Calculation of Support Payments Archives

Ex-Spouse Hiding Income to Avoid Child Support and Spousal Support Payments

Is your ex-spouse hiding income to avoid child support and spousal support payments. Or alternatively, is your ex-spouse falsely accusing you of hiding income to avoid child support and spousal support payments. Unfortunately these are common issues. Ex-spouses can turn routine divorce proceedings into a complete circus.

For example, the Ottawa Citizen recently reported on an Ottawa businessman who went to Court and said he burnt $1 million in cash. Allegedly, he had a bonfire with no witnesses and no video. The Judge didn’t believe him and sent him to jail for 30 days, with more to come if he continued to thumb his nose at the Court.

Earlier this summer, the Ontario Superior Court of Justice issued a harsh decision against a father who refused to co-operate. Clearly this was a bitter dispute and the husband had not co-operated over a period of time. The decision was for a trial in which the father was allowed to observe, but couldn’t participate.

My Ex-Spouse’s Lifestyle Doesn’t Match His Tax Returns

The couple married in 2000 and had three children together, who are now all teenagers. The couple separated in 2014 in circumstances that led to criminal charges against the father. Court proceedings have been ongoing until this decision was issued in June 2020.

The father operated a small construction and tree business, which primarily generated revenue through contracts with municipalities. The father claimed approximately $30,000 in income each year.

While claiming minimal income, in a separate Court proceeding, the father claimed to have given a family member $22,000 to purchase a property. The father then spent $230,000 for improvements to that property. In reviewing the credit card statements of the business, there were interesting purchases over a four-month period in 2017, including:

$6,000 for a resort in the Turks and Caicos;
$12,000 in spending in Las Vegas;
$24,000 for a travel agent; and
$4,000 at a local casino.

Effectively the father had spent approximately two-years of alleged income on travel and casino over short period of time. These type of expenditures didn’t match what the business was involved in and therefore were not legitimate business expenses.

My Ex-Spouse is Hiding Income and Assets in a Corporation

The wife hired an accountant to review the financial records of the husband and his business. Since the husband was not co-operative in this process, very little in the way of financial records were disclosed. The husband refused to answer any questions and would not provide any information to assist in the financial analysis.

The accountant completed his work and noted the gaps in the information. The biggest issue was the potential to keep profit in the corporation for capital spending. For example, for a construction and tree business, there may be a need to purchase significant equipment to assist the business. There was no evidence that the business had made any capital purchases and because the husband was not co-operating, the Judge did not find any legitimate reason to allow profit to remain within the corporation.

The Judge also found that the profit reported by the business decreased substantially immediately after separation. Typically, income can be imputed over a five-year period, but there is broad discretion for the Court. In this case, because the five-year period did not include amounts pre-separation, the Court found that extending this five-year period was appropriate.

In this case, the Judge found that the husband’s income ranged from $234,000 per year to $404,000 per year, with and average of $294,000. As there was no evidence available that this amount would change, the Judge fixed this amount as the husband’s income going forward. The only way that the amount would change is if the husband brought an application to review child support and spousal support.

Retroactive Child Support and Spousal Support When an Ex-Spouse is Hiding Income

In this case the father had not paid any support between separation in 2014 and trial in 2020. The Judge reviewed the law on the availability of retroactive child support and spousal support and found that the husband needed to pay retroactive support.

The children were splitting time between the mother and father, resulting in a set-off of child support. This means that the father would pay child support based on his income and the mother would pay child support based on her income. Even with this set-off, the Judge ordered the father to pay $115,000 in retroactive child support.

Spousal support was also reviewed and the Judge found that the husband owed the wife over $548,000 in spousal support. Ongoing spousal support of $8,800 per month was also ordered.

My Ex-Spouse is Falsely Accusing Me of Hiding Assets and Concealing Income

Sadly, this is also a common issue and one in which you need legal advice. Simply holding a corporation can mean ex-spouses believe you are earning far more than you actually are. Without a true appreciation for the legitimate expenses a corporation incurs, this becomes an unnecessarily contentious issue.

Defending yourself from these false accusations will mean effective and meaningful disclosure. It also means that you will need to effectively cross-examine any so-called expert your ex-spouse has found to attribute additional income to you.

If you find yourself in this situation, you need a lawyer who understands the issues.

How to Hide Income From Child Support in Ontario

Understanding how income is hidden is important in determining whether or not your ex-spouse is deliberately hiding or concealing income. Much like hiding assets, income is concealed through the use of corporations or by earning cash income.

Cash income is particularly difficult to establish. While cash is becoming more uncommon as a form of income, it is still an option for many. Determining cash income requires a dedicated approach through a thorough examination of all financial records and an analysis of assets obtained and expenses paid for.

Similarly, if you earn a cash income and your ex-spouse is accusing you of making far more than you do, you will want to actively defend yourself. Hiring a lawyer who understands these issues is essential in getting a fair income for everyone involved.

