Child support refers to payments made by one parent or guardian to another. These payments provide financial support for the benefit of the child or children. The amount of child support payments is determined, in part, by the payor’s income. This article explains how parental income is determined for the purposes of child support.
How much child support must be paid?
Parents must pay a basic child support amount to cover children’s basic living expenses. The amount of child support payments is determined by the Federal Child Support Guidelines under the Divorce Act and the Alberta Child Support Guidelines under the Family Law Act. The amount to be paid is based on the number of children being supported and the payor’s income.
Parents must share information about their income with each other. This financial disclosure helps to ensure the fairness of child support ordered. To determine guideline incomes, proof of your income is required. This may include some or all the following:
- recent pay stubs
- a letter that confirms your current income
- copies of your income tax returns and notices of assessment
- copies of statements of other income sources (such as Employment Insurance, disability benefits or pension)
- copies of the financial statements for businesses that you have in interest in
A payor’s guideline income may be determined in one of the following ways:
- Line 150 from your income tax return is used if your employment situation is straightforward. Professional and union dues can be deducted from the amount that appears on Line 150.
- In cases where you’ve changed jobs, received a raise or become unemployed, using the previous year’s tax return is ineffective: it does not reflect the your current financial means. In this instance, your guideline income may be determined by using recent pay stubs.
- The average income amount over three years may also be used when your income varies from one year to the next.
If, as the payor, you are a shareholder, director or officer in a corporation, your income determination may also include part or all of the:
- personal expenses paid by the corporation
- fees or wages paid to individuals not within arm’s length of the corporation
- corporation’s pre-tax income and the income of any other corporation related to that corporation
A judge can declare a payor to have a certain income for child support purposes. A judge can impute, or declare, income if the payor
- has diverted income
- is not taxed on his or her income
- is intentionally underemployed or unemployed
- unreasonabley deducts expenses from his or her income
- fails to provide income information when required to do so
- earns a significant amount of income from sources taxed at a lower rate than employment earnings
Child support and family law can be complicated. Understanding the law, as well as your options, is an important first step. Consult with an accountant, as well as with the Lift Legal team of family lawyers.
The information on this blog and website is provided by Lift Legal for educational purposes only. It is intended to give readers a general understanding of the law, not to provide specific legal advice. Information contained in these pages should not be used in place of competent legal advice from a licensed, practising lawyer in Alberta. Furthermore, by using this blog and website, you understand that no lawyer-client relationship exists between you and Lift Legal.