COURT FILE NO. D44534/23 DATE: September 20, 2024
ONTARIO COURT OF JUSTICE
B E T W E E N:
CARLO FIORENZA
APPLICANT
ANDREA DI BATTISTA and NATASHA LOVE, for the Applicant
- and –
SHANNON MITIC
RESPONDENT
KATHERINE CASH, for the Respondent
HEARD: September 11-13 and 16, 2024
JUSTICE S.B. SHERR
REASONS FOR DECISION
Part One – Introduction
1This trial was primarily about the parties’ child support obligations for their 2-year-old son (the child) and the applicant’s (the father’s) spousal support obligations to the respondent (the mother).
2The parties resolved the parenting issues, with the exception of the issue of travel terms, prior to the trial. The parties agreed to an equal-parenting time arrangement and a comprehensive decision-making plan.
3At the conclusion of the trial, the court provided brief oral reasons and a decision on the travel issues. It reserved its decision on the support issues.
4On November 10, 2022, after a contested motion, Justice Philip Clay ordered the father to pay temporary child support to the mother of $981 each month, starting on April 1, 2022. He also ordered him to pay the mother spousal support of $2,281 each month, starting on July 15, 2022 (the temporary order). This was based on the father earning annual income of $109,000 and the mother having no income.
5The father has also been paying $700 each month, starting on May 1, 2023, towards the child’s daycare costs. The mother has been paying $269 each month towards these expenses.
6The mother seeks to impute the father’s annual income at $1,781,550 for child and spousal support purposes. She asks for child support of $13,046 each month, starting on April 1, 2022, the date the parties separated. She also seeks spousal support of $35,412 each month, starting on July 15, 2022. [1]
7The father’s position is that he has earned far less than the $109,000 attributed to him in the temporary order. He agrees that support should be readjusted to the start dates requested by the mother. He asks for income to be imputed to the mother for support purposes. He submitted that no ongoing child support should be paid by either party and that daycare expenses should be equally paid by the parties until June 2025. He asks that spousal support be terminated. [2]
8The father asked the court to reimburse him for his overpayments of support.
9The parties agreed to a focused trial of these issues. The court heard from the parties and the father’s accountant. The parties filed a joint document brief.
10The issues for the court to determine are:
a) What are the parties’ incomes for support purposes? How much, if any, income should be imputed to them?
b) How much child support should the father pay the mother starting on April 1, 2022?
c) What is the amount and the duration of spousal support the father should pay the mother, starting on August 1, 2022? [3]
d) If there has been an overpayment of support, how should it be repaid?
Part Two – Background facts
11The father is 42 years old. The mother is 28 years old.
12The father is the sole owner and operator of a truck haulage company (the corporation).
13The mother is a student taking Interior Design at Toronto Metropolitan University (TMU). She just started the third year of a four-year program.
14The mother said that in September 2020, the parties began cohabiting in a condominium owned by the father. The father said they began cohabiting in December 2020. Nothing will turn on this difference.
15In the spring of 2021, the father sold his condominium and the parties moved into a home (the Bolton home) purchased by the father in Bolton, Ontario.
16The parties have the one child together. He was born in November 2021.
17The parties agreed the mother would take one year off school to care for the child and be a homemaker.
18The parties separated on March 12, 2022. The mother initially took the child and moved in with the father’s parents (the paternal grandparents).
19The father started this application in the Ontario Court of Justice in Brampton on March 24, 2022. The mother issued her Answer/Claim on June 1, 2022.
20The father was charged with criminal harassment regarding the mother in May 2022. Those charges were eventually resolved when the father agreed to a peace bond. The peace bond has expired.
21The mother found her own residence in Toronto and moved there with the child in July 2022. Until the parties reached an agreement for equal parenting time on September 9, 2024, the child lived primarily with the mother.
22The mother obtained social assistance in October 2022. She was in receipt of social assistance until April 2023.
23On November 10, 2022, Justice Clay made the temporary order.
24On January 23, 2023, Justice Clay ordered the father to pay the mother her costs of the motion of $5,271.
25The father sold the Bolton home in January 2023. The net proceeds of sale were about $431,000. He rented a condominium in Toronto and continues to reside there.
26On June 15, 2023, Justice Clay transferred the case to Toronto.
27On August 6, 2024, Justice Carole Curtis, on consent, made final orders regarding several incidents of decision-making responsibility for the child and holiday parenting time.
28On September 11, 2024, on consent, the court made final orders regarding decision-making responsibility and parenting time. On September 16, 2024, after hearing evidence and submissions, the court made final travel orders.
29The parties agree the father has made the support payments ordered in the temporary order.
Part Three – Imputing income – legal considerations
3.1 The guidelines
30The parties are seeking to impute income to each other.
31The court must determine the parties’ incomes in accordance with the guidelines. Section 2 of the guidelines provides that "income" means the annual income determined under sections 15 to 20. Where the parties do not agree on what the payor's income is, section 16 of the guidelines states that "subject to sections 17 to 20, a parent's or spouse's annual income is determined using the sources of income set out under the heading "Total income" in the T1 General form issued by the CRA and is adjusted in accordance with Schedule III." See: Isse v. Mohamud, 2022 ONCJ 337.
32If relying on a payor's most recent personal income tax return would not be the fairest way in which to determine their income, section 17 of the guidelines provides that the court can determine a fair and reasonable amount having regard to the payor's income over the last three years and "any pattern of income, fluctuation of income or receipt of a non-recurring amount".
3.2 Imputation of corporate income
33When an individual solely owns a corporation, they control how much they are paid, whether through salary or dividends. They need to show what they pay themselves is a reliable indicator of what they are actually earning. See: Crightney v. Garcia, 2024 ONCJ 431.
34Section 18 of the guidelines comes into play when the payor is the sole shareholder of a corporation. This section gives the court discretion to attribute some or all of the pre-tax income of a corporation to the shareholder, director or officer personally or, in the alternative, to attribute an amount less than or equal to the pre-tax corporate income that is commensurate with the services that the parent provides to the corporation. Section 18 reads as follows:
18 (1) Where a spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the spouse’s annual income as determined under section 16 does not fairly reflect all the money available to the spouse for the payment of child support, the court may consider the situations described in section 17 and determine the spouse’s annual income to include
(a) all or part of the pre-tax income of the corporation, and of any corporation that is related to that corporation, for the most recent taxation year; or
(b) an amount commensurate with the services that the spouse provides to the corporation, provided that the amount does not exceed the corporation’s pre-tax income.
