Important Case Law — Imputing Income
Taylor v. Taylor 2009 ABCA 354
The parties were married for 18 years and had two children who the parties shared parenting. The husband worked for the wife’s father until the parties separated. The father in law’s company gave the husband a one year severance package and also compensated the wife. The husband started his own company and borrowed very heavily to purchase the new assets. He began drawing $75,000.00 per annum from the company. When the wife stopped receiving her severance from her father’s company, she made an application for spousal support of $2000 per month and child support based on an imputed income of $124,000.
The principles of imputing income follow from the Alberta case of Hunt v. Smolis-Hunt (2001) ABCA 229. The test for imputing income is (1) the court should have regard to the overall purpose of the Guidelines, which is to establish fair levels of support for children from both parents in a consistent matter; (2) that section 19(1)(a) requires a specific intention to undermine or avoid support payments or proof of circumstances which permit the court to infer that a payor’s intention is to undermine or avoid support obligations; and (3) that people involved in divorce proceedings are permitted to change employment.
With Mr. Taylor, it was not the case that he wanted to or purposively tried to avoid his support obligations. Moreover, the court could accept why he no longer wanted to work at his father in law’s company and why he would want to start his own business. The Court of Appeal did not, however, agree with the lower court’s use of employment law principles to determine that Mr. Taylor did not successfully negotiate better borrowing terms. On the facts, it was held that Mr. Taylor did not intentionally become underemployed and did not try and evade support.
Child and spousal support were based on an income of $75,000.00.