Child Support: Imputing Income to the Intentionally Underemployed
By Tanya Thakur, Vancouver Family Lawyer
Many people are making a career change these days and you or your former spouse may decide to take a new job that leads to a significant decrease in income. How does this lower paying job affect child support payments? This blog discusses the topic of imputing income where a payor of child support experiences a decrease in their annual income because they decide to pursue a less financially lucrative career path. Does this mean that the amount of child support received by the recipient parent also decreases?
In the above scenario, the court can impute or increase, the payor’s income where the total income on their tax return does not accurately reflect their earning capacity. Typically, when a spouse is an employee, their total income on their tax return is used to calculate child support. Where the spouse is under-employed or unemployed, and the court decides that they are capable of earning more income, the court can award child support to the recipient based on the payor’s earning capacity rather than their actual income.
The test for imputing income for intentional under-employment or unemployment is one of reasonableness, considering the parties’ capacity to earn income as it relates to their age, education, health, work history, and work availability. Capacity to earn income includes the ability to work and to be trained to work (Willms v. Willms, 2020 BCCA 51).
In determining whether a party is intentionally unemployed or under-employed under s. 19(1)(a), the court must determine whether the party has taken reasonable steps to obtain employment commensurate with factors such as age, health, education, skill, and work history (Van Gool v. Van Gool, 1998 CanLII 5650 (BC CA)).
The person seeking to impute income to the payor must show evidence that the payor’s actual income is less than their earning capacity. For example, if the payor of child support quit their more financially lucrative job for one that pays less money, the recipient may need to show the court that there are higher paying jobs available to the payor than their current job and the payor has made little efforts to pursue higher paying jobs.
If the payor is facing an income imputation claim, they can raise the defense that their under-employment is caused by any of the following reasons:
- Required by the needs of a child of the relationship
- Required by the need of a child under the age of majority
- Due to the reasonable educational or health needs of the spouse
The ability to impute income to a payor spouse means that payors of child support may face barriers to switching careers where their desired career is not as financially rewarding. The rationale for potentially limiting a payor’s choice of career is found in section 19 of the Federal Child Support Guidelines, where parents have an obligation to maximally support their children.
The family lawyers at Crossroads Law have a great deal of experience in working with clients who affected by imputed income. To learn more about how we can help, contact us today for your free 20- minute consultation.