Marginal note: Adjustment to corporation’s pre-tax income
(2) In determining the pre-tax income of a corporation for the purposes of subsection (1), all amounts paid by the corporation as salaries, wages or management fees, or other payments or benefits, to or on behalf of persons with whom the corporation does not deal at arm’s length must be added to the pre-tax income, unless the spouse establishes that the payments were reasonable in the circumstances
35Whenever section 18 of the guidelines comes into play, the onus is on the shareholder, director or officer to show that corporate monies, whether retained earnings or pre-tax corporate income, are not available for support purposes. See: Nesbitt v. Nesbitt, 2001 MBCA 113, [2001] M.J. No. 291 (C.A.), paras. 19 & 21; Hausmann v. Klukas, 2009 BCCA 32, [2009] B.C.J. No. 121 (C.A.) 32, paras 51-61. That is because the payor parent knows more about the business than the recipient and is therefore in the best position to explain why some or all of the company’s pre-tax income is not available for support. See: Elder v. Dirstein, 2012 ONSC 2852.
36Section 18 of the guidelines makes it clear that the court should first consider whether expenses should be added back to the corporation’s pre-tax income, and then whether all or part of the adjusted pre-tax income should be attributed to a parent’s income for support purposes. See: Ward v. Murphy, 2022 NSCA 20.
37The court is not required to add any pre-corporate income to the payor’s income. This is discretionary. In Ward, the court set out these factors:
i) One should not interfere with corporate decisions to meet corporate sustainability.
b) The onus is on the shareholder parent to establish the income is not available for support purposes.
c) What is the nature of the business?
d) Is there a business reason for retained earnings?
e) What is the historical practice for retained earnings?
f) What degree of corporate control does the payor exercise?
g) Are arms-length shareholders involved?
h) Depreciation.
i) Possible economic downturns.
j) Return on invested capital.
38Under the “unlimited rule”, the court is not limited to attributing only the corporate pre-tax income of the previous year. Rather, the court can combine sections 17 and 18 of the guidelines so as to consider a “pattern”, or average, of corporate pre-tax income. See: Mason v. Mason (2014), 47 R.F.L. (7th) 173 (Ont. S.C.J.), rev’d, (2016), 2016 ONCA 725, 83 R.F.L. (7th) 1 (Ont. C.A.); Nesbitt v. Nesbitt, 2001 MBCA 113, 19 R.F.L. (5th) 359 (Man. C.A.).
39In Dreesen v. Dreesen, 2021 ONCA 557, the court stated that the onus of proving the need for retained earnings in a corporation is on the party trying to justify the reduction of income. They have the obligation to produce evidence, including documentation to ground a broader consideration of the nature of the corporations’ business and why there are legitimate calls on its corporate income for the purposes of that business. See Kowalewich v. Kowalewich, 2001 BCCA 450, 92 B.C.L.R. (3d) 38, at para. 58; Thompson v. Thompson, 2013 ONSC 5500, at paras. 91-93.
3.3 Imputation of personal income
40The court can also impute income to the parties pursuant to section 19 of the guidelines. Subsections 19 (1) and (2) of the guidelines read as follows:
Imputing income
19 (1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following:
(a) the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse;
(b) the spouse is exempt from paying federal or provincial income tax;
(c) the spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;
(d) it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines;
(e) the spouse’s property is not reasonably utilized to generate income;
(f) the spouse has failed to provide income information when under a legal obligation to do so;
(g) the spouse unreasonably deducts expenses from income;
(h) the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and
(i) the spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.
Marginal note: Reasonableness of expenses
(2) For the purpose of paragraph (1)(g), the reasonableness of an expense deduction is not solely governed by whether the deduction is permitted under the Income Tax Act.
41The jurisprudence for imputation of income sets out the following:
a) Imputing income is one method by which the court gives effect to the joint and ongoing obligation of parents to support their children. In order to meet this obligation, the parties must earn what they are capable of earning. If they fail to do so, they will be found to be intentionally under-employed. See: Drygala v. Pauli, [2002] O.J. No. 3731(Ont. C.A.).
b) The Ontario Court of Appeal in Drygala v. Pauli set out the following three questions which should be answered by a court in considering a request to impute income:
(1) Is the party intentionally under-employed or unemployed?
(2) If so, is the intentional under-employment or unemployment required by virtue of his or her reasonable educational needs, the needs of the child or reasonable health needs?
(3) If not, what income is appropriately imputed?
c) The onus is on the party seeking to impute income to the other party to establish that the other party is intentionally unemployed or under-employed. The person requesting an imputation of income must establish an evidentiary basis upon which this finding can be made. See: Homsi v. Zaya, 2009 ONCA 322, [2009] O.J. No. 1552. (Ont. C.A.). However, in Graham v. Bruto, 2008 ONCA 260, the court inferred that the failure of the payor to properly disclose would mitigate the obligation of the recipient to provide an evidentiary basis to impute income.
d) Once a party seeking the imputation of income presents the evidentiary basis suggesting a prima facie case, the onus shifts to the individual seeking to defend the income position they are taking. See: Lo v. Lo, 2011 ONSC 7663; Charron v. Carriere, 2016 ONSC 4719.
e) The payor must prove that any medical excuse for being underemployed is reasonable. See: Rilli v. Rilli, [2006] O.J. No. 4142 (SCJ.). Cogent medical evidence in the form of detailed medical opinion should be provided by the payor in order to satisfy the court that his/her reasonable health needs justify his/her decision not to work. See: Cook v. Burton, [2005] O.J. No. 190 (SCJ) and Stoangi v. Petersen, [2006] O.J. No. 2902 (SCJ).
f) A self-employed person has the onus of clearly demonstrating the basis of his or her net income. This includes demonstrating that the deductions from gross income should be taken into account in the calculation of income for support purposes. See Whelan v. O’Connor, [2006] O.J. No. 1660, (Ont. Fam. Ct.). This principle also applies where the person’s employment income is derived from a corporation that he or she fully controls. See: MacKenzie v. Flynn, 2010 ONCJ 184; Yocheva v. Hristov, 2019 ONSC 1007; Poulin v. Poulin, 2017 ONSC 64.
g) The self-employed have an inherent obligation to put forward not only adequate, but comprehensive records of income and expenses, from which the recipient can draw conclusions and the amount of child support can be established. See: Meade v. Meade (2002), 31 R.F.L. 5th 88 (SCJ). This includes the obligation to present information in a user-friendly fashion. A recipient should not have to incur expense to understand it. See: Reyes v. Rollo.
h) Where a party fails to provide full financial disclosure relating to their income, the court is entitled to draw an adverse inference and to impute income to them. See: Szitas v. Szitas, 2012 ONSC 1548; Woofenden v. Woofenden, 2018 ONSC 4583.
i) The court may impute income where it finds that a party has hidden or misrepresented relevant information respecting their income to the other party or to the authorities. This includes cases where the evidence indicates that a party earns cash income that they do not declare for income tax purposes. See: Kinsella v. Mills, 2020 ONSC 4785; Prillo v. Homer, 2023 ONCJ 8.
j) The court can also impute income where the evidence respecting income is not credible for any other reason. See: Heard v. Heard, 2014 ONCA 196 (C.A.), at paras. 33-35; Gostevskikh v. Gostevskikh, 2018 BCSC 1441 (S.C.); M.A.B. v. M.G.C., 2022 ONSC 7207.
k) The court must have regard to the payor’s capacity to earn income in light of such factors as employment history, age, education, skills, health, available employment opportunities and the standard of living enjoyed during the parties’ relationship. The court looks at the amount of income the party could earn if he or she worked to capacity. See: Lawson v. Lawson.
l) A person’s lifestyle can provide the basis for imputing income. See: Aitken v. Aitken; Jonas v. Jonas; Price v. Reid, 2013 ONCJ 373; Prillo v. Homer, supra.
