone is underemployed or unemployed because it is required they take care of the child of the marriage/relationship, due to the child having special needs or a disability, or the parent themselves has a disability, then you may not be able to ask the court to impute the income. However, the needs of the child do not always have to relate to a disability or special needs, but at times this could be due to a child’s young age, or if the parent is on paternity or maternity leave. This is the same if your partner is going to school and is unable to work due to that commitment. However, these exceptions are not automatic, and will depend on the specific circumstances of each case.

Section 19 also provides several reasons that a court may impute someone’s income, such as instances where:

  • the spouse is intentionally underemployed or unemployed, other than where the underemployment 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;
  • the spouse is exempt from paying federal or provincial income tax;
  • the spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;
  • it appears that income has been diverted, which would affect the level of child support to be determined under the Federal Child Support Guidelines;
  • the spouse’s property is not reasonably utilized to generate income;
  • the spouse has failed to provide income information when they are under a legal obligation to do so;
  • the spouse unreasonably deducts expenses from their income;
  • 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;
  • the spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.

If any of these situations apply, and none of the exceptions under section 19 apply, then you might be able to apply to the court to request that your partner’s income be imputed.

Should judicial discretion be exercised?

Even if you apply to the court to impute your spouse’s income, the court does not need to impute income. The question the court considers of whether to impute income involves determining whether someone being underemployed or unemployed was reasonable, considering all the circumstances in your situation. The court will consider all the evidence before them in making this determination, including disclosure that had been exchanged and filed, as well as any affidavit or oral evidence presented.

In determining whether income should be imputed, the court provided a non-exhaustive list of principles in Peters v Atchooay to guide the court’s analysis (at paragraph 92):

General Duty to Work: parents have a general duty to seek employment if they are healthy and can work. Parents cannot refuse employment or refuse to take reasonable steps towards gainful employment simply because they cannot obtain interesting or highly paid employment.

Earning Capacity Used to Assess Reasonableness: A court must consider what is reasonable in the circumstances, with the starting point being earning capacity. This earning capacity should be considered considering the parent’s age, education, experience and skills.

The court should not impute income where a parent’s decision to earn less than they are capable of making is reasonable in the circumstances.

Obligation to Support Children is the overarching goal: a parent is required to act in a manner reflective of his or her obligations to their children.

Agreements contextualize reasonableness: Although pre-separation agreements have some weight in determining child support income, they are not the determining factor.

Reasonableness is not fixed in time: what is reasonable at one point in time may not be over the entire time the children are owed support.

The ultimate onus rests on the party opposing imputation: assuming that the parties have met their financial disclosure obligations, the party opposing imputation will have to prove on a balance of probabilities that 1) their under or unemployment is not voluntary, or not due to their own conduct; or 2) the under or unemployment is due to one of the exceptions listed in section 19. Although the other party will have to demonstrate there is some reason for the court to consider the imputation, the party opposing imputation will have to meet the previous test.

Finally, if the court decides to impute income, there must be a rational basis in deciding what income is appropriate to impute and it must be grounded in evidence.

Alternative Dispute Resolution

If you are still struggling to determine what amount of child support may be payable but still would like to keep court as a last resort, you can look into Alberta’s Child Support Resolution Services (formerly called Dispute Resolution in Calgary or Child Support Resolution in Edmonton).

Remember, child support is the right of the child, and parents have an obligation to provide financial support for their children. If you have questions regarding child support and need affordable and flexible legal services, contact one of our legal coaches or paralegals at Coach My Case to learn more. Get started today by booking a free 20-minute consultation.