Do your homework when determining child support payments

By Tony Poland, LegalMatters Staff • While calculating child support payments “can be very straightforward, there are still some complications that people need to be aware of,” says Toronto family lawyer A. Julia P. Tremain.

“The vast majority of people understand that they owe an obligation to their children and they will pay what is expected to help support them,” says Tremain, a partner with Waddell Phillips Professional Corporation. “However, sometimes it can be complicated. Even when people want to pay the correct amount, it can sometimes be difficult to determine their accurate income if they are not a typical employee receiving a set salary.”

She says courts will always put children’s welfare ahead of all other issues.

“One of the first things that judges ask is whether the appropriate amount of support is being paid. They really do want to ensure parents are being responsible for their children and that the children are not growing up impoverished,” she tells LegalMattersCanada.ca. “When the payor parent has an obligation to pay child support, the view is that the support is the right of the child. It is not the right of the other parent.” 

Some calculations are easier than others

Tremain says it is a simple matter of calculating monthly child support payments if the payor parent has a job that provides a T4 slip – the document that summarizes the money paid by an employer to an employee during a calendar year that is used for tax purposes. 

“There are the child support guidelines – which really aren’t guidelines since it is the law ­– with a grid to enter the payor’s income along with the number of children and it provides the amount that must be paid,” she explains. “Where it can get tricky is if the payor has their own business with deductions. Some expenses that are deductible for business tax purposes are not necessarily deductible for child support purposes.

“Although a person may be eligible to make these deductions to keep their income lower for income tax reasons, they may have to add some of those back in to determine their income for child support,” Tremain adds. “This can cause significant disagreements. because obviously the payor prefers to keep their income as low as possible while the recipient parent will argue it should be higher.” 

Depending on how people earn money, “there can be issues about determining actual income,” she says. 

‘The onus is on the person disputing the income to prove it’

“Some people derive income through dividends, others through investments, which can be a challenge to unwind,” Tremain says. “Some parents have small businesses and receive some cash off the books. How do you account for that? People sometimes believe, rightly or wrongly, that someone is not declaring all that income. And the onus is on the person disputing the income to prove it. That can be extremely challenging.”

It is also not always a simple task to calculate child support in a shared residential situation either, she says. Under Ontario’s Child Support Guidelines, the child must live at least 40 per cent of the time with each parent for it to be considered a shared residency, says Tremain. 

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Depending on how the parents choose to arrange the child support payments, there can be significant tax implications if the children have shared residency, so parties should consult a family law lawyer before they deal with the child support issue, she says.

Tremain says when couples decide to end their relationship, they should turn their attention to child support. When negotiating a separation agreement, each parent will be expected to provide full financial disclosure that includes income tax returns, she says.

Important to establish a separation date

It is important to establish a date of separation because that is when child support starts, assuming the parents are not still living in the same home, Tremain says.

“Sometimes people don’t start talking about support until many months later,” she says. “But it is still owing and the payor may end up owing thousands of dollars in retroactive support.”

Tremain advises the payor parent to begin paying something immediately after separation and then deal with any arrears after the correct amount of support has been determined.

“There are situations where a parent does not realize that they owe child support at the date of separation, or perhaps they were being willfully blind,” she says. “If they start paying from the date of separation, courts will regard them in a more favourable light.”

Couples will also build regular income reviews into their separation agreements, Tremain says. This is necessary in case the payor’s income changes, necessitating a variation in the amount of support paid, she says.

“Sometimes people change jobs or their income increases or decreases,” Tremain says. “It makes sense to have a provision in the separation agreement to look at child support each year.”