42The above is a non-exhaustive list and as such, the court has discretion to impute income based on other circumstances.
43Business expenses can be addressed under either subsection 18 (2) or clause 19 (1) (g) of the guidelines where a corporation is involved. The question under the guidelines is whether the business deductions include expenses which provide a personal benefit or constitute an ordinary living expense that would normally be paid from a party’s employment income—expenses which would not be deducted from a salaried party’s income and should equally not be deducted when income flows through a corporation. Typical examples include meals, entertainment, telephones, internet and vehicle expenses. See: M.T. v. J.S., 2023 BCCA 64, where the court added back 50% of meals, entertainment, cellphone and vehicle expenses.
44Even if the expense is legitimate, it might be added back on if it is not in proportion to the total income earned. See: Wilcox v. Snow, 1999 NSCA 163, 3 RFL (5th) 171 (NSCA).
Part Four – The father’s income
4.1 Positions and evidence of the parties
45The mother seeks to impute the father’s annual income at $1,781,550 for support purposes. She claims:
a) The father runs his personal expenses through his corporation. These expenses, she says, should be added back to pre-tax corporate income.
b) The father is dishonest and the figures he presents for his corporation are not accurate.
c) The father lives a lifestyle incompatible with the income he claims to be earning.
d) The father is deliberately earning or reporting less corporate and personal income to avoid his support obligations.
e) The corporation’s pre-tax corporate income should be added to the father’s income.
f) The corporation’s retained earnings should be added to the father’s income.
g) The sale proceeds of the Bolton home in 2023 ($431,000) should be added to his income for each year of this analysis.
h) A shareholder loan of $145,000 should be added to his income for each year of the analysis.
46The father deposed he has a grade 10 education. When he turned 18, he went to work for his father as a truck driver. He started the corporation in 2014. His company hauls gravel, dry bulk and salt.
47The corporation hires subcontractors and brokers to drive for it. The father drove one of the corporation’s trucks until the summer of 2022. Since then, he has primarily worked as the corporation’s dispatcher, handling logistics.
48The father provided extensive corporate documentation, including the corporation’s T2 Income Tax Returns, annual financial statements, ledgers and bank records. Historically, the father has been paid salary and dividends by the corporation. He has been paid only salary since 2022.
49The father deposed his annual income varies between $60,000 and $110,000 annually. He reported his annual income in his income tax returns as follows:
| Year | Income |
|---|---|
| 2019 | $101,775 |
| 2020 | $110,025 |
| 2021 | $109,250 |
| 2022 | $59,096 |
| 2023 | $67,000 |
50In closing submissions, the father acknowledged some personal expenses paid by the corporation should be added back to his income. These include legal fees of $10,540 for his family law case, a $442 payment to the child and $3,900 for his personal portion of cell phone and internet expenses. [4]
51The father deposed his business has been in jeopardy since the start of 2022, stating:
a) Costs have skyrocketed. This includes costs for gas, insurance and repairing trucks.
b) The corporation’s trucks need to be replaced every three years. The cost of replacing a truck has increased from $250,000 to $450,000.
c) The increase in interest rates has made the cost of financing a truck prohibitive. He has chosen to buy trucks instead of leasing to own them.
d) A trucker strike in 2022 severely impacted his business as the corporation is paid by the load.
e) Due to personal stress, he stopped driving a truck in 2022 and he had to hire a driver. This reduced the amount the corporation could pay him.
f) In 2022, he sold one of his trucks, reducing the corporate trucks from four to three. He said he used the sale proceeds to keep his business afloat.
g) The corporation has started working with brokers to increase its business. The corporation charges 5% to the brokers.
h) The corporation purchased new trucks in 2023 and 2024. It now has five trucks plus it is now dealing with five brokers. The father says there has been some improvement in the business in 2024.
52The father proposes using $89,542 as his annual income for 2024 and for calculating ongoing support. This consists of annual income of $84,000 and personal expenses paid by the corporation.
53The father denied living a high lifestyle, as claimed by the mother. He deposed that the proceeds he received from the sale of the Bolton home are almost gone.
4.2 The accountant’s evidence
54The mother called the father’s accountant (the accountant) as a witness.
55The accountant prepares the financial statements and T2 Income Tax Returns for the corporation. He said he has his assistant do the corporation’s bookkeeping. He said the father will often pay personal expenses from the corporation. However, at the end of the year, the accountant said he backs those expenses out of the corporation, to the best of his ability.
56The accountant stated the corporation’s year-end is February 28th of each year. He said they are still working on the corporate year-end statements for the year ending February 28, 2024. This will determine the father’s 2024 income.
57It was more challenging for the court to assess the father’s 2024 income without this information.
58The accountant did not express the same concerns about the corporation’s viability as the father. The accountant testified the corporation is doing well. It is paying the father a salary and making a profit. He said it has good cash flow.
59The accountant explained his preference is to have the corporation pay the father a salary, rather than dividends, so the father can build up Canada Pension Plan credits and room for RRSP payments. The father received a salary from the corporation in 2022 and in 2023. In prior years he had also received dividends.
60The accountant explained most of his clients only take the salary they require from their corporations. He said some richer clients take no salary. He said this is done because the corporation is a tax shelter and pays lower tax. He described it is a sound tax decision to leave money in the corporation.
61When the accountant was asked what additional amounts the father could have paid himself from the corporation in 2022 and 2023, without impairing the operation of the business, he said the father could have taken an additional $50,000 both years. He modified that answer in cross-examination, when it was pointed out to him the corporation required funds to replace its trucks.
4.3 Addressing the mother’s allegations about the father’s income
62The mother believes the father is hiding income and manipulating his financial affairs to reduce his support obligations.
63The mother’s claims about the father’s income were fantastical, kept escalating during the trial, and were not supported in any way by the evidence.
64The father and the accountant were able to reasonably address the mother’s concerns to the court’s satisfaction. Their explanations were usually supported by documentation. It became apparent to the court that the father had provided these explanations and supporting documents several times to the mother prior to the trial. The court will provide a few examples.
65The mother was convinced the father has multiple GIC’s because his bank statements showed different account numbers. The father explained he received $431,000 from the Bolton home sale. He took $250,000 and put it into a 100-day GIC. This was deposited back into his bank account with some interest after the 100 days. He asked the bank to keep $152,000 in his account and bought another 100-day GIC for $100,000. It was given another number. The same process happened again after 100 days. $101,000 went into his account. He renewed the GIC for another 100 days. It was given another number. Eventually, at trial, the mother said she accepted this explanation.
