Income Determination & Support
Income Determination / Appropriate Support
One of the main keys to determining child support or spousal support payment amounts in separation and divorce is to determine the income of both spouses. The amount of child support is based on the incomes of both parties as well as the number of children.
Determining income can be as straightforward as looking at line 150 of a Notice of Assessment from Revenue Canada.
Income determination can, however, become very complex when people are self-employed, employed by a corporation that they own, or receive stock options as part of their compensation, or have stocks or business shares that fluctuate in value, or have hidden assets or income. Thomas and Associates: Trial and Appeal Lawyers have significant experience dealing with the valuation of businesses, and determination of income in complex factual situations with associated child support and spousal support.
A spouse who solely owns his successful business and receives income from the business may be required to defend an application that his income is higher than what his line 150 income says it is. That is because the business may be so successful that the business for the current tax year or prior tax years has or had excess profits that can be attributed to his income even where he left the funds in the business. Thomas and Associates: Trial and Appeal Lawyers have extensive experience in such areas and can provide advice as to how to deal with such issues. Likewise, the spouse of the business owner would wish to seek this firm’s advice about such issues.
Further, a spouse who solely owns a successful business may have taken greater income for a year for reasons that should not be held against him for support purposes, and again Thomas and Associates: Trial and Appeal Lawyers have the experience to review such detail with a client and determine a strategy to deal with such issues. Planning is a key to success.
A party may be subject to an application that they have the ability to earn greater income than they have actually earned. There are a number of possible scenarios. A party may have reduced their hours of work. A party may have changed how they do business and reduced their income. Some may have simply quit work. Others may not have entered the work force or entered the work force but only on a part time basis. All such background is relevant to determining a party’s income for support purposes.
Child and Spousal Support Issues
Where child support is relevant, once Guideline Income is determined, the Federal or B.C. Child Support Guidelines are applied to the factual matrix to determine the amount of child support.
A number of complex and inter-related factors impact the support calculations. The following factors impact child support:
- the number of children
- if both parties are biological parents, or if one of the spouses is a step-parent. Biological parents have the primary obligation to support their children, and the obligation of step-parents is analyzed only after the biological parents situation is known, although that analysis depends significantly on the facts
- if one party is the primary care giver to the children or if there is split or shared custody
- the income of the payor is above $300,000 per year
- the children or one of them is 19 or older and still dependent on the parents for one reason or another. The reason for continued dependency is critical to whether the obligation continues or if it does, whether the support obligation is lower than the presumptive amount set out in the Child Support Guidelines.
Likewise, a number of factors impact not just entitlement to spousal support but the monthly amount of support and how long the spousal support should be paid. The factors include but are not limited to:
- the length of the marriage
- the roles assumed by the parties in the marriage. Such as one party remained home to raise the children whereas the other party focused on his or her career
- the respective incomes of the parties at and after separation. Where a payor has income above$350,000.00 potentially different support might result above $350,000.00. However such arguments are involved and complex.
- the potential impact of property division on spousal support
- the amount of child support paid by the payor. However, sometimes a party in receipt of spousal support has an obligation to pay child support to the other spouse, and in that case, the amount of spousal support is influenced by that background.
To determine income and support, parents may need to produce documents such as income tax returns for the last three years, pay stubs and financial statements for corporations they own.
Thomas and Associates lawyers have significant experience and success in determining income, determining appropriate support, and achieving positive outcomes for clients who would like to defend a stated income even in complex cases. Our lawyers are also good at tracking down hidden or unreported assets or income.
Child Support and Special Expenses
There are two types of child support. The first discussed above is based on income determination and a number of other factors. This is referred to as basic child support.
Basic child support is designed to provide financial assistance to cover primarily food, shelter, basic education costs, and clothing and other basic necessities. The presumption is that the primary parent pays the same cost indirectly and the non custodial parent contributes based on his or her income based on the Child Support Guidelines the required basic child support.
Special expenses and other extraordinary expenses are an additional level of contribution.
Special expenses generally require contribution for the following types of child based expenses:
- medical/dental expenses for the child;
- where there is medical/dental plans, the uncovered or net portion of such expenses;
- educational expenses that are extraordinary such as tutoring, educational assessment testing;
- post secondary expenses;
- extra-curricular activities for the children.
However, special expenses are viewed through a prism of the benefit to the child, and how necessary the service or activity is to the child as compared to the cost and what the parties did in the past with respect to such expenses.
Thomas and Associates lawyers have significant experience and success in dealing with special and extraordinary expenses and achieving positive outcomes for clients in the areas.