Introduction

In Canada, child support is intended to ensure that children receive financial support proportional to both parents’ abilities to contribute. However, issues arise when a parent is underemployed or intentionally reduces their income to lower their child support obligations. This article explores the concept of imputed income in child support cases and what happens when a parent is underemployed.

What is Imputed Income?

Imputed income refers to the income that a court attributes to a parent based on their potential earning capacity rather than their actual income. This concept is used in child support cases to ensure that a parent who is voluntarily underemployed or unemployed does not evade their financial responsibilities towards their child.

When is Income Imputed?

Income may be imputed in the following circumstances:

• Underemployment: When a parent is employed but earns less than they are capable of due to a voluntary choice, such as working part-time instead of full-time or accepting lower-paying work.
• Unemployment: When a parent is unemployed and has not made reasonable efforts to find suitable employment or is not actively seeking work.
• Non-Disclosure: When a parent fails to provide accurate financial information or hides their income to reduce their child support payments.

How is Imputed Income Determined?

Courts use several factors to determine imputed income, including:

• Previous Employment History: The parent’s past employment and earning history provide a baseline for what they are capable of earning.
• Education and Skills: The parent’s level of education, training, and skills are considered to assess their potential earning capacity.
• Employment Opportunities: The availability of jobs in the parent’s area and their suitability based on the parent’s qualifications are taken into account.
• Reason for Underemployment: The court will examine whether the parent’s underemployment is voluntary or due to circumstances beyond their control.

Examples of Imputed Income

Here are examples of how imputed income might be applied in different scenarios:

1. Example 1: Voluntary Reduction in Hours

Parent A was previously employed full-time as a manager with an annual income of $80,000. After separation, Parent A voluntarily reduces their work hours to part-time, resulting in an income of $30,000. The court may impute income based on Parent A’s previous full-time earnings, assuming they are capable of earning a similar amount if they choose to work full-time.

2. Example 2: Unemployment

Parent B is unemployed but has a history of working as an electrician with an annual income of $60,000. Despite having the skills and certifications required for this role, Parent B has not actively sought employment. The court may impute income based on the earnings they would likely make if they were employed in their previous role.

Legal Process for Imputing Income

If one parent believes that the other parent is underemployed or not disclosing their true income, they can take the following steps:

• Gather Evidence: Collect evidence of the parent’s earning capacity, such as employment history, educational background, and job market conditions.
• File a Motion: Request the court to impute income by filing a motion and presenting evidence that supports the claim of underemployment or non-disclosure.
• Attend a Hearing: Attend a court hearing where both parties can present their arguments and evidence. The court will make a decision based on the information provided.

Consequences of Imputed Income

If the court decides to impute income, it can result in a higher child support obligation for the parent. This ensures that the child support payments reflect the parent’s true earning capacity rather than their actual, reduced income. The court’s decision aims to prevent unfair advantage and ensure that child support payments are fair and adequate.

Conclusion

Imputed income plays a crucial role in ensuring that child support obligations are fair and based on a parent’s potential earning capacity. When a parent is underemployed or fails to disclose their true income, the court may impute income to ensure that child support payments meet the needs of the child. Understanding this concept can help both parents navigate the child support process and ensure that financial responsibilities are met.