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Family Law Blog

Calculating Income for Child Support

Calculating Income for Child Support

Separating is never easy – both financially and emotionally. It’s a time when important decisions need to be made in extremely difficult circumstances. These decisions usually encompass aspects like dividing the home and belongings, deciding where the children will live, and how much financial support is needed for your children.

Even though they’re separated, divorced couples have an ongoing legal obligation to provide financial support for their children. The Divorce Act and Federal Child Support Guidelines handle the formula for deciding how much support is to be paid. When someone makes an application to the BC courts for child support, the payor and the recipient are required to disclose their financial circumstances using a court form called a Financial Statement.

Financial Statements – What’s Included?

The person being asked to pay will be required to do a financial statement, and the person seeking support MAY be required to depending on the circumstances.  The following documents are typically requested as part of the statement:

  •   three most recent years’ tax returns
  •   all notices of assessment and reassessment received for the last three years
  •   both parties most recent paystub, showing earnings to date, or;
  •   if the party isn’t working, their most recent EI statement (or other statement listing support payments)
  •   business records such as financial statements and corporate income tax returns (if applicable)

For most people who work a salaried job, the amount stated in line 150 of their most recent tax return is considered their income. That being said, there are important exceptions and caveats to be aware of. An individual’s income might include bonuses, rental income, profits from stocks, company dividends, workers compensation payments, disability payments, government benefits, or interest from an investment.

Let’s examine how exceptions work for several common income scenarios.

Government Benefits

If the payor is a recipient of WSBC payments, employment insurance, pension or social insurance, they all count as income towards child support. It’s worth mentioning Canada Child Tax Benefits will not be considered income for child support purposes.

Fluctuating Income

Many individuals work commission-based roles where their income fluctuates from year to year. In this event, the courts will examine the prior three years of income before setting a reasonable level of support payments. While it’s too simplistic to say it happens in every scenario, the courts will likely defer to an average of the prior three years income.

Court Awards

If one party to the separation receives an award from a personal injury proceedings, the court may attribute a portion of the award allocated for lost wages to the payor’s income. Any part of a personal injury award that is allocated to compensation for lost wages will be considered income

Here to Help

As family law experts, the team at Westside Family Law has been a trusted advisor to countless clients going through a separation. Need assistance with any aspect of child support during a divorce? Contact us and we’ll be happy to assist.