For Ontario child support, income starts with the "Total income" line of the parent's tax return, adjusted under Schedule III of the guidelines. A court can use a three-year average, add a corporation's income, or impute income when a parent earns less than they could, hides income or will not disclose it. Spousal support calculations start from the same definition.
How income is decided for support in Ontario, step by step
Every support calculation rests on an income figure. Get the income wrong and the table amount, the share of special expenses and any spousal support range are all wrong too. That is why income is the most argued-about number in many support cases, especially for parents who are self-employed, own a company, earn commissions or have recently changed work. For the wider context, see our child and spousal support page.
The rules are in sections 15 to 20 of the Ontario Child Support Guidelines, which mirror the federal guidelines used in divorces. The process usually looks like this:
- Start with "Total income". Section 16 takes the sources of income listed under "Total income" on the Canada Revenue Agency T1 General return. That includes employment income, self-employment income, investment income, rental income and most benefits.
- Apply the Schedule III adjustments. For example, certain employment expenses are deducted, child support received is deducted, and the taxable amount of dividends is replaced with the amount actually received.
- Ask whether that figure is fair. If the latest year is not the fairest measure, section 17 lets the court look at the last three years and set an amount that reflects a pattern, a fluctuation or a one-time payment.
- Look through the corporation. If a parent is a shareholder, director or officer and their personal income does not fairly reflect the money available to them, section 18 allows the court to include all or part of the corporation's pre-tax income, or an amount matching the services the parent provides.
- Impute where needed. Section 19 lets the court impute income in listed situations, from intentional under-employment to unreasonable expense deductions.
- Agree if you can. If both parents agree in writing on an income, the court may accept it if it is reasonable given the disclosure provided (section 15(2)).
When a court may impute income
Imputing income means the court uses a figure other than what the tax return shows. Section 19(1) gives a non-exhaustive list of situations where it may do so.
| Situation in section 19(1) | What it looks like in practice |
|---|---|
| (a) Intentionally under-employed or unemployed | A parent quits a job or works fewer hours without a good reason; not where the child's needs or the parent's reasonable education or health needs require it |
| (b) Exempt from income tax | The parent is exempt from paying federal or provincial income tax, so the tax return understates spending power |
| (c) Lives in a lower-tax country | Effective tax rates significantly lower than in Canada |
| (d) Income diverted | Income moved to a partner, relative or company to lower support |
| (e) Property not reasonably used to earn income | Large savings or property kept in a form that earns nothing |
| (f) Failure to disclose | A parent does not provide income information when legally required |
| (g) Unreasonable expense deductions | Personal costs run through a business; the tax rules alone do not decide reasonableness (s. 19(2)) |
| (h) Lower-taxed income | Much of the income comes from dividends, capital gains or other lightly taxed sources |
| (i) Trust beneficiary | The parent receives or will receive income or benefits from a trust |
Self-employed parents and business owners
Self-employment is where most income disputes arise. A business owner's tax return shows net income after expenses, and some of those expenses may be personal: a vehicle used mostly for family, a phone plan, meals, travel, or salaries paid to a new partner. Under section 19(1)(g), the court can add back expenses it finds unreasonable, and section 19(2) makes clear that an expense being allowed for tax purposes does not settle the question.
For a parent who controls a corporation, the company may be holding earnings that could be paid out. Section 18 lets the court treat all or part of the corporation's pre-tax income as available for support. Payments to people who do not deal at arm's length with the corporation, such as family members on the payroll, are added back unless the parent shows they were reasonable. The same company is often also a property question. Our page on a business owned by one spouse explains how it is valued for equalization. Our page on financial disclosure in a property case lists the records usually needed.
Parents who are paid partly in shares, stock options or deferred compensation raise similar questions, because the value they receive may not appear on the tax return in the year it is earned. Those cases usually need an accountant's help to show what was truly available.
Disclosure is the foundation. A parent applying for child support who is self-employed must include financial statements for the business and a breakdown of payments to non-arm's-length people for the three most recent years; a parent who controls a corporation must include the corporation's financial statements as well (section 21).
