Imputing Income – Determining the Proper Quantum of Child and Spousal Support

If you are separating or divorcing from your spouse, you’ll know that a key step in the process is to determine how much annual income each of you earns. Accurately setting those income amounts is important, because it factors into the legal determination of how much spousal or child support must be paid, and by whom.

In a perfect world, each of you would both be forthright and honest about your income figure. But real-life teaches us that that most divorces are acrimonious; when it comes to finances, some spouses fudge the numbers, or lie about them outright.

The good news is that the Ontario Family courts have several tools to address this kind of scenario.

For the following discussion, let’s assume that in your divorce proceedings, you will be the party entitled to received spousal or child support from your spouse. And let’s assume you suspect your spouse of trying to avoid paying the full amount you are owed: Instead of earning income at their full capacity, they are currently in a state of self-induced unemployment or under-employment.

In this kind of scenario, here are some of the points you should know.

Imputing Income

When faced with a spouse who is trying to shirk his or her support duties, Ontario courts have certain powers at their disposal. If it’s clear that a spouse is deliberately unemployed or under-employed, courts have the authority to impute income – meaning they can attribute an appropriate “best guess” income amount to the spouse and then, based on that figure, can proceed to calculate support accordingly.

The courts’ authority is found in various sources. Respecting child support, for example, it stems from s. 19(1)(a) of the Ontario Child Support Guidelines., which reads:

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; …

What Will the Court Look At?

If you suspect your spouse is intentionally unemployed or under-employed, you can ask the court to make a declaration to this effect, and then to impute income to him or her for the purpose of calculating support. In making the assessment, the court will keep the following legal principles in mind:

• Your spouse cannot avoid his or her support-related obligations by unilaterally or voluntarily reducing their income (LePage v. Porter (2002), R.F.L. (5th) 335 (Ont. S.C.)).

• If unemployed, your spouse has a duty to actively seek out reasonable employment opportunities that will maximize his or her income potential, to meet the needs of your children (Thompson v. Thompson, 2014 ONSC 5500).

• Your spouse is also not entitled to quit his or her employment for selfish reasons, or engage in deliberately reckless or bad faith behaviour that gets them fired (Scott v. Chenier, 2015 ONSC 7866).

• Even if your spouse has lost his or her job involuntarily, they have a legal obligation to seek out replacement work, after a short “grace period” (Filippetto v. Timpano, 2008 CanLII 3962 (Ont. S.C.); Lavrinenko v. Lavrinenko, 2014 ONSC 4097 (Ont. S.C.J.)).

• If your spouse does not engage in a reasonable job search, the court will have no choice but to find that he or she is intentionally under-employed or unemployed (Filippetto v. Timpano, 2008 CanLII 3962 (Ont. S.C.)).

• Likewise, if your spouse persists in engaging in unremunerative business opportunities with no realistic prospect for future advancement, or pursues unrealistic or unproductive career aspirations, the court may decide to impute income to him or her (Drygala v. Pauli, 2002 CanLII 41868 (ON CA); Blake v. Blake, 2000 CarswellOnt 2477 (Ont. S.C.J.); Abballe v. Abballe, 2014 ONSC 4244 (Ont. S.C.J.)).

Note that the test for imputing income is the same in both child support and spousal support cases (Crowe v. McIntyre, 2014 ONSC 7106; Da Silva v. Kelly, 2022 ONSC 1402, 2022 CarswellOnt 2488, 2022 A.C.W.S. 373, 69 R.F.L. (8th) 286).

Related: High Income Earners and Spousal Support

Who Has to Offer the Proof?

If you are the one seeking to have income imputed to your spouse, then it will fall to you to prove that he or she is intentionally unemployed or under-employed (Hgeomsi v. Zaya, 2009 ONCA 322, 65 R.F.L. (6th) 17)). But once you have provided evidence to persuade the court, then the burden shifts: Your spouse is then entitled to try to show that the situation of under-employment or unemployment is driven by his or her reasonable needs.

Note that a court does not need to see evidence of bad faith in the technical sense – meaning there is no requirement to show your spouse is malevolently trying to avoid paying spousal or child support. Rather, in this context the term “intentionally” simply equates to “voluntarily”. In other words, your spouse can meet the threshold by simply choosing not to work when they are capable of earning income (Drygala v. Pauli, 2002 CanLII 41868 (ON CA); Da Silva v. Kelly, 2022 ONSC 1402; Lavie v. Lavie, 2018 ONCA 10).