66The mother also believes the father was being deceptive about his purchase and sale of the Bolton home and the rental of his present condominium. The father provided considerable documentation setting this out. The accountant explained the father does not have to include the sale proceeds of the Bolton home in his personal income as it was his principal residence. Eventually, at the end of her cross-examination, the mother accepted this evidence. However, in closing submissions she asked to have the entire sale proceeds of $431,000 attributed to the father’s income for each year since 2022. This was indicative of the unreasonable positions she has taken regarding the father’s income.
67The mother sought to add the father’s annual rent of his condominium of $66,000 to his personal income. There is no basis to do so. This is the father’s personal residence. The corporate ledgers indicate that the corporation is paying $4,800 annually for rent, not $66,000, as the father has a home office. That is the maximum amount the court would add back to the father’s income. See: Crightney v. Garcia, supra, par. 96; Heuss v. Sarkos, 2004 ONCJ 250.
68The mother sought to add shareholder advances of $145,000 to the father’s income for each year of this analysis. [5] She raised this issue in closing submissions. The father testified he repaid any shareholder advance reflected in the February 28, 2023 corporate year-end. The court does not know if the advance was paid back during the tax year ending February 2024, as the financial statements for that year end have not been completed. In the absence of this information, the court is not prepared to add this to the father’s income for 2024. However, this can be re-addressed on a motion to change if it turns out the advance was not repaid and is captured as income in the father’s 2024 income tax return.
69During her testimony, the mother did not identify any other personal expenses of the father that were paid by the corporation. [6] In closing submissions, she sought to add to the father’s income any corporate ledger entry she felt was described vaguely. She did not establish in cross-examination of the father, or the accountant, that any of these expenses were personal.
70The court agrees with the mother that the father has been living a lifestyle of someone earning more income than he has claimed since this litigation started and income should be imputed to him. However, his lifestyle is nowhere near the level claimed by her.
71What is apparent is that the father has gone through most of the proceeds of the Bolton home in a relatively short time, due to his criminal and family legal fees, support obligations and gambling losses. He acknowledged losing over $50,000 gambling in 2023. It was pointed out in closing submissions he drew over $100,000 from his account in January 2024 to gamble. [7] However, in this case, this is not evidence of hidden income., since the flow of money can be traced from the proceeds. The father cannot expect the court to reduce his child and spousal support payments based on inability to pay when he has spent huge sums of money gambling.
4.4 Analysis
72It is unfortunate that neither party obtained a professional valuation of the father’s income. This was a difficult exercise without expert evidence to assist the court.
73The court’s rejection of the mother’s evidence about the father’s income does not mean it completely accepts the father’s evidence.
74The father has been clear during this proceeding that he does not want to pay spousal support to the mother. Justice Clay noted this in his November 10, 2022 decision. The father’s anger at the mother at the trial for making this claim was evident to the court.
75The father was highly motivated to present a lower income to the court for support purposes. As the sole owner of the corporation, he has the ability to do this.
76The father chose to stop driving one of the corporation’s trucks after he separated from the mother. He said this reduced his income, as he had to pay a subcontractor to drive the truck. The court finds the father was deliberately under-employed and deliberately chose to reduce his income.
77The father claimed he stopped driving the truck due to the stress of driving on Highway 401. The court does not find it coincidental that he made this decision once support had to be determined. He also claims he stopped driving due to the stress of the litigation. The father provided no medical evidence to support this. The court finds he was deliberately under-employed without reasonable excuse.
78The father’s dire description of his business was contradicted by the accountant, who was a friendly witness to him. The court accepts the accountant’s evidence that the corporation is doing well. It has a good cash flow, is paying the father a salary and has considerable assets.
79Despite having only a grade ten education, the father impressed the court as being a smart and experienced businessman. The court has little doubt he has adopted the accountant’s belief that there are tax advantages to only taking personal income from the corporation, as needed, and to leave the balance in the corporation to reap the tax advantages.
80The court considered the accountant’s evidence that the father could have taken additional funds from the corporation in 2022 and 2023 without affecting the viability of the business. The father might not have been able to take the $50,000 each year the accountant initially expressed (due to the purchase of new trucks), however, he could have paid himself significant additional amounts. The father had no motivation to take additional funds from the corporation that would increase his support obligations and chose not to do so.
81The father submitted the court should not add back pre-corporate tax income, or attribute any corporate retained earnings to his personal income, other than the personal expenses previously discussed. He said he required sizeable bank balances and retained earnings to meet the corporation’s expenses and expand the business. However, a review of the corporation’s financial records demonstrate to the court that the father treats these requirements inconsistently. The corporation has been able to pay the father a significant salary even when the corporation has had little money in the bank and when it had negative retained earnings. The corporate financial records show that:
a) The corporation only had $29,934 in its bank accounts at its 2019 year-end and $15,644 at its 2020 year-end. It had retained earnings of $891 at its 2019 year-end and negative $67,539 in retained earnings at its 2020 year-end. Yet, the father reported personal income of $101,775 in 2019 and $110,025 for 2020 and the corporation reported pre-tax income of $48,763 for 2019 and $73,755 for 2020.
b) The corporation only had $5,667 in its bank account at its February 28, 2021 year-end. It reported year-end negative retained earnings of $124,633. Yet, the father reported personal income of $109,250 for 2021 and the corporation’s pre-tax income was $41,558.
c) It is noteworthy that the corporation had small bank balances and negative retained earnings during times when the father claimed the business was doing very well.
d) The corporation’s bank balance went up to $218,000 at its February 28, 2022 year-end. Gross revenues jumped $986,381 from the year before to $1,353,386. The pre-tax corporate income went up to $156,413. The corporation had positive year-end retained earnings of $29,163. [8] Yet, the father only reported personal income of $59,096 for 2022.
e) The corporation’s bank balance went up to $279,471 at its February 28, 2023 year-end. Gross revenues rose to $1,615,847. The court accepts the father’s evidence that the corporation’s revenues and expenses went up as the corporation started using brokers. The pre-tax corporate income was $52,073 and the year-end retained earnings went up to $74,939. Yet, the father only reported income of $67,000 for 2023.
f) The father’s corporate bank statements show that its balance was down to $11,965 as of March 1, 2024.
82The court accepts the father’s evidence that the business had increased expenses in 2022 and 2023. The cost of replacing trucks increased. Gas prices went up. Interest rates went up.
83The court also notes that interest rates have come down in 2024.
84The court, in conducting this analysis, added back the personal expenses identified above to the corporate pre-tax income and grossed-them up. It also added a portion of the corporation’s pre-tax income and retained earnings to the father’s personal income each year for the purpose of the support analysis. These amounts are not grossed-up. See Van Boekel v. Van Boekel, 2020 ONSC 5265.
