For military and RCMP members receiving a Veterans Affairs Disability pension, there is some confusion on whether or not the amount is included in income for child support and spousal support purposes. This blog post will discuss some factors that need to be considered in determining whether a Veterans Affairs Disability Pension is income for support purposes.
Prior to 2012, generally, the amount was included as income. As the pension is not taxable, the amount would be “grossed up” to the pre-tax equivalent. Support would then be calculated on that amount. Some confusion ensued with a Federal Court decision in 2012.
Veterans Affairs Disability Pension is Property not Income
In a case called Manuge, the Federal Court was asked to decide on a class-action brought on the government by 4,500 former members of the Canadian Forces. These members were receiving an insurance amount each month. The member was also awarded a monthly disability pension through Veterans Affairs. As a result, the monthly insurance award was reduced by the amount of the disability pension. The Court ruled that this wasn’t proper. The Veterans Affairs Disability pension was not income replacement. Rather, the pension was property. It was compensation for loss of amenities of life and for the personal limitations and sacrifices that arise from disabling injuries.
After this decision, courts across the country remain divided on the impact of this ruling on family law matters. It appears as though the first time this issue was decided after Manuge was in Alberta in 2013, where the court decided that the VAC disability pension was not to be included as income for support purposes. The one exception was for the monthly amount received for the children of the veteran.
Veterans Affairs Disability Pension is Income and not Property
In 2013 in Nova Scotia, the court decided on a case where the husband was a full-time active member of the RCMP, while also receiving a monthly VAC disability pension. In this case, the court rejected the reasoning from Alberta. The Court found that a decision on the contractual insurance obligations between the government and veterans was not applicable in the family law context. The result was that the monthly pension income was included in calculating support payments.
This issue was again argued in front of the Alberta Court of Appeal in 2017 and that Court ruled that the VAC disability pension was considered income. That decision was appealed to the Supreme Court of Canada who dismissed the application for leave with costs.
Is VAC Disability Pension Income or Property in Ontario
The decision from the Supreme Court of Canada is likely the last word on the issue. It may be possible that VAC disability pension amounts are income for support purposes. The Ontario Superior Court also had a decision after the Supreme Court of Canada decision. The Court in that case carefully reviewed all of the case law on the subject and came to the conclusion that a VAC disability pension was income and was to be included as income in determining child support and spousal support.
Of interest in the recent Ontario decision, that considered the issue when the amount received was a lump sum. The Court converted the lump sum into an annual amount based on a life expectancy to age 75. There will be times where certain facts may change the outcome of your specific case, as happened in the Manitoba decision.
In that decision the veteran was receiving a VAC disability pension due to a significant back injury. The monthly VAC payments were used for massages in excess of what benefits covered. In addition, the payments also went to cover the costs to hire someone for yard work and snow removal, as the veteran was unable to do it alone. This is a much different situation than simply taking the monthly VAC disability payments and increasing your standard of living.
What Can You do if You or your ex-Spouse is Receiving a VAC Disability Pension?
If either you or your ex-spouse is receiving a VAC disability pension, consider obtaining some legal advice. The question is Veterans Affairs Disability pension considered income for support purposes is not easy to answer. Depending on the amount, it can have a significant impact on monthly support payments. Each situation is different and your situation may differ from the cases that are discussed here. Everything in this article is for educational purposes only and do not constitute legal advice.
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