Child and Spousal Support for the Self-Employed

Child and Spousal Support for the Self-Employed

Francesco Tolfa
Posted February 20, 2024 Category: News & Updates

There are different income considerations for self-employed individuals facing child or spousal support obligations.

If you are separating from your spouse, calculating your income is the first step in determining whether you may have to pay, or if you are entitled to receive, spousal or child support. Courts across Canada have consistently applied the same principles to determining income for the purpose of calculating child support as they do when determining spousal support. In Canada, the Federal Child Support Guidelines (the “Guidelines”) and Spousal Support Advisory Guidelines (often referred to as “SSAG’s”) create the framework for determining income and support entitlements for children and spouses. The Guidelines require the judge to use the most current income information available when assessing support obligations.

Your employment situation and all other sources of income are relevant. For those who are categorized as employees, your total income (Line 15000) on your T1 tax form is the key, often serving as the basis for determining the amount to support to be paid or received. 

If you are self-employed your total income (Line 15000) is only the starting point, and it is then adjusted to reflect favourable tax laws and corporate pre-tax income, if any. For these folks, income for tax purpose is different than income for family law purposes.

Self-employed individuals reap what they sow. Unlike individuals earning an annual salary, those who are self-employed are particularly susceptible to overall risk and income fluctuation. Admittedly, there are benefits to being self-employed, which include the ability to write off non-recurring capital and business investment losses or other expenses you have claimed as deductions for the purpose of operating your business (i.e., your motor vehicle). These deductions all have the effect of lowering your income reported for tax purposes.

However, the Canadian family law accounts for these deductions and favourable tax treatment and provides Judges the ability to assess the validity and reasonableness of the deductions you claim. Family law lawyers and accounting professionals can work with you to ensure the dynamic nature of your income as a self-employed individual is fairly portrayed.

Being an entrepreneur is an endless pursuit. We want to support those who create value and opportunities within their community. The Family Law team at Cunningham Swan LLP can advocate for your rights to ensure you are being treated fairly when obligations of spousal or child support arise.

Article written by: Francesco Tolfa and Lesley Kendall

Francesco Tolfa
Posted February 20, 2024 Category: News & Updates

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