“Before I turn to consider the evidence and make my findings, it is prudent to review the legal principles that apply to the determination of a payor’s income for the purposes of determining child support. To begin with, the determination of income for the purposes of child support is governed by ss. 15 to 20 of the Federal Child Support Guidelines, SOR/97-175. Section 19 concerns the imputation of income and provides as follows:
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;
(b) the spouse is exempt from paying federal or provincial income tax;
(c) the spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;
(d) it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines;
(e) the spouse’s property is not reasonably utilized to generate income;
(f) the spouse has failed to provide income information when under a legal obligation to do so;
(g) the spouse unreasonably deducts expenses from income;
(h) the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and
(i) the spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.
The list is not exhaustive and it is not intended to circumscribe the court’s general discretion to impute income in other situations where it might be appropriate to do so. The only limitation on the court’s discretion rests with the requirement that there be some basis in the evidence for the amount that court chooses to impute: see Korwin v. Potworowski, 2007 ONCA 739, 43 R.F.L. (6th) 1.
The leading case on this subject is Drygala v. Pauli (2002), 2002 CanLII 41868 (ON CA), 61 O.R. (3d) 711 (C.A.). In that case, the Ontario Court of Appeal stated that imputing income is one method that the court may use to give effect to the joint and ongoing obligation of parents to support their children. To meet that obligation, parents must earn what they are capable of earning: at para. 32. If they fail to do so, they will be found to be intentionally under-employed. The applicable principles that emanate from Drygala, which were summarized recently in C.V. v. S.G., 2019 ONCJ 159, at para. 329, are the following:
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- One of the objectives of the Guidelines is to establish a fair amount of support for children to ensure they benefit from the financial means of both parents after separation;
- It is not necessary to find a specific intent to evade child support obligations before income can be imputed. There is no requirement of bad faith;
- There is a duty to seek employment. A parent cannot avoid child support by a “self-induced” reduction of income; and
- If income is to be imputed, there must be a rational basis for the figure selected. The Court must consider what is reasonable in the circumstances, including the payor’s age, education, experience, skills, health, the availability of job opportunities, the number of hours that could be worked in light of the parent’s overall obligations and the hourly rate that the parent could reasonably be expected to obtain.
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In Duffy v. Duffy, 2009 NLCA 48, 289 Nfld. & P.E.I.R. 132, at para. 35, another leading case, the Newfoundland and Labrador Court of Appeal outlined eight general principles to consider in deciding whether to impute income:
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- The fundamental obligation of a parent to supporthis or her children takes precedence over the parent’s own interests and choices;
- A parent will not be permitted to knowingly avoid or diminish, and may not choose to ignore, his or her obligation to supporthis or her children;
- A parent is required to act responsibly when making financial decisions that may affect the level of child support available from that parent;
- Imputing income to a parent on the basis that the parent is “intentionally under-employed or unemployed” does not incorporate a requirement for proof of bad faith. “Intentionally” in this context clarifies that the provision does not apply to situations beyond the parent’s control;
- The determination to impute income is discretionary, as the court considers appropriate in the circumstances;
- Where a parent is intentionally under-employed or unemployed, the court may exercise its discretion not to impute income where that parent establishes the reasonableness of his or her decision;
- A parent will not be excused from his or her child supportobligations in furtherance of unrealistic or unproductive career aspirations or interests. Nor will it be acceptable for a parent to choose to work for future rewards to the detriment of the present needs of his or her children, unless the parent establishes the reasonableness of his or her course of action; and
- A parent must provide proper and full disclosure of financial information. Failure to do so may result in the court drawing an adverse inference and imputing income.
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Finally, the onus falls on the parent requesting that income be imputed to provide an evidentiary basis upon which a quantum can be imputed: see Homsi v. Zaya, 2009 ONCA 322, 65 R.F.L. (6th) 17, at para. 28; and Tillmanns v. Tillmanns, 2014 ONSC 6773, 53 R.F.L. (7th) 210, at para. 58.”