Imputing Income: Zigiris v. Foustanellas, 2016 CarswellOnt 18902 (Ont. S.C.J.)
In this case, Justice Shelston carefully overviews section 19 of the Federal Child Support Guidelines and notes that there is a duty on the spouse to actively seek out reasonable employment. When imputing income, the court first looks at the spouse’s capacity to earn income, which can be influenced by age, education, health, work history and availability of work that is within the scope of his or her capabilities. The second step of the test comes from the Ontario Court of Appeal case in Drygala v Pauli(2002), which is an overall test of reasonableness. Essentially, once intentional unemployment is established, the onus to the payor to show on of the exceptions of reasonableness.
The parties separated in 2014 and the wife has not worked outside the home since 2005. Since separation, the wife has taken a French course to upgrade her French skills. She has had two job interviews with one being at the Children’s Hospital of Eastern Ontario and the other one for a position as a daycare person at a local gym. In addition she has sent out resumes including the Queensway Carleton Hospital.
The wife indicates that her days are spent taking care of the children by delivering them to school in the morning and picking them up in the afternoon and bringing them to the respective activities. She also indicates that she goes to a gym on a regular basis.
The wife admitted that she has not investigated what steps she would have to take to upgrade her skills since her last position was in March 2005. The wife indicates she is not bilingual and this would be an impediment for finding employment. She indicated she would like to ease back into work for the children’s sake.
In this case, the relevant part of section 19 of the Federal Child Support Guidelines is as follows:
Imputing income. — (1) The court may impute such amount of income to a parent or spouse as it considers appropriate in the circumstances, which circumstances include,
(a) the parent or spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of any child or by the reasonable educational or health needs of the parent or spouse;
In Drygala v Pauli, the Ontario Court of Appeal set out a three-part test for determining whether income should be imputed on the basis of intentional under-employment or unemployment as follows:
- Is the spouse intentionally under-employed or unemployed?
- If so, is the intentional under-employment or unemployment required by virtue of his reasonable educational needs?
- If the answer to question #2 is negative, what income is appropriately imputed in the circumstances?
A spouse is intentionally under-employed if he or she chooses to earn less than he or she is capable of earning having regard to all of the circumstances. There is no requirement that the under-employment or unemployment be undertaken in bad faith or with the intention of avoiding support payments.
The onus is on the party seeking to impute income to establish an evidentiary basis that the other party is intentionally under-employed or unemployed.
The wife argues that it is not reasonable to impute her with and income until after about one year, in November 2017, in the amount of $20,000. She submits that given the roles adopted by the parties during their marriage and the lengthy period of time she has been out of the workforce, she will need to return to the workforce and potentially obtain a part-time position.
The husband submits that the wife should be imputed with an income of $32,500, which is the lowest according to the payscale of a medical lab assistant. The husband further submits that the sum of $39,600 should be imputed to the wife representing the $3,300 per month of temporary spousal support that she was receiving.
Based on the wife’s age and all of the other circumstances, Justice Shelston held that she could earn $24,000 per year starting now and did not penalize the wife for being out of the workforce for a considerable period of time prior to trial.
With respect to the husband’s income, the wife submitted that his income should be $250,000 based on the amount he received from his employer, his father. Alternatively, the wife argued that he should be imputed with an income based on his salary, his RRSP income of $35,000 as well as between 40,000 and $50,000 of expenses paid by his father in 2016 which would have to be grossed up to account for the income tax. The husband’s position was that his income is his salaried income of $113,503 in 2016.
Justice Shelston held that the husband’s employment income for 2016 was $113,503 based on the fact that the income of $250,000 paid by the father to the husband from 2007 to 2013 was an income splitting scheme designed by the father without any input by the husband. Ultimately, the husband never received any financial benefit when he received $250,000 in the relevant years.
Another issue related to the husband’s income was the fact that he had cashed in some RRSPs of about $35,000. The wife wanted to add this to the husband’s income. The Court here found that the husband cashed in the RRSPs to pay his support obligations and legal fees and, thus, declined to add the RRSPs to the husband’s income.