A recent Ontario Court of Appeal case highlighted the issues concerning imputed income in the calculation of spousal support.
What is Income Imputation?
In certain situations, courts will impute (increase or decrease) the value of the payor’s income. This is for the purpose of adjusting the necessary spousal support payment. If a higher income is imputed to the payor, they will likely need to pay more in spousal support.
Income imputation gives the court a certain degree of discretion. Judges are given the opportunity to analyze the presented evidence in order to determine how much income should be credited to the payor. The final order by a trial judge in family court is typically afforded deference.
In this case, however, the Court of Appeal challenged the judge’s imputation of income. The two individuals involved earned high incomes and were embroiled in lengthy litigation for their separation.
Background on the Case
The wife was retired and had previously earned a six figure salary while working as an executive for a Canadian steel company. The husband was similarly successful in his work as a clinical researcher.
For the purposes of calculating support, the trial judge imputed to the wife an indefinite income of $484,356. In determining her income the trial judge considered, among other things, the retired wife’s Registered Retirement Income Fund, the wife’s interest income on a loan to her daughter, $380,000 worth of capital gains income and the wife’s rental income from one of her properties.
Overturning the Judge’s decision
Upon review of the case, the Court of Appeal found the judge did not err in imputing the figure of $484,356. However, the mistake was in determining that the wife would be making the income indefinitely. The appellate court further decided that there was no “apparent justification” for the judge’s decision.
This case shows how higher courts can intervene in a judge’s decision regarding income imputation. Typically, family court decisions have a certain degree of finality and appellate courts show deference to the trial judge who makes the first determination. However, this case showed a willingness of the Court of Appeal to interfere.