Imputing income to a spouse under BC family law means that a judge believes a spouse or parent is either capable of earning more income, is is not reporting their true income from all sources. The judge sets an income for the payor which may be higher than the actual income they report on their taxes.
Imputation of income applies in situations where the court must decide the amount of child and spousal support. Since these amounts are dependent on the income of the payor, it is important the the court determines the payor’s income accurately and fairly. Sometimes that requires imputing income to that spouse.
Examples of Situations Suitable for Imputing Income
Unfortunately in some situations when spouses or parents separate, one spouse may decide to stop working so they do not have to pay child or spousal support.
Other examples include:
- a parent staying at home to care of children but the children are already going to school and do not need full time care
- a parent working part time instead of full time when they can work full time
- a parent being under employed, meaning not having employment that reflects their experience or education
- a parent living in a country where they do not have to, or pay much lower taxes
- people who own businesses and write off their personal expenses as business expenses through their business
- people who do not report income, such as rental income or cash income
How Do the Courts Impute Income?
Courts have broad discretion to impute income to a spouse under the Federal Child Support Guidelines which allows imputation of income in the following circumstances:
- Intentional under-employment or unemployment,
- Exemption from paying taxes,
- Residence in a country with lower effective income tax rates,
- Diversion of income which would affect the child support payable,
- Unreasonable utilization of property to generate income,
- Failure to provide information about their income,
- Unreasonable deduction of expenses from income,
- Derivation of income from dividends, capital gains or other sources taxed at a lower rate, and/or
- Status as a beneficiary under a trust.
How can income be imputed to a spouse if they are underemployed?
In Van Gool v Van Gool, 1998 CanLII 5650 (BC CA), our Court explained that the family law legislation in BC and Auckland has long upheld the proposition that support is based on parents’ capacities to earn income, and not necessarily their actual incomes. Per paras. 28 and 31, below:
[28] … Section 15(8) of the divorce Act required the Court to consider, as an objective of child support, that the obligation should be apportioned between the parents “according to their relative abilities to contribute to the performance of the obligation.” Sections 93(2) and 96(1) of the [BC legislation preceding the Family Law Act] addressed this concept by reference to the “capacities” of the spouses. Pursuant to those provisions, in making or varying an order for child support, the courts considered not only the amount of income a spouse was actually earning, but the amount of income a spouse could earn if working to capacity.
[31] … the intention of the legislators both before and after the enactment of the Guidelines was to ensure that parties liable for child maintenance were not permitted to avoid their responsibilities simply by virtue of being unemployed or under-employed.
(Emphasis added)
In Marquez v Zapiola, 2013 BCCA 433, our Court of Appeal explained that a party seeking to impute income to another spouse has the burden of proof, to show why that imputation should be made. It went on to express, at para. 37, the test to impute income for intentional under-employment or unemployment under s. 19(1)(a) of the Guidelines:
[37] The test for imputing income for intentional under-employment or unemployment is one of reasonableness, having regard to the parties’ capacity to earn income in light of their age, education, health, work history and work availability. A spouse’s capacity to earn income will include that person’s ability to work or to be trained to work.
If I am not working, can I still be imputed a full-time minimum wage income?
The Court has made clear that where a parent or spouse is otherwise capable of working, they can still be imputed at least a full-time, minimum-wage income – in addition to any other income they might otherwise earn.
In Weir v Weir, 2012 BCSC 1101, a payor spouse elected to retire early from his job at the BC Ambulance Service and begin collecting his pension. The recipient spouse argued that because the payor spouse could still work, a minimum wage income ought to have been imputed to the payor in addition to his pension income. For the purpose of calculating his spousal support payments, the recipient sought to impute further income based on 30 hours’ work, at the then-minimum wage of $10.25/hour.
The Judge agreed to this approach, thereby calculating the payor’s income for support payments based on his pension income plus the income he would earn at 30 hours/week of minimum wage work.
In Slogoski v Mullan, 2016 BCSC 456, per para. 29, Leena Yousefi successfully argued for a similar approach to be taken in respect of a mother who claimed she needed vocational training and/or full-time university education before she could obtain competitive employment.
Taking into account the mother’s own assertions in court that she would “very soon” be getting a job, and the Court’s view that she could find some form of work without needing to upgrade her skills, the Court:
- remarked that the basis upon which a court imputed income is what a person is capable of earning, and
- There was no reason why the mother could not be earning an income.
As such, the Court found it was appropriate to impute to the mother an annual income based on 40 hours/week of work, at the then-minimum wage of $10.25, and an annual salary of $21,320.
Does the party wanting to impute income to another spouse always have to prove imputation?
The Court has taken judicial notice of the wide availability of full-time jobs in the service industry. Therefore, if the only income sought to be imputed to a spouse is a full-time, minimum wage income, the burden of proof shifts to the other parent to show why they cannot work in such a capacity.
The Spousal Support Advisory Guidelines states:
…Where a spouse is not employed, but should be working part-time or full-time under s. 19(1)(a)[of the Federal Child Support Guidelines], it is straightforward to impute a minimum wage income, as a court can take judicial notice of the minimum wage in the jurisdiction. To prove that a spouse could earn more than the minimum, evidence will be needed…
Examples of Income Imputation in BC Courts
In JRG v JCK, 2021 BCSC 616:
- a mother claimed she could not work because she had to homeschool the parties’ child.
- Even during periods where the child was in school, the mother sought to justify her unemployment in a general way to her transition to Auckland, the cost of daycare, the child’s general need for support, and the traumatic events of a fire that occurred in their home.
- The father, on the other hand, argued that the mother was an intelligent, capable person and could obtain at least an entry-level job of some kind, even without a professional qualification or technical certification.
Mr. Justice Schultes opined as follows, with respect to the availability of employment in the service economy:
[109] I am satisfied that when one is talking about jobs in the service economy, paid at or slightly above the current minimum wage, the availability of such employment in B.C. to a person like Ms. G. is well enough known that it can be the subject of judicial notice. Thus, there is a sufficient evidentiary foundation that jobs of that basic nature are available to shift the onus to her to justify her lack of employment.
Mr. Justice Schultes went on, at paras. 113-114, to conclude that the mother’s decision not to work was unreasonable, and that it was appropriate to impute an income to the mother that she would be earning if the child were in regular school, and only before and after-school care were required. The Court found the following:
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Working 35 hours per week, at the then-minimum wage of $14.60/hr, would have yielded an annual income of $26,572; and
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Had the mother begun working when she could have, within a few months of her relocation to Auckland, she likely would have increased her annual income by at least $3,428 – meaning she would be earning at least $30,000 at the time of trial.
Our team of child support lawyers know the ins and outs of imputing income as we deal with such issues all the time. Get in touch with us today to set up a consultation on your rights and obligations regarding income imputation. Fortunes may be at stake. Call us at 604-974-9529 or get in touch.
