Family Law Principles that we can learn from Thompson v. Thompson 2013 ONSC 5500 (Income determination)

LEGAL PRINCIPLES RELATING TO INCOME DETERMINATION

In the context of child and spousal support proceedings, the determination of the parties' incomes is crucial. The Guidelines' sections 15 to 20 are the starting point for calculating a party's income. If both spouses agree in writing on the annual income of a spouse, the court may consider that amount to be the spouse's income. The spouse's annual income is determined using the sources of income set out in the T1 General Form issued by the Canada Revenue Agency, with adjustments provided for in Schedule III to the Guidelines. The court should determine the party's Guidelines income for the upcoming twelve months from when child support will be paid if a party's prior year's income is not predictive of what they are likely to earn in the upcoming year.

The process of determining child and spousal support in divorce proceedings largely hinges on the accurate determination of both parties' incomes. The Guidelines' sections 15 to 20 provide a starting point for determining a party's income, and this forms the basis for calculating child and spousal support.

If both spouses can reach an agreement regarding one spouse's annual income and this agreement is put in writing, the court may take that agreed amount as the spouse's income. This process helps to simplify matters and reduce potential disputes over income levels.

The income determination process takes into account various sources of income as set out in the T1 General Form. This is a form issued by the Canada Revenue Agency and it details various income types that are relevant for tax purposes. However, the court doesn't simply take the income reported on the T1 form at face value. Instead, any income reported on the T1 form may be adjusted as provided for in Schedule III to the Guidelines.

This means that certain types of income may be included or excluded, or certain deductions may be applied or ignored, to arrive at a figure that accurately reflects the spouse's income situation. This adjusted figure is then used as the basis for calculating child and spousal support.

One important point to note is that in certain situations, a party's income from the previous year may not be a good indicator of their likely income for the upcoming year. For example, if a party has just started a new job with a much higher salary, or if they have lost their job and are currently unemployed, their income from the previous year would not accurately reflect their current income situation.

In such situations, the court needs to determine the party's Guidelines income for the upcoming twelve months from when child support will be paid. This involves making some predictions about the party's likely income for the upcoming year based on available information. This ensures that the child and spousal support amounts are based on a realistic and fair assessment of the party's likely income, rather than being based on outdated or irrelevant income figures.

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