85The court will impute the father’s 2022 income at $100,000. The court accepts the father’s evidence that the business did not do as well as it did in 2021. However, it does not accept his evidence that its decline was as bad as described by him. The father’s business improved somewhat in 2023, as reflected by the increase in his reported personal income. The court will impute the $109,000 income figure used in the temporary order for 2023 to the father.
86The court was provided with little financial information to assess the father’s income for 2024 and on an ongoing basis. It only has the father’s self-report that he expects to earn $84,000 in 2024. [9] This is about $17,000 higher than he reported as his income in 2023. The court will use this estimated increase to attribute income of $126,000 ($109,000 plus $17,000) to the father, starting on January 1, 2024.
Part Five – The mother’s income
5.1 The mother’s evidence
87The mother testified she completed a degree in political science at Wilfred Laurier University in 2018. In 2019, she worked as a hostess, server and waitress in Toronto. She said she worked for one month in early 2020 and stopped working when the pandemic started. She said she received Canada Employment Recovery Benefits (CERB) for the balance of 2020 and had no other income.
88The mother said she moved in with the father in September 2020. She stated he asked her to stop working and told her he would completely financially support her.
89The parties moved to the Bolton home in the spring of 2021. The mother started her Interior Design program. The parties agreed the mother would take one year off school once the child was born in November 2021.
90In 2021, the mother declared income of $1,500 and CERB of $18,800.
91After the parties separated in March 2022, the mother took a two-week course and qualified as a mortgage agent. She admitted in cross-examination that she was offered a job in this field and did not take it. She said she did not feel qualified to do this job and felt she could not rely on a job that would only pay her commissions. She also felt she did not have reliable childcare.
92The mother worked for about two months in the summer of 2022 as a server at a restaurant. She said she was fired because she could not commit to the hours her employer wanted her to work.
93In cross-examination, the mother admitted she was offered a full-time restaurant job in August 2022 and the paternal grandmother offered to look after the child while she worked. She turned the job down because the hours were inflexible, and she didn’t want the paternal grandparents to be providing childcare due to issues she was having with the father and them.
94In 2022, the mother claimed employment income of $2,291, other income of $1,075, spousal support of $4,281 and social assistance of $6,359, for a total income of $14,006.
95The mother testified she made efforts to find work after the separation. She said she had difficulty finding employment that could offer her flexible hours and allow her to care for the child. She provided evidence of eleven job applications she made in the 30 months after she separated from the father.
96The mother returned to TMU in September 2023. She said she had to retake the two courses she had taken in 2021. She took five courses in the winter session starting in January 2024 and is taking three courses in the fall of 2024. She testified she will finish the program in June 2026.
97The mother deposed in her financial statement sworn on August 30, 2024 that her 2023 income from all sources was $31,340. This includes the spousal support she received of $27,372, and the taxable portion of a scholarship of $3,968. She said she did not work during 2023.
98The mother said she worked in a placement for her Interior Design course during the summer of 2024. She was paid $25 per hour for a 30-hour week. The mother deposed she earned $1,835 per month at this job.
99The mother hopes to work part-time at this placement during this school term and work full-time at the placement next summer. When she completes her course in June 2026, the mother hopes to obtain a full-time job there. She stated that entry level positions pay $50,000 annually.
100The mother asked the court to use her income reported to CRA for the purposes of the support analysis.
5.2 The father’s evidence
101The father claims the mother was working as a server during 2020 and often showed him the considerable cash she was earning.
102The father said his corporation briefly employed the mother, in January 2022, to do administrative work. He provided evidence of $2,000 paid to her. This was not included in the mother’s 2022 income tax return.
103The father believes the mother has not reported considerable cash income from working as a server, hostess and bartender to CRA since their separation.
104The father submits the mother has been capable of earning much more income than she has declared and has turned down job opportunities. He says she has been deliberately unemployed or underemployed.
105The father seeks to impute income to the mother as follows: [10]
| Year | Imputed Income |
|---|---|
| 2022 | $60,928 |
| 2023 | $59,443 |
| 2024 | $122,871 |
106The father also believes the mother is stalling completing her Interior Design course to extend his obligation to pay her spousal support. He feels she should be working full-time.
5.3 Analysis
107It quickly became apparent that the mother has not historically reported her income received from tips to the CRA. She has also not accurately reported her income on the multiple financial statements she filed in this case.
108The evidence also supports a finding the mother has been earning additional unreported cash income in 2024.
109That said, the annual income the father sought to impute to the mother at the conclusion of the trial was unrealistic and not supported by the evidence.
110In 2019, the mother reported earning income of $14,163. She said this included her tips. It didn’t. The mother was able to support herself comfortably without assistance from anyone else at that time. She acknowledged she traveled to Turkey in September 2019 for plastic surgery and paid for this herself.
111In 2022, the mother declared non-spousal support income of $3,336. However, the corporation paid the mother $2,000 in January 2022. She worked at a restaurant for two months during the summer. The mother provided a list of tips she received totaling $4,246. This amount alone exceeded her reported income to the CRA. This was in addition to the salary she received for two months. The mother also did not report a small amount of $148 earned at another restaurant.
112The mother turned down two full-time job opportunities in 2022 – one as a mortgage agent where she would be paid commission income and a second job as a full-time server at a restaurant. The mother testified she could earn $2,000 each month for salary and $2,000 each month in tips as a server. The court finds she could have worked part-time as a server during the fall of 2022. She provided minimal evidence of job search efforts. She was not in school. The court finds she was deliberately unemployed that fall.
113The court will not impute full-time income to the mother for 2022, as requested by the father. The mother was going through a tumultuous separation with the father. He was charged with harassing her. She was the child’s primary caregiver. It is understandable she did not want to use the paternal grandparents for childcare, given her conflict with them and the father.
114The court will impute the mother’s 2022 income at $14,000 for support purposes. This includes any gross-up of income for undeclared tips and an undeclared student grant of $920. In determining the mother’s income for spousal support, social assistance payments are not included. See: Spousal Support Advisory Guidelines: The Revised User’s Guide, April 2016: Professor Carol Rogerson and Professor Rollie Thompson (the RUG), Chapter 6.
115Since the start of 2024, the mother has declared in several financial statements that she is receiving $1,070 each month in student grants. This is close to the grant amount she will receive for the 2024/2025 school year. However, it understates the $20,274 grant amount she received for the 2023/2024 academic year.
116Student grants are treated as analogous to income. They were imputed in income and grossed-up, since they were tax-free, in Mwenda v. Matituka, 2018 ONCJ 503. This court will take the same approach.
117The mother has received student grants as follows:
| Year | Grant Amount |
|---|---|
| 2022 | $922 |
| 2023/2024 | $20,274 |
| 2024/2025 | $13,360 |
118The mother has also received student loans totaling over $23,000 in the past two years. It appears the student loans the mother has received have been sufficient to cover her education costs.
