Family Law Blog

What is Imputed Income?

What is Imputed Income?

In BC Family Law, spousal support and child support are calculated based on the spouses’ income. If one (or both) of the spouses are underemployed or unemployed, the court has the right to impute income when deciding on a figure for support. In this week’s blog, we’re going to examine what imputed income is, and the different scenarios in which it might come into play.

Defining Imputed Income

When it comes to calculating how much child or spousal support an individual must pay, BC courts will look to the amount reported on line 150 of the individual’s most recent tax return. However, it’s worth noting that this examination doesn’t end at line 150. After all, this income figure doesn’t always fairly reflect what a person should be paying.

In a situation where an individual is intentionally underemployed, unemployed, or utilizing tax strategies to reduce their taxable income, the court may impute their income to ensure they are paying an appropriate level of support. This involves the court settling on a payment figure that’s more in line with the realities of the individual’s situation. Here’s a comprehensive list of scenarios in which the court may decide to impute:

  •   A spouse is intentionally underemployed or unemployed
  •   A spouse is exempt from paying federal or provincial income tax
  •   A spouse lives in a country that has income tax rates significantly lower than those in Canada
  •   An appearance of income that has been diverted that would impact the level of support
  •   A spouse’s property is not reasonably utilized to generate income
  •   A spouse has failed to provide material income information when legally obligated to do so
  •   A spouse unreasonably deducts expenses from income
  •   A spouse pays themselves a nominal income from a corporation they control and retains the majority of earnings in the corporation
  •   A spouse earns a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than typical employment income
  •   A spouse is a beneficiary under a trust, or will receive income from a trust

How can I Impute my Ex’s Income?

If you have reason to believe a former spouse isn’t disclosing their full income, we recommend consulting with a family law expert. Our team at Westside Family Law can assist in mounting a legal challenge and ensuring you’re receiving a level of support that’s commensurate with the realities of your former spouse’s income. A decision by a former spouse to not disclose honestly is a bad strategy for avoiding their obligation.

Our team can help you initiate proceedings to have the figure assessed. Once this process begins, the former spouse is obligated to provide relevant documents pertaining to their income in quick fashion. It’s also worth noting, judges have the power to adjust support retroactively, so it’s always worth pursuing these matters through the law.

Let us Help

If you’re considering claiming spousal support or child support from your former spouse in BC, the expert team at Westside Family Law is standing by to assist. Contact us and we’ll be happy to help.