Imputing Income: intentionally under-employed or unemployed?

Imputing Income: intentionally under-employed or unemployed?

Lindsay McFadden
Posted May 31, 2022 Category: Individuals/Families, News & Updates

Determining income is required for a variety of purposes in family law matters. One of these purposes is to determine the amount of support payable for children or a spouse.  

In some circumstances it may be appropriate to impute income. Imputing income is when additional income is attributed to a party in excess of the amount of income the party actually made or is claiming to have made. 

Section 19(1) of the Federal Child Support Guidelines allows income to be imputed for the purpose of child support. This section provides a list of circumstances where imputation of income may be appropriate. Section 19(1)(a) states that income may be imputed where: 

  • (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.

The issue of whether a party is intentionally under-employed or unemployed pursuant to s. 19(1)(a) of the Guidelines was discussed by the Ontario Court of Appeal in Drygala v. Pauli, (2002), 61 OR (3d) 711. This decision was subsequently revisited by the Ontario Court of Appeal in 2018 in Lavie v. Lavie 2018 ONCA 10.

In Lavie v. Lavie the Court explained that “there is no requirement of bad faith or intention to evade support obligations” for s. 19(1)(a) to apply. Simply put, “if a parent is earning less than they could be, they are intentionally underemployed” and the first part of the test for s. 19(1)(a) is met.

The analysis under s. 19(1)(a) does not stop there. The second part of s. 19(1)(a) provides an exception in circumstances 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. The Courts have placed particular emphasis on the term “required”.

Imputation of income is deemed appropriate if the first part of the test is met and the exception is not applicable. If this is the case, the Court still has the discretion to decide whether to impute income and if so, how much, depending on what the Court considers reasonable in the circumstances. Some factors that the Court may consider when determining whether it is reasonable to impute income in the circumstances and how much is considered reasonable in the circumstances are the age, education, experience, skills and health of the parent. 

As you can see, this area of family law can be complex. If you think that the imputation of income may be appropriate in your matter, it is recommended you contact a legal professional to discuss.

Our Family Law team understands that you need a family law lawyer who is a good listener, skillful advocate and strong negotiator. They are committed to helping you and your changing family circumstances in a timely and confidential manner.

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Lindsay McFadden
Posted May 31, 2022 Category: Individuals/Families, News & Updates

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