Section 19(1)(a) of the Child Support Guidelines grants the court the right to impute income to a parent if deemed appropriate to do so under the circumstances. For example, the court may impute income to a payor parent above and beyond his or her reported earnings if the evidence indicates that the parent is intentionally under-employed or unemployed. The decision of whether to impute income is guided by the consideration of the following factors: the age, education, experience, and skills of the parent as well as the parent’s past earning history and the projected quantum of income the parent could potentially earn if he worked to his capacity.
A three-step test for imputing income was enunciated in the case of Drygala v. Pauli, 2002 Carswell Ont 3228 (C.A.):
- The first step is to ascertain whether the father is intentionally under-employed. The onus to establish this is on the parent seeking to impute income.
- If the answer to this question is answered affirmatively, the second step is to ask whether the intentional under-employment is by virtue of the reasonable needs of the child or the reasonable educational or medical needs of the payor parent. The onus to establish this second part of the test falls on the payor.
- If the answer to this second question is no, the third and final step is to determine the amount of income that should be imputed.
For example, in Rodrigues, the court unequivocally found that the payor father was under-employed.
The parties lived together from 1992 until September 19, 2005 and had one child together. At the time when the mother made a motion for interim child support against the payor father, he was sixty years old. The mother took that position that the court should attribute income of $100,000 to him in light of his notable work history and credentials.
The father was an experienced life insurance salesperson and financial advisor and was employed in those fields since 1973. From 1990 to 1998, he worked for Standard Life as a branch manager. At the time that he left this company, he earned over $150,000 per annum. He subsequently began working for Edward Jones as a financial advisor. In 2002, he incorporated his own business, called Previdente Financial Corporation, which sold life insurance policies and RRSPs. He worked nowhere else but this business since 2002.
The father also held the following certifications: Certified Financial Planner, Chartered Life Underwriter and Chartered Financial Consultant. For the past three or free years, he earned less than $2,500 in self-employment income according to his income tax returns. Prior to the motion, he was paying child support pursuant to an interim order based on an income of $15,828. At the motion, the mother entered into evidence a transcript from a discovery that was conducted. The transcript revealed that during the past six years, the father had applied for only one job.
The motion judge was clearly unimpressed with the father’s efforts to gain reasonable employment:“It makes no sense to me that someone with the father’s skills and experience would, for six years, choose to continue a self-employed venture that provides him with an income that would make him eligible for social assistance. The one job application he referred to was only made in April of 2008. His failure to seek employment in these circumstances is unreasonable. The first part of the test in Drygala v. Pauli is met. I find that the father is intentionally under-employed.” The court found that the second part of the test was not met as the father provided no evidence to support a claim that he was unable to work due to medical reasons.
When it came to the third part of the test and determining the appropriate income to attribute to the father, the judge found that the mother’s position was overreaching in light of his circumstances. The mother filed into evidence reports published by provincial and federal governments demonstrating that the average annual income in the father’s line of work ranged from $70,000 to $110,000. She argued that these figures were representative of the income that should be attributed to him. The judge, however, was reluctant to impute this income to the father for a number of reasons. First, it was found that this evidence should be treated with “considerable caution” in that it was unsworn hearsay evidence untested by cross-examination.
There were practical considerations that militated against imputing income of a managerial level to a payor who had not worked in that post for many years and who, at his age, was unlikely to be hired by anyone at such a high starting wage. Ultimately, the judge rejected the published figures and found that while the payor was indeed under-employed, he was reasonably capable of earning $45,000, either through his own employment venture or by procuring employment. He deferred to the trial judge to adjust the temporary support order after all of the evidence had been heard and tested at trial.
Rodrigues demonstrates that the courts will not countenance parents shirking their ongoing obligation to support their children and, to that end, will ensure that child support orders reflect what the parent is reasonably capable of earning.