How to Find Hidden Assets and Concealed Income

The only way you will find hidden assets and concealed income is through an aggressive litigation approach. This can become very expensive and there is no guarantee that there will be any success.

Like many other countries, Canada does permit the use of a type of “civil search warrant” called an Anton Piller Order. This allows for an Order to be granted by a Judge, without hearing from the defendant. It is used when there is actual evidence that what you are looking for will be at the place you want to search. Though more than that, you also need to prove that the evidence you are looking for will be destroyed if you request it in the usual manner.

Ex-Spouse is Hiding Income to Avoid Child Support and Spousal Support Payments

If you believe your ex-spouse is hiding income and assets to avoid paying child support and spousal support, seek legal advice. Addressing this issue takes a careful approach and if successful, is of tremendous benefit to the children.

Peter Hearty of Hearty Law brings twenty-years of policing experience primarily in the area of money laundering. There is significant overlap between money laundering investigations and parents avoiding support payments. In both situations, the person is trying to benefit by deliberately trying to hide income.

Contact Hearty Law with any questions on financial issues during your divorce, including: hidden assets, concealed income, child support, spousal support, retroactive support, division of property or any other family law financial need.

Email toronto@heartylaw.ca or ottawa@heartylaw.ca to get more information.

Hearty Law serves Toronto, Ottawa and surrounding communities.

How Do I Change Spousal Support Payments in Ontario

Spousal support can be one of the most contentious topics in any divorce. A question I am often asked is “how do I change spousal support payments in Ontario?” Typically the answer is only when there is a material change in circumstance, such as a retirement. If you are paying spousal support and you have found yourself in a situation where you can’t afford to keep paying, continue reading.

Last fall the Supreme Court of Canada refused to hear an appeal of a change in spousal support. The facts of this case demonstrate a view of the extreme behaviour of one spouse.

Spousal Support Equals Pension For Life

The couple married in 1968 when they were both 24-years old. The husband was a dentist and the wife was in a PhD program at Queen’s University. They had two children, who both went to boarding school in the United Kingdom at age 12.

In 1985, after 17-years of marriage, the couple divorced. They were both 41-years old at separation. At the time of the divorce, the husband was earning approximately $275,000 per year. The final divorce judgement required the father to give the mother $40,000 in compensatory spousal support. Non-compensatory spousal support was set at $4,000 per month for life, and indexed with inflation. The Order did provide that the amount of spousal support could not be reduced unless the wife was earning more than $30,000 per year.

The wife moved to the United Kingdom where there is no tax on spousal support. By the time the husband asked for a review of this order in 2016, spousal support was over $70,000 per year tax-free. The wife continued to live in the United Kingdom, but had a summer house in France and a winter house in Panama. The wife never made any effort to obtain employment after divorce.

The husband summarized the wife’s activities as follows. Since the Divorce Judgement (the wife) has travelled extensively and led an active lifestyle throughout the world, going to Thailand, a Caribbean cruise, travelling the Silk Road, trekking in the Himalayas, travelling to New Zealand and Australia, skydiving, assisting with world cup sailing regattas in Spain, travelling throughout the Southern United States in a RV, skiing, scuba diving, spending several months in Africa, travelling the Middle East, northern British Columbia, a safari in the Serengeti and she has climbed Mount Kilimanjaro. The judge characterized these activities as enjoying the pension for life.

Can’t Afford Spousal Support in Retirement

By age 72, the husband had been paying spousal support for over 30 years. He was planning for retirement and estimated that his retirement income would be approximately $35,000 per year. He simply couldn’t afford to continue to pay over $70,000 per year in spousal support. The Court found that the husband seeking retirement at his age was completely reasonable.

The Judge reviewed the law on spousal support variation and found that the husband had to prove a “material change” in circumstance. The planned retirement in this case met the threshold and the initial spousal support order was reviewed. Importantly, reviewing a spousal support order does not mean the Judge starts the entire process over. The review is limited to how the change in circumstance impacted the initial order.

In reviewing the present circumstances, the Judge observed that the marriage was not long, the wife had a university education and was relatively young at the time of divorce. The wife’s unemployment was simply her lifestyle decision.

How to Change Spousal Support Payments

The Judge ultimately found that the husband’s retirement was justification to reduce spousal support to $1 per month. The wife appealed this decision and the Ontario Court of Appeal didn’t agree with the trial judge. The Court of Appeal found that the husband should have been paying more spousal support for a shorter period of time. In the end, the trial judge’s decision was changed and the husband will now continue to pay $850 per month in spousal support for the rest of his life.

How to Pay a Fair Amount of Spousal Support

In this extreme case, the husband has already paid millions of dollars in spousal support. This support has been paid for more than twice the duration of the marriage. The lesson learned here is that spousal support is very difficult to alter once the initial order has been made.

Previous Court decisions have established that voluntary early retirement will not be a sufficient reason to reduce your spousal support obligation. Any reduction in your income needs to reasonable and not voluntary.

