Child Support: Imputing Income to an Underemployed Parent
Section 19(1) of the Child Support Guidelines allows the court to impute income to a parent for support purposes in certain circumstances. These circumstances include intentional under-employment or unemployment unless the employment status is required due to the needs of a child or the parent. A recent trial decision, Ojigho v. Burke, 2023 ONSC 2029, addressed whether to impute income to a self-employed parent.
The key issue at trial was the amount of income earned by the father. The mother asked the court to impute income to the father based on two of the circumstances identified in the Child Support Guidelines: intentional underemployment and the failure to provide income information under a legal obligation to do so and despite previous orders requiring disclosure (s. 19(1)(a) and (f), CSG).
Before considering whether imputation was appropriate and the amount to be imputed, the court summarized the principles governing this exercise of the court’s discretion. The rationale underpinning this section of the Child Support Guidelines is that a payor of child support has a duty to actively seek out reasonable employment opportunities that will maximize their income potential. Whether a parent is underemployed is to be determined having regard to a number of factors, including the parent’s background, education, training, and experience, whether a choice to pursue self-employment is reasonable, and whether the parent has pursued an unrealistic or unproductive career objectives. Notably, a finding of underemployment does not require the payor to have acted in bad faith or intended to evade their child support obligations. In addition to imputation based on or unemployment, if the payor does not provide full financial disclosure of their income, the court is entitled to draw an adverse inference and to impute income to them. Courts often face difficulty in assessing the appropriate quantum of income despite the payor’s nondisclosure of relevant income details.
In Ojigho v. Burke, the court granted the mother’s request to impute income to the father. The finding was based primarily on three factors: (1) the father’s admission that he was working only part-time; (2) the absence of any evidence of educational pursuits that would explain the hours worked (the father claimed that he worked part-time to study for computer qualifications, but was not enrolled in any course and provided no details of his alleged self-study and how it would allow him to obtain any additional qualifications); and (3) the father’s ongoing failure to provide full financial disclosure, despite his obligation to do so pursuant to the Child Support Guidelines as well as numerous court orders for disclosure.
Having found that the father was underemployed, the court analyzed the amount of income to be imputed, noting that the amount must be grounded in the evidence. The mother asked that the amount be set at the amount of the gross income of the father’s sole proprietorship. The mother’s request to use the father’s gross self-employment income was in part rooted in the father’s failure to justify the expenses diverted through his business. Notably, expenses legitimately diverted through a corporation or business under the Income Tax Act are not necessarily legitimate deductions under the Child Support Guidelines. The Child Support Guidelines establish a more stringent threshold for the deduction of such expenses from income. As a result, personal expenses properly deducted from gross revenue for tax purposes are often added back for the purpose of calculating Guideline income for self-employed individuals.
Ultimately, the court granted the mother’s request and set the table support amount accordingly, including retroactive support from the date of separation in 2018 until January 1, 2020. Although the father did not begin making payments until 2021, the court declined to order retroactive support during 2020 and 2021. The court’s reasoning was twofold: (1) there was no clear statement of arrears for the period between 2020 and 2021; and (2) the court declined to impute income to the father for 2020 to 2021 due to the impact of the COVID-19 pandemic, noting that the father qualified for Canadian Emergency Response Benefits (CERB) for that timeframe.