119The mother could have worked part-time in 2023 until she started school in September. The court finds she was deliberately unemployed without a reasonable excuse. The court will impute employment income of $12,000 to her. In addition, the mother received taxable scholarship income of $3,968, bringing the total to $15,968 for 2023.
120The analysis of the mother’s 2023 income does not end there. The court will add 50% of the grant funds she received for the 2023/2024 school year to her income. [11] This will be grossed-up as it is non-taxable. The software analysis shows, based on these findings, that the mother’s income is $26,404 for 2023. [12]
121For 2024, the court does not accept the mother’s evidence that she has only earned $3,700 working in her placement during the summer. The father provided a summary of the mother’s credit card statements from February to August (7 months). They show the mother has been spending on average $4,448 each month. This does not include her payment of rent, utilities and daycare. They indicate the mother is spending at a pace of $90,194 for 2024.
122The mother’s income sources do not account for this spending level. The mother receives just over $39,000 annually for support. She reported employment income of about $3,700. If she spent one-half of her 2023/2024 student loans and grants in 2024, that may have given her another $21,000. Adding in her Canada Child Benefits, of about $8,500 annually, [13] this comes to just over $72,000 for the year. The additional money to meet her expenses must be coming from somewhere, since the mother does not have corresponding debt to explain the deficiency.
123The court considered the mother wasn’t cross-examined on this differential and did not have the chance to explain it. [14]
124The court finds that the mother has been earning unreported part-time employment income in 2024. She might also be able to obtain some part-time work this school term. In addition to the $3,700 of income she said she has earned, the court will impute an additional $11,300 to her, including gross-up, to bring her 2024 imputed employment income to $15,000.
125The court will also add 50% of the 2023/2024 grant money and 50% of the 2024/2025 grant money to the mother’s 2024 income. [15] This will be grossed-up, as it is non-taxable. The software analysis shows, based on these findings, that the mother’s imputed income for 2024 is $32,499.
126The court did not add student loans to the mother’s income as they must be repaid.
Part Six – Adjustment of child support payable by the father until September 30, 2024
127The guidelines table child support for 2022 based on the father’s imputed annual income of $100,000 is $910. The father was ordered to pay child support of $983 each month in the temporary order. The father will receive a credit of $657 ($73 x 9 months) for 2022.
128There will be no change to the guidelines table support for 2023.
129The guidelines table support for 2024, based on the father’s imputed annual income of $126,000, is $1,115. This leaves additional support owing of $1,188 for 2024 ($1,115 – $983 x 9 months).
130The father owes the mother an additional $531 for guidelines table support as of September 30, 2024 ($1,188 - $657).
131The father seeks an adjustment to the daycare expenses each party has spent to date. The court will not order this. The parties reached an out-of-court agreement with respect to those expenses. The court will not interfere with that agreement. [16]
Part Seven – Child support payable from October 1, 2024
132The support analysis changes starting on October 1, 2024, because the parties now have an equal-time shared parenting arrangement. The child support analysis must now be conducted pursuant to section 9 of the guidelines.
7.1 Legal considerations
133Section 9 of the guidelines reads as follows:
Shared custody
- Where a parent or spouse exercises a right of access to, or has physical custody of, a child for not less than 40 per cent of the time over the course of a year, the amount of the order for the support of a child must be determined by taking into account,
(a) the amounts set out in the applicable tables for each of the parents or spouses;
(b) the increased costs of shared custody arrangements; and
(c) the condition, means, needs and other circumstances of each parent or spouse and of any child for whom support is sought.
134In Contino v. Leonelli-Contino, 2005 SCC 63, [2005] 16 R.F.L. (6th) 277 (SCC), the Supreme Court of Canada set out the following principles when dealing with cases under section 9 of the guidelines that are applicable to this case:
a) Once the payor surpasses the 40% threshold, section 9 creates a different method of determining child support in shared custody cases. There is no onus on the payor to convince the court to order a different amount than the table amount.
b) There is no presumption of a reduction in the table amount for child support in section 9 cases. A court may still order the full table amount after conducting the section 9 analysis.
c) There should be no mathematical formula or multipliers applied to section 9 cases. In particular, the simple set-off only serves as a starting point under subsection 9 (a) of the guidelines, but it has no presumptive value.
d) The court should consider all three factors in section 9. None should necessarily prevail over the others.
e) Section 9 of the guidelines is broad enough to incorporate section 7 guideline expenses directly in the examination of child-related expenses, and expenses can be considered that might not fit within section 7.
135In Flick v. Flick, 2011 BCSC 264, the court, citing Contino, identified these additional factors for consideration in a section 9 analysis:
a) The language of section 9 warrants an emphasis on flexibility, fairness and consideration of the overall situation of the parents and the needs of the child.
b) The weight of each factor under section 9 will vary with the particulars of the case.
c) The court retains the discretion to modify the set-off amount where, considering the financial realities of the parents, it would lead to a significant variation in the standard of living experienced by the child as they move from one household to the other.
d) The analysis should be contextual and remain focused on the particular facts of each case.
e) The court has full discretion under subsection 9 (c) to consider “other circumstances”.
136In his article, The TLC of Shared Parenting: Time, Language and Cash, Professor Rollie Thompson summarizes how the Supreme Court in Contino has directed courts to conduct a section 9 analysis as follows:
a) Determine the simple set-off amount – The starting point under subsection 9 (a) is the straight set-off of each parent’s table amount for the number of children involved in the shared custody arrangement.
b) Review the child expense budgets – A court must look at the parents’ actual spending patterns, based upon child expense budgets, and not just make assumptions about spending. Under subsection 9 (b), a court has two concerns: the over-all increased total costs of child-rearing for both parents, especially duplicated costs; and any disproportionate assumption of spending by one parent or the other. The child-related expenses should be apportioned between the parents based upon their incomes, to verify the set-off and to determine the need for significant adjustments to the set-off amount.
c) Consider the ability of each parent to bear the increased costs of shared custody and the standard of living for the children in each household – In assessing each parent’s ability to bear the increased costs of shared custody, a court should look at the incomes of the parents, the disparity in incomes, and their assets and liabilities. Children should not experience a significant variation in the standard of living as they move from one household to another.
7.2 Analysis
137The father’s guidelines table support payment is $1,115 each month, based on his imputed 2024 income of $126,000.
138The mother’s guidelines table support payment is $277 each month, based on her imputed 2024 income of $32,499.
139The set-off amount, as set-out in subsection 9 (a) of the guidelines, is $838 each month.
140The parties did not provide the court with childcare budgets, so it is difficult to conduct an analysis under subsection 9 (b) of the guidelines. However, the parties have a significant expense for the child – the daycare expense of $969 each month.
141When looking at subsection 9 (c) of the guidelines, the father has greater needs, means and circumstances than the mother. He has an established business that grosses well over one million dollars a year. The mother is still a student and has nominal assets.