If you are currently paying spousal support and are considering applying to have it changed, contact Hearty Law for legal advice. Or if you are currently involved in litigation over spousal support, either as the payor or recipient, contact Hearty Law. Email toronto@heartylaw.ca or ottawa@heartylaw.ca or fill out the contact form. Paying a little bit for legal advice now may have a significant financial impact in the future.

Hearty Law provides legal services on spousal support, retroactive support, hidden assets, concealed income, distribution of property and other family law financial issues.

Hearty Law serves Toronto, Ottawa and surrounding communities.

Date When Property is Valued in Divorce in Ontario

A contentious divorce issue is often the date when property is valued in Ontario. This date is when the couple begins to live separate and apart with no realistic possibility of reconciliation. When there is a minor difference in the dates, there may be no impact on the property. Significant differences in the separation date can have a significant difference on the property value.

The reason this issue is important is because the Family Law Act in Ontario requires the property be equalized on the date of separation. All of the marital property is valued. Then the person with the higher property value gives half of the difference to the other person.

Earlier this summer the Ontario Court of Appeal upheld a trial decision and reviewed the law in this area. The earlier trial decision reviewed the background in detail and provides an interesting analysis when the husband and wife were 14 years apart on the date of separation.

The Importance of the Date of Separation in Ontario

The couple in this case married in 1993 and had two children. The husband was a farmer and the wife worked for the farm. Their house a main part which was two stories and had four bedrooms. There was a single story “in-law” suite attached to the main house. This suite had a single bedroom, kitchen, living area and bathroom.

Early on in their marriage, the couple often rented out the single story residence. When the last tenants left in 2000, the wife testified that she moved into that area of the house. Her evidence was that she had already been sleeping in a separate bedroom from her husband because she didn’t want to disturb him while caring for the young children.

The wife continued to live in the separate residence until an incident in July 2014. At that time, the wife left the residence after the husband had an argument with the daughter. The wife obtained legal advice and served the husband with her intention to obtain a divorce.

Effectively, the husband argued that the couple separated in 2000 after a seven year marriage. On the other hand, the wife argued that the couple separated in 2014 after a twenty-one year marriage. Depending on which party was believed, there would be a significant difference in spousal support as well as property. Spousal support for a twenty-one year marriage would likely be far greater than spousal support after a seven year marriage.

Further, determining the value of property nineteen years prior to trial would be difficult. It is important to note that the there are provisions in the Family Law Act that potentially create a six-year statute of limitations. The Judge addressed this issue and found support for the notion that there was discretion on this point.

How to Determine the Date of Separation in Ontario

The trial heard evidence on how the family functioned. This meant a review of everything from household chores, to vacations, to family visits to sexual relations to how holidays were celebrated. The wife gave evidence that they were still a family, even though she did not share a bedroom with her husband. The husband testified that they had been living separate lives, even though the wife was still living in the same residence.

The Judge reviewed the law on separation and found that there is no “typical”marriage. For example, the Judge found that a couple could be separated while living in the same house. Conversely, a couple could still be married and not living in the same house.

Some indicia of separation was reviewed from a previous case. These were:

there must be a physical separation, though just because a spouse remains in the same house for reasons of economic necessity does not mean there isn’t a physical separation;
there must be a withdrawal by at least one spouse from the matrimonial obligation with the intent of destroying the marriage;
the absence of sexual relations is no conclusive but is a factor to be considered;
the discussion of family problems, presence or absence of social activities and the meal pattern;
household tasks are a factor, but must be viewed with their roles during marriage;
the true intent of the spouse must be determined and not simply the stated intent, such as identifying yourself as married on a tax return.

Sleeping in Separate Bedrooms But Still Married

In the end, the Judge found the date of separation to be in 2014. Though it is possible to be living separate and apart in the same house, in this case, the Judge preferred the evidence of the wife. Some of the important factors were the wife continued to make meals for the family, the family celebrated holidays together and exchanged gifts, the wife continued to do laundry for the family and the couple attended family functions together.

The important point to take away from this case is that no two families are the same. The entirety of the relationship and situation will be examined prior to determining the separation date.

Contact Hearty Law with any questions on separation, divorce, property distribution, spousal support, child support, custody, access or other family law financial needs. Either complete the contact form found here, or send an email to toronto@heartylaw.ca or ottawa@heartylaw.ca.

Hearty Law serves Toronto, Ottawa and the surrounding areas.

Bad Faith and the High Cost of Divorce

Earlier this summer, the Ontario Superior Court of Justice released on interim decision on a divorce proceeding. The actions of the father in that case demonstrate bad faith and the high cost of divorce. This is a story of what you can’t do when you initiate divorce proceedings. Nobody gets married and plans for divorce. At times, the highly emotional situation can lead to bad decisions that can turn costly.

First Steps to Initiate a Divorce Proceeding in Ontario

This Court decision is on the divorce of a mother and father who were married in 2018 and had one child together. The child was under 2 years old at the time of the separation. The father had two children from a previous marriage who he had access to. The mother was from Columbia and also had two children from a previous marriage. The mother moved to Canada in 2019 with her children. Both her and the child had medical issues.

