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Child Support and imputing Income

child support

The courts will impute income to a parent who earns below a certain threshold. This is to ensure that children are financially provided for and that in situations where a parent decides not to pursue gainful employment, this does not come at the child’s detriment. Each case, however, turns on its own facts. The oft-cited case of Drygala v. Pauli, 2002 CanLII 41868 (ON CA) sets out the legal test for imputing income to a child support payor. The Court of Appeal determined the key factors that a court must consider when it imputes income and what amount to impute given the parent’s health or educational needs. 

THE FACTS

In this case, the parties had a brief marriage. They were married in 1997 and a divorce was granted in 2001. There was one child of the marriage.

During the marriage, the father earned $21.00/hr as a tool and die maker. After the parties separated, the father was unemployed but kept on the payroll of his stepfather’s company from 1997 to 2011. In 1999, the father enrolled in university on a part-time basis. In 2000, he enrolled as a full-time student in a Bachelor of Arts program with the intention of becoming an elementary school teacher. He was financially supported by his mother during his studies.

TRIAL DECISION

At trial, the judge imputed income to the father based on an imputed annual income of $30,000.00. The judge found that the father was capable of working while attending school and that he could earn $30,000.00 on a part-time basis. This resulted in a child support order of $266.00 per month.

The father appealed. 

COURT OF APPEAL 

The Court of Appeal examined the law as it applied to imputing income and the reasonable education needs of a child support payor. The Court of Appeal agreed with the trial judge that the father acted intentionally and that s. 19(1)(a) applied to him when he made the decision to attend university rather than to work.

THE LAW

Imputing income

  • 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;

S.19(1)(a) of the Guidelines states that a court can impute income where a spouse is intentionally under-employed or unemployed. A parent falls within the meaning of s. 19(1)(a) of being intentionally under-employed or unemployed if he or she chooses to earn less than they are capable of earning. That statutory meaning is captured even when the parent attends school they could otherwise be working. There is no requirement of bad faith or a specific intent to evade child support obligations.

PARENT’S REASONABLE EDUCATION NEEDS 

The court stated that “as a general rule, a parent cannot avoid child support obligations by a self-induced reduction of income.” (paragraph 38). Once it is established that s. 19(1)(a) applies, and that a parent is intentionally unemployed or under-employed, the burden shifts to that parent to establish what is required by virtue of his or her health or reasonable educational needs.”

Under this section, the court can make an exception and find that even though a parent is making less than what they are capable or earning, or in some cases nothing at all, that this may be required by their educational needs. The caveat is that the court must find that the educational needs are reasonable. A parent would not meet the exception afforded under s. 19(1)(a) if the parent has unrealistic career aspirations or pursues employment that has limited earning potential. 

As the evidentiary burden is on the parent, the parent must provide the evidence for what is required by the parent’s educational needs. It is a fact-specific inquiry. Key considerations include how many courses must be taken, how much classroom time is required, how academically demanding the program is and whether it would preclude part-time employment, whether the program could be completed over a longer period of time to accommodate part-time employment, whether summer employment is possible, whether remunerative co-operative courses can be taken to earn income during the program, etc.

Quantum of Income to be Imputed

At paragraph 44, the Court of Appeal said the following: “Section 19 of the Guidelines is not an invitation to the court to arbitrarily select an amount as imputed income. There must be a rational basis underlying the selection of any such figure. The amount selected as an exercise of the court’s discretion must be grounded in the evidence.”

When imputing income, Gillese J.A. wrote that the court must consider the amount that can be earned if a person is working to their full potential while pursuing a reasonable educational goal. The relevant factors are the health of the parent, age, education, experience, skills, the number of hours the parent is capable of working, and what amount they would likely earn if they obtained work. 

The court looks at the parent’s financial statement when determining what quantum of income to impute. The financial statement provides the court with insight into the parent’s spending habits, debt levels, and their overall financial status. In this particular case, the court commented that the income that was imputed to the father was significantly less than his annual expenses. His annual expenses were $48,000.00 while the income imputed to him at trial was $30,000.00. Despite his considerable expenses, he had no debt at the time of trial. Rather, the father’s financial statement showed that he had disposable income and that he spent $240.00 per month on cigarettes.

APPELLATE DECISION

In writing for the Court of Appeal, Gillese J.A. commented that the trial judge did not provide an explanation for why an annual income of $30,000.00 was imputed to the father on a part-time basis. Gillese J.A. disagreed with the trial judge that this was a reasonable figure to impute to the respondent given that his earning history revealed that in his highest earning year, the respondent earned $33,000.00 while working full-time. Thus, the assumption that he could earn $30,000.00 on a part-time basis was not realistic. On the basis that he was assumed to be capable of working part-time while attending school, Gillese J.A. ordered the respondent to pay child support based on an imputed income of 50% of his highest earning year – $16,500.00.

TAKEAWAY

A parent who decides to make a career change while in family law proceedings is not excused from meeting his or her child support obligations. Thus s. 19(1)(a) of the Child Support Guidelines does not permit a parent to avoid their responsibility to financially support their child. This reflects the court’s recognition that the parent’s pursuit of their career goals should not be at the detriment of their child/children. Rather, the application of S. 19(1)(a) is an exercise of discretion that is informed by the parent’s reasonable educational needs. The parent still has the burden to prove what he or she is capable of earning while attending school. The court can make an order that imputes income to a parent while recognizing that they may not be able to their full capacity because they are in school. In this way, the court is empowered to craft a remedy that balances the child’s need for financial support and the parent’s educational objectives.  

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