Determining the amount of a support payor’s income is necessary to be able to set the amount of their support obligations. When a payor spouse or parent does not participate in the legal proceedings or does not provide sufficient evidence of their income, courts can impute an amount of income for them to calculate support obligations. If a payor later argues in variation proceedings that the amount does not reflect their true income, the reason why income was imputed is important. On a motion alleging a material change in circumstances, the onus can fall on the payor to prove why their income should be calculated differently.

A Party Must do More Than Argue the Income Imputed is Wrong

The Ontario Court of Appeal has held that a material change to the finances of a payor spouse or parent can amount to a change in circumstances giving rise to an adjustment of support. However, when income has been imputed, and the payor alleges a material change, different principles apply, and the onus can shift to the payor.

In Trang v. Trang, the support payor challenged the amount of income that had been imputed to him. Justice Pazaratz found that in such a scenario, the first thing that must be considered is whether the support order is based on the Court accepting the payor’s declared income or whether the order is based on the Court imputing income to the payor. The outcome of this question is critical in assessing whether there has been a material change in circumstances that could impact the amount of support payable.

Justice Pazaratz explained that if support was calculated on the payor’s declared income, then changes in the declared income in later years can be persuasive. Ultimately, if the Court could rely on items, such as tax returns, when the original order was made, the same items may be sufficient evidence of a change in circumstances in subsequent years. This is subject to the exception of whether the payor manipulated their income.

Challenging an Amount Imputed by the Court

Different considerations apply if the Court imputed income when making the support order. Additional analysis requires the Court to consider:

1. Why did income have to be imputed? Have those circumstances changed? Is it still necessary to impute income to arrive at a fair result?
2. How did the Court quantify the imputed income, and are those calculations still applicable?

The answers to these questions provide the Court with information that should be considered as it can help courts understand the factors that were originally considered when the original order was made and whether those factors remain unchanged. When a party argues that an imputed income amount is no longer appropriate, they must do more than establish their current declared income. In Trang v. Trang, Justice Pazaratz stated that the party challenging the amount should address why income had to be imputed in the first place and show evidence of changed circumstances that indicate either that:

1. It is no longer necessary to impute income, and the payor’s income figures should be accepted even if they weren’t accepted before, or
2. If income should still be imputed, changed circumstances indicate a different amount is more appropriate.

Imputing Income is Not a Provisional Determination by a Court

Justice Pazaratz expressed concern that if the declared income amount was merely accepted on a motion to change, it could defeat the purpose of imputing income and act as a disincentive for payors to participate in the original court process. Payors could “wait to see if the Court imputes income, and how much. If dissatisfied with the amount, the payor could later return to Court waving their tax returns, to suggest that the original judge got it wrong.”

For the same reason, on a motion to change brought by the payor, the support recipient should not be required to show why income should still be imputed. Courts impute income because it cannot rely on disclosure from the payor. Once that determination is made, the onus falls on the payor to demonstrate why their income should be calculated differently. Consequently, if a payor has income imputed and brings a motion to change, they “face the presumption that the original order was correct” and must show why their representations should be accepted by the Court this time.

Framework Upholds the Financial Disclosure Regime

In Rubatto v. Sandoval, the respondent sought to decrease his support obligations retroactively to the date of an earlier temporary order. However, in the history of the litigation, there have been numerous findings that he had been deceitful and misrepresented facts with the intent of misleading the Court. He had also breached earlier Court orders, as well as the Family Law Rules. The respondent argued that the Court had imputed income to him at a higher level than his actual income. In trying to explain his poor behaviour, he claimed that he could not cope with the family litigation and that he was unrepresented and acted on bad advice. However, he claimed that he was now acting in good faith. Overall, his argument was that it would be unfair to refuse him the opportunity to seek retroactive relief as his actual income had not been determined.

The Court had to determine whether the respondent had an arguable case in which he could establish a change in circumstances that would justify changing the support order. The respondent claimed that the issue of his actual income should now be adjudicated because he recently provided financial disclosure, which made it possible for the Court to determine his actual income and set a corresponding support award. Justice Starr noted the history in which the respondent had ignored his disclosure obligations and found that he was not in compliance until the date of this hearing. Referring to the case of Gray v. Rizzi, in which the Court looked to Trang v. Trang and found that enabling a party to ignore their disclosure obligations and later satisfy the obligations and claim a material change in circumstances “would eviscerate the financial disclosure regime.”

Change in Payor’s Behaviour Justified Revisiting Support Issues

Ultimately, at the time when the Court imputed income to the respondent, it made a finding of his income for support calculation purposes. Unless that order was set aside on appeal, there was no jurisdiction to work around that finding.

However, in this case, the judge observed that the respondent had made positive changes in his behaviour and found that a fair adjudication of the issue was now required. During such adjudication, he would have the opportunity to address his income and support obligations. Yet, because the changes in his behaviour had only occurred recently, the date of the material change in circumstances could not be earlier than the date of that hearing.

Contact the Divorce Lawyers at NULaw For Trusted Advice on Support Calculations and Imputing Income

Spousal support and child support can be highly contentious matters in divorce proceedings, which is why the experienced family lawyers at NULaw in Toronto ensure clients have a thorough understanding of the law that applies to their situation. We also ensure that clients remain informed at every stage of the process so that they can make the best decisions to move forward after a separation or divorce. Additionally, NULaw handles other family law disputes, including post-divorce modifications and parenting time disputes. As your circumstances change, we ensure that your rights remain protected and ensure that you can continue living your life comfortably. To speak with one of our family lawyers regarding your support obligations and imputing income for support purposes, contact us online or at 416-481-5604.