The couple was living in a residence owned by the father’s family. At the time of separation in April 2020, the mother, father and three children were living in the home. The father’s children from his first marriage also stayed there every second weekend.

In April 2020, the father moved out of the matrimonial home and moved in with his parents. The mother continued to reside in the matrimonial home with the child from this marriage and her two children from a previous marriage.

On June 22, 2020, the father’s lawyer sent a letter to the mother which stated that the matrimonial home was rented and the lease was to be terminated. The mother was to vacate the home within three days.

This is an example of bad faith. The father was using his family to apply pressure to the mother to have her leave the matrimonial home. She had only lived in Canada for five months and had no income and no way to care for her children.

What is an Urgent Family Law Application in Ontario

This situation is exactly what an urgent family law application is for. The mother had just arrived in Canada and was completely dependent on the father for financial support. The mother had medical issues, including reduced immunity, which made her at risk during the ongoing pandemic in Ontario.

Typically motions are not heard until after a case conference, unless it is urgent. During emotional separations, it may seem like everything is urgent and needs to be resolved immediately. Urgent in this case means hardship if required to wait. Hardship would be to have no home and no income to care for three children.

The mother was successful in having her application heard prior to the case conference. She sought spousal support, and child support for the child of the marriage as well as child support for her children from her previous marriage.

Bad Faith and the High Cost of Divorce in Ontario

The father’s actions proved to be costly. In this instance his bad faith proved to be costly. The father reported his income as $92,000 per year. According to the online Canada Revenue Agency payroll calculator, his net income is approximately $5,500 per month. While the judgement is not clear, he would likely be paying $1,374 per month in child support for his two children from his previous marriage.

The mother sought child support for their child as well as her children from her previous marriage. The father argued against paying child support for these two children. The Judge found that since the children came to Canada to form a new family with the father, for the purposes of interim child support, they were children of the marriage. This decision could be looked at again with a full trial on the issue.

The father was ordered to pay child support for these three children, which according to the Federal Child Support Guidelines is approximately $1,795 per month. Just in child support alone, the father was ordered to pay more than 55% of his monthly salary.

The father was also ordered to pay the mother $343 in spousal support, in addition to this high level of child support. Further, as the mother still had nowhere to live, the Court ordered that she remain in the matrimonial home and the father was to pay all rent and utilities. While the father did not own the house, his family was represented in Court and were also subjected to the decision.

How to Initiate a Separation in Ontario

There is no information on this point in the decision, but if the father’s family expected to be paid rent each month, it would be very costly. Child support is approximately $3,169 per month and spousal support is $343 month. A very conservative estimate on market rent on the home would be approximately $1,500 per month and utilities would be an additional few hundred per month. These expenses are getting very close to the entirety of the father’s take home pay each month.

Whether or not to separate is always a difficult decision. Sometimes, living under the same roof, but separate and apart is an option. If you are at the point where you are going to leave the matrimonial home, ensure that each person has the financial resources to provide the necessities for the children.

It this situation, the father could have made a different decision. By ensuring the mother had financial resources to care for herself, there may have been a different outcome. Instead, the father is now paying almost his entire salary in support payments.

Contact Hearty Law if you are considering separation. Hearty Law provides legal services on spousal support, child support, retroactive support, hidden assets, concealed income, property distribution and other family law financial needs. Either complete the contact form here, or email toronto@heartylaw.ca or ottawa@heartylaw.ca.

Hearty Law serves Toronto, Ottawa and the surrounding communities.

My Ex-Spouse is Sick and Can’t Pay Child Support

Recently, I wrote about a couple who were married for eleven years and had two children together. That post focused on a failed motion to gain overnight access. This post looks at a different issue from the same Ontario Superior Court of Justice decision released earlier this summer. This issue is a common source of conflict, when an ex-spouse says they are sick, can’t work and can’t pay child support. This claim is typically followed by an allegation that the medical condition is exaggerated.

My Ex-Spouse is Sick and Can’t Pay Child Support

The father in this case was unemployed and collected government assistance. He had a Master of Science degree in biology and computer science. He claimed that he was unemployed due to a medical condition that prevented him from working.

The mother argued that the father was capable of working and asked that the Court impute an income of $65,000 per year. The father argued that his medical condition prevented him from working and that no child support ought to be awarded.

These parents were in Court a few months prior and the father was ordered to provide a letter from his doctor explaining his health condition and how it impacted his employment. At the time of this decision, the father still had not complied with that Order and he did not have an explanation of why. While the pandemic situation may have been part of the reason, that argument becomes more difficult to make after seven months.

Child Support Calculation When a Parent Can’t Work in Ontario

The Judge in this case noted that the father still hadn’t provided any evidence on his medical condition. A failure to provide evidence and a failure to prove a claim of a medical condition was harmful for the father. When you can’t prove what you are claiming, a Judge simply can’t take your word at face value.

