In this case, the court needed to determine the husband’s income for support purposes. Although the case covered a number of issues, the interesting issue pertained to the imputation of the husband’s income.
The parties were married for 20 years, they had four children, and they separated after an incident of domestic violence inflicted by the father on the mother and the oldest child. The father filed a financial statement disclosing a current income of $12,000 and a 2017 income of $11,000. The mother asked the court to impute income to the father in the amount of $175,000, and to make a child support order as well as a spousal support order based on that income imputation.
Despite being aware that the quantification of his income would be the primary focus at trial, the father failed to make full financial disclosure. As such, the court found that the father’s evidence lacked credibility and had no confidence in the father’s evidence where it conflicted with the mother’s evidence. After finding that the father’s evidence lacked credibility, J. Spence turned to the how much income to impute. The court reviewed Drygala v. Pauli, the leading case on income imputation in Ontario, and emphasized that the court cannot arbitrarily select an amount as imputed income; there must be a rational basis underlying the selected amount. The father did object to the admissibility of the wage survey for accountants which was introduced in evidence by the mother. The court found that there is precedent for the admissibility of such surveys but that these kinds of surveys should be treated by the courts with caution. He explained that their value is to provide a reference point - in this case, between $85,000 and $175,000 - for the court to consider. The father argued that the survey is not applicable because many young accounting firms struggled. The court felt that the father was not in the category of young accounting firms that struggled because he had multiple professional licenses and had been recognized with excellence awards.
The court considered the father’s holidays and cars, and noted that his lifestyle is inconsistent with a person who claims to be earning an income which is either below, or barely above the subsistence level required for a person living in Toronto. Additionally, the court took into account the father’s testimony that he worked 12 to 15 hours per day because he had no child care responsibilities, and the evidence showing he unreasonably deducted expenses from business income to minimize his income tax obligations. Given his evasiveness and lack of credibility, as well as his failure to comply with the financial disclosure requirements of the Rules for the year 2017, J. Spence felt inclined to impute income to the father at the high end of the survey. However, the court ultimately took a more modest approach and imputed an income to the father in the amount of $130,000, the approximate mid-point between the lower end and higher end survey figures. The income imputed to the father was grossed-up to $202,065 to take into account the fact that the father was not paying income taxes on the difference between the disclosed income of $11,000 and the income imputed to him. The father was required to pay both spousal and child support which would be enforced immediately by the Director of the Responsibility Office.