If an individual paying child support intentionally reduces their income, the court may impute a higher level of income to them unless the individual can establish that the reduction in income was reasonable. Child support payment amounts will then be determined based on this higher imputed income, rather than the actual income.
Under s.19 of the Federal Child Support Guidelines, the court may impute an amount of income to a spouse it considers appropriate in certain circumstances, including if 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 or health needs of the spouse.
In Donovan v. Donovan, the Manitoba Court of Appeal adopted the following guidelines that courts may consider in determining whether to impute income:
There is a duty to seek employment in a case where a parent is healthy and there is no reason why the parent cannot work. It is "no answer for a person liable to support a child to say he is unemployed and does not intend to seek work or that his potential to earn income is an irrelevant factor"
When imputing income on the basis of intentional under-employment, a court must consider what is reasonable under the circumstances. The age, education, experience, skills and health of the parent are factors to be considered in addition to such matters as availability of work, freedom to relocate and other obligations.
A parent's limited work experience and job skills do not justify a failure to pursue employment that does not require significant skills, or employment in which the necessary skills can be learned on the job. While this may mean that job availability will be at the lower end of the wage scale, courts have never sanctioned the refusal of a parent to take reasonable steps to support his or her children simply because the parent cannot obtain interesting or highly paid employment.
Persistence in unremunerative employment may entitle the court to impute income.
A parent cannot be excused from his or her child support obligations in furtherance of unrealistic or unproductive career aspirations.
As a general rule, a parent cannot avoid child support obligations by a self-induced reduction of income.
In Drygala v. Pauli, the Ontario Court of Appeal established a three-part test in applying the provision under s.19, requiring the trial judge to consider the following three questions:
Is the spouse intentionally under-employed or unemployed?
If so, is the intentional under-employment or unemployment required by virtue of his reasonable education needs?
If the answer to question two is negative, what income is appropriately imputed in the circumstances?
Significantly, the Court of Appeal also held that there was no need to find a specific intent to evade child support obligations before income can be imputed. The term “intentionally”, in the first part of the test, is therefore given a wide definition. An individual is intentionally under-employed or unemployed where they earn less than they are capable of earning having regard for all the circumstances.
This test was recently applied in Ghent v. Busse. In that case, the applicant, Ghent, sought an order to increase the monthly child support the respondent, Busse, should pay based on an increased annual income she asked the court to impute. The respondent was a teacher with a base salary of $95,000. In the past, Busse had supplemented his income by teaching summer school and evening classes.
Ghent argued that Busse could earn up to $115,000 a year if he taught summer school and evening classes and made periodic sales of his artwork to supplement his income. She argued that by choosing not to earn this supplementary income, the respondent was intentionally under-employed.
Busse gave evidence that the summer school and evening classes he taught in the past would be difficult for him to continue because of responsibilities to his new family. Busse had remarried after separation and had young children with his new wife.
Applying the test from Drygala v. Pauli, the Honourable Mr. Justice Emery held that although the act of not enrolling to teach summer school or evening classes was an intentional act, discontinuing extra work for does not qualify as being intentionally under-employed where there is a good reason for doing so. In this case, the court found that Mr. Busse’s discontinuing additional work was understandable given his responsibilities to his new family.
Justice Emery held that, when making a determination of whether a party has a good reason for discontinuing extra work, the court must take a contextual approach to make these factual determinations in order to reach the proper legal conclusion.
The facts in Ghent v. Busse can be contrasted to those in Moffatt v. Moffatt. In that case, the parties had separated in 1997. The father was a teacher with an annual income of $63,000 at separation. In 2001, the father opted for early retirement, accepting a favourable offer by his employer to retire five years earlier than usual. The mother brought an application arguing that the father had become intentionally under-employed and asking the court to impute an income of $70,200 per year, which was the amount the father would have earned if he had not retired. The court held that the decision to retire early benefited the father and the father alone. Importantly, the decision to retire early had significant detrimental consequences on the father’s two dependent children. The court imputed an income of $70,200 per year for the husband for purposes of calculating child support.
In determining the amount of income to impute to the father, the court in Moffatt also noted that he had the ability to contribute more to his children than he proposed. The father had significant investment assets that could be available to him to top-up his investment and employment incomes for purposes of child support.
Individuals who are paying child support must consider their obligation to their dependent children before taking actions that will reduce their income. Failure to provide the court with a good reason for the reduction in income may lead to an imputed income, and a a quantum of child support corresponding to that imputed income.
Contact our lawyers for more information on imputing income in family law and divorce cases.
Suliman Lehner Barristers & Solicitors has prepared this document for information only; it is not intended to be legal advice. You should consult us about your unique circumstances before acting on this information. Suliman Lehner Barristers & Solicitors excludes all liability for anything contained in this document and any use you make of it.
 Donovan v. Donovan, 2000 MBCA 80
 Citing (V. (J.A.) v. V. (M.C.) (1998), 166 D.L.R. (4th) 528 (B.C. C.A.)).
 Drygala v. Pauli,  O.J. 3731
 Thompson v. Thompson, 2013 ONSC 5500 at paras. 98-99.
 Ghent v. Busse, 2016 ONSC 5282
 Moffatt v. Moffatt,  O.J. No. 3912 (Ont. S.C.J.)