As this motion was simply for an interim child support award, the outcome wasn’t as significant. Typically with a Final Order, you must prove a material change in circumstance to get the Order changed. An interim award simply means that you can have the Order reviewed without establishing a material change in circumstance.

The Judge reviewed the law on imputing income for parents who are not working, or who are underemployed. The relevant law here is section 19 of the Child Support Guidelines (Ontario), which gives the Judge the authority to impute income. The Judge found that the evidence presented did not support the father’s medical claim. Based on his educational background and his work experience, the Judge imputed an income of $40,000 per year.

A $40,000 per year income for two children resulted in monthly child support of $597. The Judge specified that this was an interim Order and the father could have it reviewed once he provided medical evidence. The Judge also added that continued non-compliance with the Order to provide medical evidence would preclude the father from making further motions to the Court.

Doctors Looking at X-Ray — A proper medical diagnosis and prognosis from a doctor will assist in your claim.

I Am Sick and Can’t Pay Child Support in Ontario

There will be times where a medical condition prevents a parent from working. And likely there are times when a parent simply doesn’t want to work, potentially out of spite. Differentiating between these two scenarios is difficult. Nobody wants to force someone to work if there is a legitimate medical condition. On the other hand, making selfish decisions to the detriment to the children, only to get back at your ex-spouse, needs to be addressed.

If you are legitimately unwell and can’t work, gather some medical evidence to prove your claim. This medical evidence needs to provide sufficient information to the Court to prove what you are saying. It is quite common for doctors to provide “sick notes” that simply say you are sick and can’t work. This isn’t enough.

Proper medical evidence to prove your claim means a medical diagnosis as well as a prognosis. Specific medical issues are private and don’t necessarily need to be disclosed. But you do need to disclose what your limitations are and when those limitations will no longer impact your employment.

For physical injuries, this is very simple to address. For example, if you suffered a fall at work and broke your leg, it is easy to say that you can no longer perform your construction duties. Along with this statement will be a further statement that your recovery will take six weeks (as an example), at which time you will be returning to work.

Mental Health Conditions and the Impact on Child Support in Ontario

Mental health injuries are different and will require a lot more information than simply saying “can’t work due to mental health”. In the past, nobody spoke about mental health conditions, but these barriers are being broken down. Experiencing the trauma of a high-conflict divorce can create mental health issues, but you still need to have some prognosis for your recovery.

Mental health issues can cause conflict if one of the parties is not compassionate about the situation. Communication about the condition can alleviate some of the conflict.

If you are looking to have a Judge accept your evidence of a mental health diagnosis, then you need to file actual evidence with the Court. This can mean the current diagnosis, the current treatment schedule and the prognosis based on the treatment schedule. If you are looking for a finding that you are permanently unwell, then the evidence needs to be strong to support that claim.

The Difference Between an Interim and Final Child Support Order

Immediately after separation, child support needs to be paid. This means that the amount of child support is decided with very little information. For all parents who earn a salary, this isn’t an issue, as support will be owing based on your Line 150 of last year’s income tax return.

If the parent is earning an income through their own corporation, then the calculation is a lot more difficult. Many items can be lawfully deducted to reduce taxes owing. These same items can’t be deducted for the purpose of calculating child support owing.

This means that a Judge is making an informed guess on what level of support needs to be paid. As part of this guess, there is no live evidence and no way to test the truth of the statements being made. As such, the child support awarded is on an interim basis only. When new information is obtained, the interim order can be adjusted as necessary, which isn’t always possible on final orders.

A final child support (or spousal support) Order will be made after the parties agree or after a trial. At this point the Judge has weighed the evidence and made finding of fact to support the decision. This also relates to the medical evidence you need to prove your claim.

The doctor who provides the medical evidence may be subjected to cross-examination at trial. Likely this wouldn’t be necessary on an interim application, but come time for trial, this may happen. This is the opportunity for the skeptical ex-spouse to test the medical evidence.

Questions About Child Support Calculations in Ontario

Contact Hearty Law with any questions on child support, spousal support, or any other family law financial need. Hearty Law serves Toronto, Ottawa and surrounding communities.

To contact Hearty Law, either complete the contact form found here, or send an email to toronto@heartylaw.ca or ottawa@heartylaw.ca.

Can I Appeal a Spousal Support Order in Ontario?

Have you just been ordered to pay significant spousal support over an extended period of time? If so, you may be asking whether you can appeal this Order. Earlier this summer, the Ontario Court of Appeal reviewed the law in this area in making a decision. This decision demonstrated how and appeal of a spousal support order in Ontario is difficult.

What is Compensatory and Non-Compensatory Spousal Support?

In this case, the husband and wife were married in the United States where they lived for several years. The couple then moved to Ontario to allow the husband to take a position as a professor at a university. Prior to marriage, the wife worked full-time for eight years as a nurse’s aide. During the marriage, the wife worked part-time in modest positions whenever she could find them. She also stayed home to care for the children.

