Father’s Failure to Provide Financial Disclosure Leads to Imputation of Income

May 30, 2023
Open book representing failure to disclose full income can result in imputation of income

written on behalf of Feigenbaum Law

When a divorce or separation involves high net-worth individuals, ensuring that proper financial disclosure information has been provided to the other party is a critical step in determining issues such as spousal support, child support, and property division. It is important to remember that each party is responsible for ensuring they are not hiding assets from the other.

In a recent decision, the Ontario Superior Court of Justice pointed out that a failure to meet financial disclosure obligations can result in the imputation of income to a party which will be the basis for property division and support obligation calculations.

Mother says father did not properly disclose finances

In the case of Whittaker v. Whittaker, the parties had two children together. The parties were married and lived together in Texas until they separated in March 2019, when the mother and children relocated to Ontario.

The parties’ divorce was finalized in Texas in July 2019. The divorce order (referred to as a “Final Decree of Divorce” in Texas) stipulated that the mother would have primary parenting time with the children, while the father was granted parenting time on the first, third, and fifth weekend of each month as well as Thursday evenings. The divorce order also stated that the father was not required to pay child support to the mother due to the expenses incurred in visiting the children when they lived far apart.

In 2021, the Ontario Superior Court of Justice formally recognized the Divorce Decree and assumed jurisdiction of the matter on a go-forward basis, particularly on matters involving decision-making, parenting time, and child support.

Father moves to Ontario; Mother seeks full financial disclosure

The father moved to Ontario at some point in 2021. His license to work as a physical therapist was not valid in Canada, so while he lived in Ontario, he worked across the border in Buffalo, New York. He continued to exercise the parenting time awarded to him, however, this suddenly came to a halt following an incident of domestic violence between the father and his new wife. A restraining order was issued against the father, which prohibited him from attending at his wife’s home. However, he breached this on a number of occasions.

The mother brought an application to the Court seeking full financial disclosure from the father, which until that point was described as “slow and sporadic.” The Court noted that the only documentation provided to date were two one-page documents titled “Statement of World Income” for the years 2020 and 2021. The Court wrote that these documents appeared to contain various portions of tax returns, while the Notice of Assessment the father provided to the Court did not include his employment income. The Court found that the information provided did not comply with the rules of the court.

Mother asks Court to impute salary based off of job posting

The Court noted that the father had been employed as a physical therapist since 2021 and had worked full-time since 2022. The mother asked the Court to impute income of $124,000 annually based on the information provided in a job posting from the father’s former employer in Texas.

However, the Court acknowledged that the job posting referred to an hourly rate of $36.50-$44.35 for a per diem job, and it did not suggest that full-time hours were available or that a salary would be provided.

Father argues that net income should be used to calculate child support obligations

The Court was prepared to make a temporary child support order regarding the father’s parenting time following the domestic violence incident.

Regarding financial disclosure, the Court said that the best evidence available to it that established the father’s income was his 2022 Canadian income tax return, which showed his gross income as $94,794.

Conversely, the father argued that the Court should instead use his net income of $84,863 when calculating his child support obligations. However, the Court noted that because the father deducted $9,930 for business and personal expenses, this amount should be added back to his income for child support purposes. The only business and personal expense deductions allowed by the Court were for the father’s business licenses, business memberships, and professional fees, which totalled $671 in 2022.

Court imputes income to father after non-compliance with financial disclosure

The Court disagreed with the father’s argument and set the father’s income at $94,794 before looking at whether retroactive child support payments should be ordered.

The Court found that there were too many unresolved factual issues, including information detailing the father’s employment and periods of non-employment, how much he was earning in his employment, and whether he was intentionally underemployed at any time. It was decided that these outstanding issues would need to be determined at trial before a finding on retroactive child support could be made. For similar reasons, the Court declined to make a retroactive order for s.7 expenses, adding it had to be determined whether the expenses incurred were reasonable and whether the father was consulted about such expenses.

Ultimately, the Court ordered the father to produce the outstanding financial disclosure and in the interim, ordered the father to pay child support to the mother in the amount of $1,399 per month commencing on May 1, 2023, based on an income of $94,123.

Contact the Lawyers at Feigenbaum Consulting for Advice on Tax Compliance and Family Law Matters

At Feigenbaum Law, we understand the importance of ensuring that you and your children are sufficiently provided for after a separation or divorce. Our compassionate lawyers also realize the various issues that can arise following the breakdown of a relationship, particularly when children are involved. We help clients work through issues involving support obligations while keeping their best interests at the forefront of strategic solutions. Our experience in both tax law and family law puts us in a unique position to provide our clients with a holistic approach to their concerns. Our team, led by Mark Feigenbaum, provides clients with reliable and strategic advice in family law disputes to help them move forward with financial stability. Contact us online or by phone at (416) 468-7298



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