What changes the answer
- Which support is being calculated. The same income feeds the child support table, the sharing of special or extraordinary expenses, and the spousal support ranges. The Spousal Support Advisory Guidelines take the Federal Child Support Guidelines definition, including Schedule III, as their starting point; see how the amount of spousal support is worked out.
- Spousal support paid or received. For the table amount, spousal support received from the other parent is deducted from the recipient's income (Schedule III, s. 3), while for sharing section 7 expenses, spousal support paid is deducted from the payer's income (Schedule III, s. 3.1).
- Income over $150,000. Above that level, the court may set the amount on the excess differently if the full table amount is inappropriate (section 4).
- Good reasons for earning less. Section 19(1)(a) does not apply where under-employment is required by the needs of a child or the parent's reasonable educational or health needs.
- Past periods. When a parent's income was higher than disclosed in past years, the question becomes whether support should be adjusted back in time; see retroactive child support.
- Undue hardship. A parent with very high debts reasonably incurred during the relationship may raise undue hardship, but that is a separate test, not an income adjustment.
A worked example
For example, imagine a Toronto parent who runs a renovation business as a sole proprietor. The last three tax returns show net business income of $62,000, $58,000 and $64,000. The business deducts the full cost of a truck the family also uses on weekends, a cell plan for the parent's new partner, and $15,000 a year in wages to that partner, who does occasional bookkeeping.
The other parent asks the court to impute income. The court may add back the personal share of the truck costs and the cell plan as unreasonable deductions under section 19(1)(g), and treat part of the partner's wages as diverted income under section 19(1)(d) if the work does not justify them. If the court found $12,000 a year should be added back, the parent's income for support in the latest year would be $76,000, not $64,000, and the table amount and the share of section 7 expenses would both be calculated on that figure.
This example is hypothetical. The outcome in a real case depends on the evidence about each expense.
Common mistakes about income
- Using net pay. Guideline income is based on the tax return's Total income, not take-home pay after tax and deductions.
- Leaving out bonuses, overtime or investment income. They form part of Total income and count unless an adjustment applies.
- Quitting or cutting hours after separation. A deliberate drop in earnings invites an imputation of income under section 19(1)(a).
- Running personal costs through a business. Courts can add them back, and it damages credibility.
- Disclosing late or partially. Section 23 lets the court draw an adverse inference and impute income where a parent does not comply, and costs can follow.
- Ignoring the yearly update. Income changes each year, and the guidelines require updated information; see yearly income disclosure.
What to do this week
- Collect your last three personal tax returns, all schedules, and the notices of assessment.
- Get your most recent pay stub or, if self-employed, your business financial statements for three years.
- If you control a corporation, ask your accountant for its last three years of financial statements.
- List any expenses your business pays that have a personal element, and any payments to family members.
- Write down any reason your income changed recently, with documents (a layoff letter, a medical note, a school enrolment).
- Book a free consultation with us to test the income figure before it goes into an agreement or court form.
Frequently asked questions
Does a new partner's income count as my income?
No. Guideline income is the parent's own income. A household's total income only becomes relevant in an undue hardship claim, where the standard of living test looks at everyone in each household.
Can income be imputed to the parent who receives support?
Yes. Where that parent's income matters, for example in shared parenting, section 7 sharing or spousal support, the same imputation rules can apply to them.
What if my income dropped because I lost my job?
An involuntary job loss is different from choosing to earn less. Courts look at the reasons and at efforts to find work. Keep records of the layoff and your job search.
Are employment insurance and disability benefits income?
Benefits reported in Total income on the tax return generally count, because section 16 starts from that figure. When a parent applies for support while receiving employment insurance, a pension, workers' compensation or disability payments, they must include a current statement of that income (section 21(1)(h)).
How far back can income be examined?
Disclosure usually covers the three most recent tax years, and section 17 lets the court look at three years to find a fair figure. Earlier years can become relevant in a retroactive claim.
Can we just agree on an income?
Yes. Section 15(2) allows the court to accept an income both parents agree on in writing if it is reasonable in light of the disclosure. An agreed figure without disclosure is risky for both sides.
Does the same income apply to child and spousal support?
The starting definition is shared, which keeps the two calculations consistent. Our page on how child support is calculated shows where income enters the table amount. Whether spousal support is owed at all is a separate question, covered in who is entitled to spousal support.