Compensatory spousal support is an Order to compensate a spouse who was placed in an economic disadvantage because of the marriage. In this case, the wife sacrificed her own career as a nurse’s aid so that she could care for the family while the husband furthered his career. Put another way, the husband was only able to further his career because of the sacrifice of the wife. As such, the husband was ordered to compensate the wife through spousal support.

The law on non-compensatory spousal support is a little confusing at present. Typically this type of spousal support addresses the “needs and means” of the recipient spouse. In this case, non-compensatory spousal support was awarded because the wife had little means, while having significant needs in trying to maintain a similar standard of living post-marriage.

Amount and Duration of Spousal Support in Ontario

The amount of spousal support to be paid and the length of time it is to be paid is typically a matter that is contentious at trial. There is no strict rules on spousal support and it can be quite discretionary for the Judge. In this case, the marriage lasted five years and the husband was earning $146,000 per year.

The husband had argued that because of his significant debt, the payment of spousal support would cause undue hardship. The evidence demonstrated the husband had $347,000 in student-loan debt. The Judge found that this debt was solely for the benefit of the husband and therefore the wife need not suffer because of it.

In the end, the Judge ordered the husband to pay the wife $1,968 per month in spousal support for five years. This represented the low end of the spousal support advisory guidelines.

Appeal of a Spousal Support Order in Ontario

The husband appealed this Order to the Ontario Court of Appeal. The law on appeals of spousal support orders was reviewed. The leading case on the issue was a decision from the Supreme Court of Canada in Hickey v Hickey.

The Supreme Court found that Appeal Courts are not to interfere with a spousal support Order unless:

There is a demonstrated error in principle;
There is a significant misapprehension of the evidence; or
The award is clearly wrong.

In other words, appealing a spousal support order is extremely difficult. The only way to successfully appeal is if the Judge made an egregious error, which would be obvious when reviewing the decision. The Court of Appeal was not persuaded in this case and the spousal support order was not changed.

What Can I Do if I Don’t Appeal a Spousal Support Order?

If you don’t appeal the spousal support Order, you will be paying it for a period of time. Typically, you may only get the Order reviewed if there has been a material change in circumstance. This means that there has been a significant change in the evidence the Judge considered. This would include such items as a significant medical issue which reduces income, retirement at a reasonable age, involuntary lay-off, or some other significant employment change.

If your ex-spouse is seeking a significant amount of spousal support, seek legal assistance. In this case, the husband was self-represented and is now paying approximately $120,000 in spousal support. A small investment in some legal advice may prove to save you money over the longer term.

Contact Hearty Law for a consultation on spousal support, child support, custody, access, divorce, property division or any other family law issue.

Hearty Law serves Toronto, Ottawa and surrounding communities. Email toronto@heartylaw.ca or ottawa@heartylaw.ca for more information.

Child Support Payments and Undue Hardship in Ontario

Are child support payments causing undue hardship in Ontario? Federal legislation establishes child support guidelines. These tables are rigid and require child support to be paid based on the income of the parent paying support. Oftentimes, a parent will say that the child support amount is high and is causing undue hardship. Only a Court in Ontario can order a lower amount of child support. The Ontario Superior Court of Justice in Ottawa examined this issue in a written decision earlier this summer. Much of that written decision was focused on custody and access. This article is only considering the argument on undue hardship as it relates to child support.

Paying Child Support is Causing Undue Hardship in Ontario

The mother and father in this case never married. Their relationship was short and their one child was born in 2017. The father is a police officer in the Pembroke area in Eastern Ontario. His most recent annual income was $105,785 per year. The mother is a nurse in Ottawa and her income was $66,000 per year.

Based on an income of $105,000 per year, child support for one child in Ontario is $925 per month. The father argued that paying $925 per month would cause undue hardship. His argument was based on:

$37,000 owed to his parents which was used to fund a criminal defence lawyer;
Payment of $620 per month in child support to his ex-wife to support his two children from a previous marriage;
Payment of significant expenses to support his two other children in their involvement in competitive hockey.

The father argued that the combination of these factors justified his request to have child support reduced. He also added to his position by arguing that the mother’s household had a higher standard of living than his.

The Law on Child Support and Undue Hardship in Ontario

The Judge reviewed the law on the facts to be considered in ruling on an application for undue hardship. In Ontario, the Child Support Guidelines are a regulation under the Family Law Act. Section 10 of that regulation provides a list of some of the factors in considering an undue hardship applications. A few of these factors are:

Unusually high debt levels incurred by supporting the children and other parent;
Unusually high expenses related to exercising access to the child;
A legal duty under a judgment to support another person;
A legal duty to support another child.

Further in that same section, there is consideration for the standard of living between the two households. This section includes a comprehensive test on comparing the standard of living.

