Imputation of Income for Support Purposes: Horowitz v Nightingale
Horowitz v Nightingale, 2015 ONSC 190
This case addresses the issue of the imputation of income for support purposes.
The parties were married on January 19, 1997 and separated on June 25, 2013. As such, the parties were married for sixteen (16) years. Further, there were three children of the marriage and all had special needs. The Applicant was a chiropractic doctor but earned a minimal income, and the Respondent was a lawyer and partner of a law firm which practiced in collections for financial institutions. During the marriage, the Respondent Husband had been receiving a gift of $50,000 per year from his parents for duration of at least eight years. The issue before the Court was the determination of the Respondent’s income for support purposes.
The following analysis will discuss the Court’s analysis with respect to the issue of the Respondent’s income for support purposes.
The Court commenced its analysis with respect to the determination of the Respondent’s income by considering whether the gifts received from his parents are considered income for support purposes. The Court found, at paragraph 20:
For child support purposes, gifts received are not included in a spouse’s presumptive annual income as defined in s. 16 of the Child Support Guidelines; however, s. 19(1) of the Child Support Guidelines does provide the court with the discretion to impute income to a party as it considers appropriate in the circumstances. Section 19(1) goes on to list, non-exhaustively, circumstances where it may be appropriate to impute income to a spouse. The receipt of ‘gifts’ is not included in this non-exhaustive list.
The Court then referenced Bak v Dobell,  OJ No. 1489 (ONCA), which held that although it seemed as though the legislature intentionally did not include the receipt of gifts for the purposes of imputing income for support purposes, a Court may consider whether the “circumstances surrounding the particular gift are so unusual that they constitute an appropriate circumstance in which to impute income”. The Ontario Court of Appeal then continued by citing the following factors to be considered in such a scenario:
- The regularity of the gifts;
- The duration of their receipts;
- Whether the gifts were part of the family’s income during cohabitation that entrenched a particular lifestyle;
- The circumstances of the gifts that earmarked them as exceptional;
- Whether the gifts do more than provide a basic standard of living;
- The income generated by the gifts in proportion to the payor’s entire income;
- Whether the gifts are paid to support an adult child through a crisis or period of disability; whether the gifts are likely to continue; and
- The true purpose and nature of the gifts.
After considering the above factors, the Court held that the sum of $50,000 per year ought to be imputed to the Respondent for the purposes of both child and spousal support.
The Court continued its analysis by considering whether the Respondent’s RRSP withdrawals may be imputed as income for the purposes of his support obligations. In Fraser v Fraser,  OJ No. 5347 (ONCA), it was held that RRSP income is presumptively part of a spouse’s income for child support purposes since RRSP income is included as part of “total income” on the T1 General form. However, in Ludmer v Ludmer,  OJ No. 5565 (ONCA), the Court held that the inclusion of RRSP proceeds in income is not mandatory and the Court has discretion in appropriate circumstances to decide otherwise.
The Court in this case decided that the majority of the Respondent’s RRSP withdrawals ought to be included in his income for support purposes as RRSP income is presumptively part of the calculation of income for child support under the Guidelines. The Court, however, held that the substantial withdrawal in 2014 is not to be considered as income as this would unfairly distort the Respondent’s actual income and such withdrawal was inconsistent with the quantum in all other RRSP withdrawals.
The Court then considered whether the increases in the value of the Respondent’s investments ought to be considered as income for support purposes. The Court found that there is “no presumption that such increases in value ought to be included in income under the Child Support Guidelines” (paragraph 41), and that the Respondent earned income outside of such investments, namely through his self-employment on a full-time basis as a lawyer.
The Court then turned to the Respondent’s income as earned from his law practice. The Court accepted the Respondent’s submissions on this issue and attributed an income of $216,000 per annum to the Respondent.
Given the above, the Court found that the Respondent’s income to be in the amount of $403,044 per annum for support purposes. The Court came to this figure through the following calculation:[one_half] Self-Employment Income
[/one_half] [one_half_last] $216,000
The reasoning of the Court in its decision, in our opinion, is flawed as gifts received, especially from family members, ought not to be considered as income for the purposes of support. At any time the family may terminate the provision of such gifts. Further, it is our opinion that this connection is fully inconsistent with the intent of the drafters of such legislation. If the parents providing such a gift understood that their child’s estranged spouse would be entitled to support from such a gift, the presumption would be that the parent’s would not provide such a gift.