How Much Income to Impute?

Now let’s assume the court is satisfied that your spouse is intentionally unemployed or under-employed. Perhaps surprisingly, this does not mean the court will automatically impute income to him or her. Instead, the court has residual discretion in this regard, meaning that it can still choose not to impute income if your spouse’s decisions are considered reasonable overall, or if the circumstances otherwise warrant it (Alazari v. Al Rubaie, 2018 ONSC 3433 (Ont. S.C.J.); Horbas v. Horbas, 2020 MBCA 34 (Man. C.A.)).

For example, the court will consider whether your spouse’s intentional under-employment or unemployment is made necessary by:

• Their reasonable educational needs (Drygala v. Pauli, 29 R.F.L. (5th) 293 (Ont. C.A.));

• Their own health limitations (Stoangi v. Petersen, 2006 CanLII 24124 (S.C.J.); Rilli v. Rilli, 2006 CANLII 34451(S.C.J.); C.V. v S.G., 2019 ONCJ 159 (O.C.J.)); or

• Their desire to return to school in the short-term, to advance their career (see for example Horbas v. Horbas, 2020 MBCA 34 (Man. C.A.)).

As always, the outcome will hinge on the particular facts of your situation.

What Amount Will Be Imputed?

As mentioned, if you want to accuse your spouse of being intentionally under-employed or unemployed, then you bear the onus of proving it to the court. However, once you have done so, you are not required to prove the proper income amount that the court should impute (Dunne v. McNeil, 2020 ONSC 1217 (Ont. Div. Ct.); Kinsella v. Mills, 2020 ONSC 4785). That assessment is left in the court’s hands.

The court will come up with an income figure, based on what it feels your spouse could reasonably earn, were it not for his or her decision to be intentionally underemployed or unemployed. The court will look at:

Earning capacity 

This assessment is influenced by your spouse’s:

• Age;

• Education;

• Skills;

• Health;

• Work history; and

• Current ability to resume an income commensurate with past income.

Availability of work 

The court-imposed figure will also be influenced by the actual availability of work that is within the scope of your spouse’s capabilities (Marquez v. Zaipola, 2013 BCCA 433; Kinsella v. Mills, 2020 ONSC 4785, 2020 CarswellOnt 12428, [2020] O.J. No. 3668, 322 A.C.W.S. (3d) 277, 44 R.F.L. (8th) 1; King v. King, 2019 ONCA 950 (Ont. C.A.)).

Previous income, but assessed in view of the circumstances 

Finally, the court may look at the amounts your spouse has historically earned, while still taking into account factors such as career interruptions to stay home and care for any of your children (see for example Lawson v. Lawson, 29 R.F.L. (6th) 8 (Ont. C.A.)).

Case Illustrations

Courts are willing to impute income in a wide variety of circumstances. To give just a few examples:

• In a case called Brooks v. Brooks, 2017 ONSC 1806, the husband had lost his construction job due to his drug addiction. The court agreed with the wife that the husband had acted “intentionally” – meaning he engaged in voluntary and criminal conduct – when he first began using drugs. This was equivalent to self-induced unemployment, the court found. It imputed income to him for the purposes of calculating the support he owed.

• In King v. King, 2019 ONSC 5279, the husband had sent the wife a series of angry text messages in response to her request that he pay her spousal support. The court recounted that “amongst other unpleasantries”, the man called her a “money-grabbing bitch” and vowed that he was “not paying her a dime until a court told him had to”. In his defence, the man said he was just angry when he sent those texts, and – despite having quit a few jobs – was not intentionally striving for under-employment. He said it simply “made no financial sense” to continue the type of work in which he was employed at the time. The court wasn’t persuaded: It noted that the husband admitted sending the texts, but never denied that they were true. As the court put it: “he explained the reason why he sent them but does not back away from the contents”. The court imputed income for some of the years since separating from the wife, and calculated the spousal support he owed her, accordingly.

Conclusion

A court’s determination on whether to impute income is very fact-driven. If this kind of scenario might pertain to you, be sure to get the advice of an experienced Family Lawyer who can inform you of your legal rights, and help you get the full support you deserve.