Proving Undue Hardship in Ontario

In this case, the father’s application for undue hardship failed. While the Judge heard evidence of a $37,000 debt owing to the parent, the father failed to prove this debt. There was no contract, no promissory note nor any other documentation related to the debt nor the repayment schedule.

Next, the Judge looked at the $620 per month the father was paying in child support for his other two children. Again, there was no evidence that these payments were causing undue hardship. The father was paying a reduced amount of child support because the children were with him for a significant amount of time each month. While this may be considered a significant expense, the father still had an obligation to pay child support for the child that was the subject of this court case.

The Judge then considered the father’s income of $105,000 per year, as well as the income of his spouse of $38,000 per year. The father estimated his monthly household expenses were $2,000 per month. Given their respective income levels, his new spouse would also be expected to contribute to the household expenses.

Finally, the Judge reviewed the father’s proposed budget in detail. He noted claimed expenses of $600 per month in tobacco and alcohol, as well as $200 per month for meals outside the home. This combined for $800 per month and can’t be considered a justification for reducing child support.

In the end, the Judge found that the father failed to prove undue hardship. While earning over $100,000 and living in a rural community in Eastern Ontario, there was no evidence to prove undue hardship.

Comparing the Standard of Living Between Two Households

In this case, the father asserted that the standard of living in his house was less than that of the mother’s house. There was no evidence provided to prove this point. Legislation in Ontario provides a framework for how a standard of living is compared. This requires a detailed analysis of the budget for each household.

The formula examines all income and expenses for each house. The total amount is then divided by a “low-income measures amount” based on the number of adults and children in the house. This calculation results in a ratio, which is used to compare the two houses.

How to Prove Undue Hardship to Reduce Child Support in Ontario

In this case, the father did not prove undue hardship. If child support payments causing undue hardship in Ontario, or if your ex-spouse is attempting to increase child support, obtain some legal advice. Proving this can be difficult.

The most important aspect of this application is providing tangible evidence on your debts and expenses. Simply stating that you have a significant debt is not enough. You need to prove this debt, meaning proving where the money came from, what expense it went to pay for and how it is being repaid.

If you are arguing that your living expenses are causing undue hardship, then simple budget estimates are not sufficient. Using financial statements to prove your income and expenses will be useful in advancing your claim.

Contact Hearty Law today for a consultation on questions related to child support, spousal support, divorce, property division, hidden assets, concealed income and other family law financial need. All consultations are completed virtually, so you don’t need to leave the comfort of your own home. Send an email to toronto@heartylaw.ca or ottawa@heartylaw.ca or complete the contact form here.

Hearty Law serves Toronto, Ottawa and surrounding communities.

RRSP Withdrawals Income for Child Support Purposes?

Federal Child Support Guidelines provide a simple framework for determining the amount of child support to be paid. These guidelines simply takes the income of the parent paying child support and the number of children to determine the monthly amount. While this seems like a simple exercise, determining income can be complex. RRSP withdrawals can be considered income when calculating child support.

Yesterday I wrote about a recent decision from the Ontario Court of Appeal, where sole custody was awarded to the father. This post looks at the same decision, but on the issue of RRSP withdrawals and how they impact income for child support purposes.

Are RRSP Withdrawals Considered Income When Calculating Child Support in Ontario?

The couple in this case married in 2006 and separated in 2015. They had one child together, who was born in 2014. The 12-day trial for this high-conflict divorce was in 2018. The trial covered all aspects of the divorce, including custody, access, child support, spousal support and property division.

The father was awarded sole custody and the child was to live with each parent 50% of the time. To calculate child support owing, the guidelines were used by each parent and only the difference would be owing each month.

The father was found to have an income of $128,000 and the child support for one child at this income is $1,130 per month. The mother had employment income of $81,000 and the child support for one child at this income is $755 per month. This means that absent any other information, though the child split time equally between each residence, the father would pay the mother $375 per month.

However, the mother had an RRSP withdrawal of $59,000 per year, which increased her annual income for tax purposes to $140,000. This RRSP withdrawal was used to pay for her lawyer in the divorce. Child support for one child at $140,000 per year increases to $1,225. If the RRSP was considered income, it would mean instead of receiving $375 per month, the mother would have to pay the father $95 per month.

RRSP’s Can be Considered Income When Calculating Child Support in Ontario

To resolve this issue, the Judge reviewed the law on calculation of income. This included a review of a 2013 Ontario Court of Appeal decision on the issue. In that case, the father had made an RRSP withdrawal to assist with the purchase of a residence. The RRSP withdrawals in those circumstances were found to be income, as it was reported as income on his tax return.

The mother in the current case had made the $59,000 RRSP withdrawal to pay her lawyer. She argued this was a one-time, non-recurring payment, which did not increase her ability to pay support. The Judge didn’t agree. Effectively, the money was available to pay for lawyers, therefore it was also available to pay for child support.

The mother appealed this decision and the Ontario Court of Appeal made a ruling last month. The appeal was dismissed and the Court of Appeal found that the Judge did not make any error in including this amount in the mother’s income. The Appeal Court found that the Judge was alive to the potential issue of unfairness and the decision was reasonable.