142The court will address subsection 9 (c) of the guidelines by requiring the father to pay all the child’s daycare costs starting on October 1, 2024, in addition to the setoff amount in subsection 9 (a). He is to make these payments directly to the daycare. It is expected that he will claim all tax benefits or credits available to him for this expense. The parties agreed that the daycare payments should end on June 30, 2025. This will be ordered.
143To account for subsection 9 (c) of the guidelines after June 30, 2025, the court will order the father to pay child support to the mother of $1,000 each month, starting on July 1, 2025.
Part Eight – Spousal support
8.1 Positions of the parties
144The mother seeks indefinite spousal support of $35,412 each month.
145The mother claims the father paid all her expenses when they moved in together. She said they lived a lavish lifestyle, frequently attended high-end restaurants and traveled. On a trip to Florida on New Year’s Eve, 2021, he won $80,000 gambling and bought her a $10,000 Chanel purse. She said he provided her with a car, a phone and a credit card. She said the father did not want her to work and she stopped working as a hostess/bartender. He wanted her to stay at home. She said she felt isolated. The mother stated she was completely financially dependent on the father.
146The father does not dispute the mother was entitled to spousal support. However, he asks that spousal support be terminated now, or at the very latest, by the end of 2024. He also feels he has overpaid spousal support and seeks reimbursement.
147The father testified the mother exaggerated their lifestyle. He acknowledged buying her an expensive purse after winning while gambling in Florida. He said the rest of his gambling winnings went to pay debts and towards his downpayment for the Bolton home. He said he often told the mother she was spending too much money and he was not rich. He said the mother had her own savings and that she also paid for expenses while they lived together.
148The father believes the mother is now capable of being self-supporting. He believes she is deliberately not working and is delaying her education to extend her spousal support payments.
8.2 Legal considerations
149Section 30 of the Family Law Act (the Act) states that every spouse has an obligation to provide support for himself or herself and for the other spouse, in accordance with need, to the extent that he or she is capable of doing so.
150Subsection 33 (8) of the Act sets out the purposes of spousal support and subsection 33 (9) sets out the considerations for the determination of the amount, if any, and duration of spousal support. The court has considered these subsections in making its decision.
151Spousal support is not merely a consideration of needs and means. In determining the appropriate amount of spousal support, compensatory and non-compensatory considerations should be taken into account in an effort to equitably alleviate the economic consequences of the breakdown of the relationship. See: Rioux v. Rioux, 2009 ONCA 569, [2009] 97 O.R. (3d) 102 (OCA). Entitlement can be based on compensatory, non-compensatory or contractual grounds. See: Bracklow v. Bracklow, 1999 SCC 24.
152Where compensation is not the basis, a support obligation may arise from the marriage relationship itself when a spouse is unable to become self-sufficient. It can be based on need. Under this model, spousal support will be based on economic hardship resulting from the breakdown of the marriage, but not necessarily the roles assumed during the marriage. See: Bracklow, supra.
153In determining need, courts ought to be guided in part by the principle that the spouse receiving support is entitled to maintain the standard of living to which she was accustomed at the time cohabitation ceased. The analysis must consider the recipient’s ability to support herself, in light of her income and reasonable expenses. See: Gray v. Gray, 2014 ONCA 659.
154On its own, a mere disparity of income that would generate an amount under the Spousal Support Advisory Guidelines (SSAG) does not automatically lead to entitlement, although a disparity of income may lead to a finding that there is an economic hardship arising from the breakdown of the marriage. There must be some evidence that the disadvantage to the recipient spouse must arise from the breakdown of the marriage. See: Lamb v. Watt, 2017 ONSC 5838. However, in practice, entitlement will generally be found in cases where there is a significant income disparity at the time of the initial application. See: the RUG, Chapter 4.
155In the RUG, the authors observe the following about spousal support orders in shared parenting arrangements: [17]
a) In shared custody cases, there is a clear default location for amount in the range: the amount of spousal support which would leave the children in each household with roughly similar standards of living. This outcome is consistent with the strong statements about similar living standards in Contino v. Leonelli-Contino, 2005 SCC 63.
b) Where neither spouse has re-partnered and there are no new children in either household, the starting point should be an amount of spousal support that leaves each household with equal net disposable income (NDI). The SSAG range in shared custody cases always includes this 50/50 NDI split, to recognize the importance of this principle. This default outcome can be adjusted, depending upon housing costs and other factors. Sometimes the equal NDI point is in the mid-range, but it is just as often lower or higher in the SSAG range.
c) Duration may become a more important consideration in shared custody cases. All initial orders under the formula will be “indefinite (duration not specified)”. Where there is true shared custody after separation, the effect is to limit the continued accumulation of loss or disadvantage from child care in most (but not all) cases. The compensatory claim will primarily reflect past loss or disadvantage, which may then be met over a shorter period of time compared to the basic formula (where the recipient continues to fulfil the bulk of child care responsibilities). In shared custody cases, a time limit upon continued spousal support may thus emerge sooner, as the lower income spouse may be able to move more quickly to self-sufficiency, e.g. Shih v. Shih, 2015 BCSC 2108.
156A basic principle of spousal support law is that the recipient must make reasonable efforts to become economically self-sufficient. See: Dingle v. Dingle, 2010 ONCJ 731.
157The Court of Appeal in Fisher v. Fisher, 2008 ONCA 11, stated that the SSAG, while only advisory, are a useful starting point to assess the quantum and duration of spousal support, once entitlement is established. The court wrote at paragraph [103]:
[103] In my view, when counsel fully address the Guidelines in argument, and a trial judge decides to award a quantum of support outside the suggested range, appellate review will be assisted by the inclusion of reasons explaining why the Guidelines do not provide an appropriate result. This is no different than a trial court distinguishing a significant authority relied upon by a party.
158Amount and duration are interrelated parts of the SSAG formula. See: Domirti v. Domirti, 2010 BCCA 472. Using one part of the formula without the other undermines its integrity and coherence. Extending duration beyond the formula ranges, for example, may require a corresponding adjustment of amount by means of restructuring (see SSAG Ch. 10) or a finding that the facts of the case require an exception (see SSAG Ch. 12). See: RUG, Ch. 7).
159The depth of need can be a strong non-compensatory factor pushing the amount of support higher in the range. See: Bastarache v. Bastarache, 2012 NBQB 75. If the recipient required training or education to improve their earning capacity, this can push the amount higher in the range for a short period of time. See: Jones v. Hugo, 2012 ONCJ 211.
160In the RUG, the authors set out the following about short-term relationships in Chapter 8.5.5:
a) Short time limits will only rarely be the right outcome at the initial hearing. The vast majority of these orders should be “indefinite (duration not specified)”. Often a review will be required in these indefinite orders.
b) Remember that there are two tests for duration under the with child support formula. Not just the length-of-marriage test, but also the age-of-children test. The second test is more important for shorter marriages, with a range from the time the youngest child commences full-time school to the upper end of the last child finishing high school.
c) The imposition of short time limits in these cases reflects a failure of compensatory analysis. A more careful approach is needed. The most obvious area for such analysis would be the basic formula cases, where the recipient continues with a disproportionate share of child care going forward. In the more complex custody cases, like shared, split, hybrid or step-child cases, there may be circumstances that warrant shorter time limits, especially the step-child cases. A short time limit would normally mean a quick “bounce back” by the support recipient, someone with pre-existing skills who can find good employment reasonably quickly and become truly “self-sufficient.”
