Spousal Support Advisory Guidelines: The Revised User's Guide

6 Income (SSAG Chapter 6)

The starting point for the determination of income under the Spousal Support Advisory Guidelines is the definition of “income” under the Federal Child Support Guidelines. For the most part, the income issues are the same as those for child support purposes, i.e. interpreting the provisions of sections 15 to 20 of the Child Support Guidelines and Schedule III.

(a) Differences in “income” for spousal support

There are some notable differences in “income” for spousal support purposes under the Advisory Guidelines, as compared to the income of a spouse determined for child support purposes.

(b) Timing of income

In the SSAG(6.7), we state: “The Advisory Guidelines start from the practical position that the relevant time for determining the incomes of the spouses is the date of the hearing or the date of the agreement, at both interim and initial stages.” Incomes can and do change in the period between separation and the date at which support is initially being set, but usually only in minor ways. A long delay in the support claim or significant changes in incomes before the initial order/agreement (such as a significant increase in the payor’s income or a significant reduction in the recipient’s income) may complicate the analysis in some cases (see below under “Changing Incomes”).

The issue of what incomes to use in situations of variation and review is dealt with below under “Variation and Review” and “Changing Incomes”.

(c) Imputing income

Everyone wants to impute a higher income to the other spouse, either to increase or decrease spousal support. Once we use income-based advisory guidelines, it is obvious that a higher income for the payor will move the range upwards, or a higher income for the recipient will move the range downwards. Attempts to impute income have now become common, often with little evidentiary foundation.

Section 19 of the Child Support Guidelines is often the basis for these imputing claims. It is worth remembering that s. 19 is a mixture of two kinds of “imputing”: a number of clauses that can be described more accurately as “attributing” income to the payor, income that the payor actually receives in some form, as contrasted to s. 19(1)(a), for example, where a court can truly “impute” income to the payor, even if he or she is unemployed or underemployed. Most of s. 19(1) focusses upon attributing income to a spouse, in an effort to treat various types of income and situations so as to put the spouse on an equal footing with a wage or salary earning employee, i.e. s. 19(1)(b) to (e) and (g) to (i). True imputing takes place under s. 19(1)(a) (and possibly under s. 19(1)(f)), where a court must determine the hypothetical income a spouse might earn.

There must be an evidentiary basis to attribute or impute income under s. 19(1). Where a spouse is not employed, but should be working part-time or full-time under s. 19(1)(a), 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. The case law under s. 19(1)(a) will be helpful, e.g. Drygala v. Pauli (2002), 61 O.R. (3d) 711 (Ont.C.A.).

In many cases, it will be difficult to prove how much a spouse ought to be able to earn. It may be easier to just argue location within the range for amount, to go lower in the range if the recipient’s income is in issue or to go higher in the range if it is the payor’s income.

In many cases where not much imputed income is involved, imputing additional income will not move the range much, which means considerable overlap between the range for actual income and the range for the desired imputed income, as is discussed in the next section. Or, where the payor has a high income, imputing a part-time or full-time minimum wage income to the recipient will not move the range much. In these instances, it might be better to concede the time-consuming proof of income, and then argue location in the range.

(d) Using alternative incomes, to estimate ranges

In some circumstances, it may be difficult to ascertain the precise income of a payor or a recipient. There may be uncertainty about income, or difficult judgments in imputing income, or inadequate evidence at the interim stage. One way to solve this common problem is to estimate different ranges for amount, based upon alternative income hypotheses. Usually there will be some overlap in the ranges, which can help in choosing a specific amount.

The B.C. Court of Appeal accepted this approach in upholding the variation decision in Beninger v. Beninger, 2009 BCCA 458. In a case above the ceiling, the trial judge had considered ranges for incomes of $366,400 and $416,400, thanks to an uncertain bonus for the payor, and then opted for an amount at the low end of the higher-income range, which fell in the middle of the lower-income range.

For an excellent example of this approach, in a high-income interim support case, see Saunders v. Saunders, 2014 ONSC 2459. For other interim examples, see Kozek v. Kozek, 2009 BCSC 1745 (Master), affirmed on appeal 2009 BCSC 1663 (dividend income); Muzaffar v. Mohsin, [2009] O.J. No. 4005 (S.C.J.) (husband self-employed) and Stork v. Stork, 2015 ONSC 312

One other example would be those cases where a court debates whether to impute income to a support recipient, or how much, in a “self-sufficiency” case. In the same fashion as for the payor, alternative incomes will usually generate overlapping ranges. Where the income disparity is great, there will be considerable overlap, often simplifying the outcome, as was the case in Teja v. Dhanda, 2009 BCCA 198 (trial judge considered ranges for wife’s incomes of $25,000 and zero). See also P.D.E. v. A.J.E., 2009 BCSC 1712 (wife underemployed, ranges determined for incomes of $20,000, $40,000 and $50,000, terminating step-down order made).

(e) Grossing-up non-taxable income

Under the without child support formula, which uses gross incomes, any non-taxable income will generally have to be “grossed up”, either by correctly inputting the income data with the software or by manual calculations (if software is not being used). If the inputs are done correctly, the software will do the grossing up calculations. The same is true for non-taxable income under the custodial payor or adult child formulas. Income can be legitimately non-taxable, such as workers’ compensation or income earned on reserve or long-term disability payments, or it can be income that is improperly not reported for tax purposes, such as tips or cash payments for work. Both forms of non-taxable income must be grossed up to do the without child support formula calculations, in order to treat earners of gross income and earners of non-taxable income on an equal footing.

The rest of the with child support formulas use net income rather than gross income to calculate spousal support, but you still have to input the income data correctly in the software. Any non-taxable income will be directly inserted into the net income calculations for spousal support by the software for these formulas. But remember that any non-taxable income will have to be grossed up by the software to determine the correct amount of child support.

Where a substantial portion of the payor’s income derives from legitimately non-taxable sources, you may have to use the “non-taxable income” exception, discussed below under “Exceptions”.

(f) Quick tips and alerts in determining income

Apart from these major issues in income determination, there are some minor ones that should be noted, both manually and in the use of software.

(g) Can a payor have “two incomes”?

Another set of difficult “income” issues can be succinctly characterized as “two incomes”, one for child support and another, different income for spousal support. The question is not, “can a payor have two incomes?”, but really “in what circumstances should a payor have two incomes?” These issues are difficult because they are not just about “income”, but about more fundamental principles of support.

Here are some examples of circumstances where the payor can have one income for child support and a different one for spousal support:

(h) Other assorted income issues

Not covered here are a variety of “income” issues, issues which receive specific treatment under a number of other headings in this User’s Guide (with the relevant sections of the SSAG also referenced below). These issues will just be flagged here: