When a couple goes through divorce or separation, it’s not uncommon for one of the parties to have to pay spousal support to the other. In the event the parties had children, there could also be child support obligations. The amount of support that someone has to pay is determined by their income. Usually, people think of income in terms of money received from an employer. In a recent decision from the Ontario Superior Court of Justice, the court was asked to include RRSP withdrawals in one of the party’s income.
The parties were married in 2008 and separated in 2017. They had three children while married, and the mother, who is a registered practical nurse, has worked exclusively out of the home since 2008. A consent order is in place, which requires the father to pay child support in the amount of $4,006 per month based on income of $239,604. It also requires spousal support of $3,250 per month to be paid to the mother.
The father argued that he had a higher than usual income when the consent order was put in place in 2017, stating it has been lower since. He added that he is experiencing financial hardship, and has accumulated debts that he has been struggling to pay.
In order to pay those debts and make ends meet, the father said he has been withdrawing money from his RRSP. These withdrawals have amounted to about $15,000 per year. The mother has asked the court to include these RRSP amounts in the father’s income. However, the father’s position is that his support obligations should be reduced, and says his RRSP income should not be included.
The court looked at the last few years of the father’s income. It found that he made $127,645 in 2019, and $166,558 in 2018. In 2017, he made $239,604. This did not include about $15,000 per year that he took out of his RRSP. His income this year is on track to be about $126,000.
The court noted that a 2013 Ontario Court of Appeal decision found that income from RRSPs should be presumptively included in the payor’s income, but added that the same decision stated courts can depart from this in the event that it would not be the fairest determination of income.
The father said in this case, it would not be fair to include it, stating that after he pays his support amounts, he is left with just $954 to pay for rent, groceries, and transportation. This is in addition to the $149,000 in debt that he has. The court noted that the mother is debt-free and has savings of about $33,000.
The court found that in this case, it would be fair to exclude the father’s RRSP withdrawals from his income.
The court was asked by the father to impute some income to the mother, who is able to work, but has not worked since they separated. The court was told that the children of the marriage are in school full time, and there are no responsibilities precluding the mother from working. The court agreed, and imputed an income of $30,000 to the mother.
In addition, the court lowered the father’s support obligations to match his income from last year and his projected income for this year.
At NULaw, our experienced family lawyer can guide you through the process of making post-separation and post-divorce amendments. Contact us online or at 416-481-5604 to book a consultation, discuss your options, and ensure that you and your children are protected in changing circumstances.