8.3. Analysis
161The evidence indicates the father fully supported the mother during their relationship. They lived a very comfortable lifestyle.
162The court finds that the mother has a compensatory and non-compensatory claim for spousal support.
163The compensatory claim arises from the mother having been the child’s primary caregiver since he was born. She held off advancing her education and career to care for the child. The father was able to focus on growing his business.
164The parties agreed the mother would take a year off and then complete her education in Interior Design. At the outset of their separation, the father failed to adequately support the mother and she had to resort to social assistance.
165The court has found in this decision that the mother was only capable of earning part-time income due to her childcare responsibilities.
166The mother’s compensatory support claim weakens going forward, as the parties will equally share childcare responsibilities.
167The mother’s non-compensatory claim arises from the financial disadvantage suffered by the mother from the breakdown of the relationship. She was completely reliant on the father.
168The mother’s standard of living significantly declined when she separated from the father. There is a huge income disparity between the parties.
169The court finds the mother remains entitled to spousal support. The parties agreed in 2021 it was a reasonable career path for her to complete the Interior Design program. The father agreed to support her in this plan. Completion of this program should provide the mother with a firmer foundation to become self-supporting and provide her with a more sustainable economic future.
170In structuring the spousal support award, the court wants to ensure the child does not have a significant difference in his standard of living in the two households while the mother transitions to becoming economically self-sufficient.
171The court recognizes this was a very short-term relationship. However, as pointed out in the RUG, this is only one of the two tests to determine duration of spousal support in the with child formula. The software indicates there should be an indefinite (unspecified) duration, with a minimum duration of two years and a maximum duration of 15 years from the date of separation.
172The court will order the father to pay the mother spousal support of $1,200 each month, starting on August 1, 2022. When combined with the child support payments, the spousal support payments provide the child with a reasonably comparable standard of living in both households and meet the spousal support objectives set out in subsection 33 (9) of the Act.
173This support order falls within various SSAG ranges for 2022 to 2024, depending on the parties’ annual incomes, and going forward, their shared parenting arrangement. The court finds ordering one amount of spousal support, as opposed to conducting a yearly analysis, is more practical, and comes close to the global amount that would be ordered, if the analysis was broken down by year.
174The father has been paying spousal support since July 15, 2022. The time the father has paid temporary spousal support needs to be taken into account when determining the duration of spousal support.
175The court will follow the recommendations set out in the RUG and not set a termination date on this original application. The order will provide that the parties may review both child and spousal support after June 30, 2026. The court expects the mother should be close to self-sufficiency by that time. The court wishes to emphasize that an indefinite order under the SSAG is not a permanent order.
176The issue of continued entitlement to spousal support, and the duration of spousal support, if entitlement continues, will be determined on review. This is similar to the approach taken in Zivic v. Zivic, 2014 ONSC 6272; Dupuis v. Desrosiers, 2013 ONCJ 720, [2013] O.J. No. 6014 (OCJ) and in Kuznetsova v. Flores, 2016 ONCJ 203, which were cases of shorter marriages with young children. It is also the approach recommended in the RUG. These cases were cited with approval in Gonsalves v. Scrymgeour, 2017 ONSC 1034.
177This order will result in a spousal support credit to the father of $28,106 ($2,281- $1,200 x 26 months). The reason for the reduction in spousal support from the temporary order is clear. The temporary order was based on the mother receiving no income and no grants. The court has found she has received both.
Part Nine – Repayment of spousal support credit
178The father proposed to have any support overpayment paid back over 10 years, on the basis of his spousal support obligation being terminated.
179The court will order the support repayment to be paid back at $300 each month, starting on October 1, 2024. This will give the mother around seven and one-half years to make the repayment. This will permit her to have sufficient funds to transition into self-sufficiency and support the child, while meeting her obligation to the father.
180It is not uncommon for an overpayment of spousal support to be set off against ongoing spousal support. See: M.B. v. S.B.B., 2018 ONSC 4893. That is the approach the court will take here. It will set off the spousal support repayments against the father’s ongoing spousal support payments, starting on October 1, 2024.
181The parties did not provide the court with the tax implications of a spousal support overpayment and its repayment. The mother included the spousal support payments she received at the higher amount ordered in the temporary order in her 2023 income tax return. [18]
182The father did not deduct any spousal support he paid in either his 2022 or his 2023 income tax returns.
183The parties may be able to refile their income tax returns to reflect the terms of this order. If they are unable to do so, they are free to return to court to determine if there should be any tax adjustment to the spousal support overpayment. [19] They should obtain tax advice.
Part Ten– Conclusion
184A final order shall go on the following terms:
a) The father shall pay the mother additional child support of $531, arising from this order.
b) The father shall pay the mother child support, starting on October 1, 2024, in the amount of $838 each month.
c) Starting on October 1, 2024, the father shall pay the child’s daycare costs directly to the daycare until the end of June 2025. It is expected he will claim any tax benefit or credit available to him for these payments after October 1, 2024.
d) The father shall pay the mother child support of $1,000 each month, starting on July 1, 2025.
e) The father shall pay the mother spousal support of $1,200 each month, starting on August 1, 2022. This changes the terms of the temporary order and results in a spousal support overpayment of $28,106.
f) The $531 the father owes for child support shall be set off against the spousal support overpayment, leaving a balance owing of $27,575.
g) The support overpayment shall be paid by the mother to the father at $300 each month until it is repaid. It is to be set off against the father’s ongoing spousal support payments, starting on October 1, 2024.
h) If the parties are unable to refile their income tax returns to reflect the terms of this order, either may return the matter to court to determine if there should be any tax adjustment to the spousal support overpayment.
i) Either party may review the issues of child and spousal support (including the mother’s entitlement to spousal support), after June 30, 2026.
j) The parties are to exchange their complete personal and corporate tax returns and notices of assessment by June 30th each year.
k) A support deduction order shall issue.
185If either party believes there is an inputting error in the software attached to this decision, or there is a mathematical error in this decision, they are to serve and file a Form 14B motion by October 1, 2024, setting out these errors. The other party will then have until October 8, 2024, to serve and file a written response.
186Any party seeking costs are to serve and file their written submissions by October 15, 2024. The other party will then have until October 29, 2024 to respond (not to make their own submissions). The submissions should not exceed three pages, not including any bill of costs or offer to settle. They are to be delivered to the trial coordinator’s office on the second floor of the courthouse.
187The court thanks counsel for their work on this case.
Released: September 20, 2024
Justice Stanley B. Sherr