Reasonable Actions Are Necessary During Divorce Proceedings

One other comment about this case needs to be made. The mother had argued in 2015 that the father’s RRSP withdrawal should be included in his income to determine child support. It was very harmful to the mother’s argument that three years prior she had argued for inclusion in the father’s income. Then, because it impacted her, she was argued that it shouldn’t be included in her income.

During prolonged divorce proceedings, it can be difficult to remember everything that has been done. Unreasonable actions can lead to your own arguments being used against you.

Prior to Making RRSP Withdrawals, Talk to a Lawyer

If you are in the midst of divorce proceedings consider your finances. All financial decisions you make can impact support payments and other property matters. Prior to making any significant financial decision, obtain some legal advice.

Contact Hearty Law with any questions on financial matters related to your divorce. Hearty Law will assist you with advice on child support, spousal support, hidden assets, concealed income, division of property and any other family law financial matter.

Email Hearty Law at toronto@heartylaw.ca or ottawa@heartylaw.ca.

Hearty Law serves Toronto, Ottawa and surrounding communities.

Calculation of Child Support When a Parent is Underemployed

When a parent is underemployed and earning far less than their capacity, a Court will impute income to calculate child support. This issue was examined by an Ontario Court earlier this summer. The warring parents in that example provide a great look at the analysis required for determining custody. This blog post is limited only to the analysis on the calculation of child support.

What Does Underemployed Mean for Child Support Purposes

This couple lived together in a common-law relationship between 2006 and 2008. They had one child together who was born in 2008. After birth, the mother and child lived with the grandmother and the father remained involved with the child. Court proceedings were first initiated in 2011 and continued until now.

The mother is currently 47 years old and works for the federal government. The father is 48 years old and is a head chef in a local restaurant. Since a Consent Order in 2012 the father was paying child support based on an imputed income of $30,000 per year. The father provided tax returns which showed income between $0 and $13,000 between 2012 and 2018 and stated the reason for the low income was failed restaurant ventures.

The father was trained as a chef when the child was born and he has an obligation to support his child financially. In this case the judge found that considering his age, skills and experience, it was unreasonable for him to continue with failed business ventures. The alternative was to obtain a steady income so that he could support his child.

This is an example of underemployed. This means that a parent is earning less income than what would be expected when age, skill and experience is considered. There are far more egregious examples of parents who deliberately remain unemployed to avoid support payments. This is a good example of a parent who was working, but not earning enough.

Can Retroactive Child Support Be Awarded When a Parent is Underemployed?

In this case, the mother sought retroactive child support back to the date of separation (12 years ago). The Supreme Court of Canada has provided direction on this issue from a decision in 2006. There are two guiding principles when determining retroactive child support. First, both parents have an obligation to ensure proper support for the child’s benefit. The second guiding principle is that the payor parent has certainty in their debts.

There are then four factors to consider. First, whether the recipient parent had a reasonable excuse for not requesting child support earlier. Second, the conduct of the payor parent. Third, the circumstances of the child and fourth, the potential hardship for the payor parent.

In this case, the evidence was that the father paid child support for the first few years after birth. The mother never told the father she was seeking more support and there was no evidence that the father was putting his interests over the interests of his child. Based on all of this, the Judge decided that this was not an appropriate case for retroactive child support.

Child Support Arrears

In this case, the father went to Court in 2017 and obtained a Court Order rescinding the $11,500 he owed in child support. The mother did not attend Court, because she said she didn’t know about the application. The day after the Court Order was issued, the mother said she received the father’s application.

The mother asked the Court to set aside the earlier Order and have the father pay the $11,500. The Judge looked at the circumstances and found the way the events unfolded were unfair for the child. The father was again ordered to pay the $11,500 in child support that was owing.

What to do if you Have Child Support Arrears?

Child support arrears means that you still owe child support. If you can’t pay child support one month, it still remains owing. The longer you go without paying child support, the larger the debt becomes and this debt does not simply go away when you ignore it.

If you have significant child support arrears owing, you may want to get some legal advice. There may be an opportunity to lessen the amount, but whether or not this can happen is based on a number of factors. Most of the factors are based on your conduct. What is your financial situation and why you are in that situation is important. There is a difference between conducting yourself against the interests of the child and doing everything you can to support your child.

Is Your Ex-Spouse Underemployed?

If you believe your ex-spouse is deliberately underemployed to reduce child support obligations, you may want to seek legal advice. Some analysis must be done on that person’s age, skill and experience. As well, some thought must be put to the local economy and the ability to easily obtain employment. In these times of social distancing, though a parent may not be earning what they have in the past, this does not mean it is intentional.

If you have questions on child support, spousal support, access, custody, division of property or other family law matters, please contact Hearty Law. Alternatively, email toronto@heartylaw.ca or ottawa@heartylaw.ca.

Hearty Law serves Toronto, Ottawa and surrounding communities.