Upon the breakdown of a relationship, support might be payable by one party to the other, either in the form of child support or spousal support. However, before those support obligations can be calculated, each party's income needs to be determined. The starting point for such a determination is each party's most recent Income Tax Return. If both parties only earn employment income, meaning they are each an employee of a business/corporation, then the Line 150 income listed on their most recent tax return is usually the best evidence of each party's income. However, there are many instances where this analysis will not result in the correct income for support purposes.

For parties who are self-employed, farmers, contractors, business owners, etc., their Line 150 income will likely not reflect the true value of the income available to them. In those circumstances, a more detailed analysis of that party's income needs to occur. For example, if you are self-employed, are there expenses that you write off through your business that have a personal component? Car payments, phone bills, meals etc. All such deductions may be acceptable from an accounting or tax perspective, but when your income is being determined for support purposes, the court will often add such expenses back into your income. For parties who are the sole or majority shareholder of a corporation, during the relationship you may have had a practice of not withdrawing all of the income earned through a corporation out to you personally. However, on a breakdown of a relationship, for the purposes of determining your income for support, the net pre-tax income of a corporation may be added to income available to you.

In situations where a party is unemployed or underemployed, a court can impute income to them. In these circumstances, the court is not looking to impute income to people who have legitimately lost employment but those who have "voluntarily" chosen not to work or work less than they could be. You cannot reduce your income in order to avoid support obligations. If you do, a court will set your income at a level that you are capable of earning and set support based on that income.

If you or your former spouse earns an income other than straight employment income, or you believe your former spouse is voluntarily unemployed or underemployed, it is best to review how such income may be determined with a lawyer to ensure support is calculated appropriately. Someone from our team would be happy to review these matters with you.

Contact our family law team at www.mckercher.ca/familylawsask.