The Federal Child Support Guidelines:
Step-by-Step

More information on calculating annual income

Other factors in determining annual income

To properly apply the guidelines, you need an accurate income amount—one that fairly reflects actual income. You may consider several factors:

  • Whether your income has increased or decreased over the past three years.
  • If your income has fluctuated over the past three years.
  • If you have received a one-time amount of money (for example, an inheritance) all, some, or none of this amount may be included.
  • If you had exceptional business or investment profits or losses during a particular year.
  • If you are a shareholder, officer or control a corporation, all or part of the corporation's pre-tax income for the most recent taxation year, or what you would earn if you were being paid for the services provided to the corporation (as long as that amount is less than the corporation's pre-tax income). In determining a corporation's pre-tax income, you must include the corporation's payments such as salaries, wages, management fees and similar expenses.
  • If you live in another country where tax rates are significantly higher or lower than those applicable in the province or territory in which the other parent lives.

In some cases, the other parent may ask a judge to look at your income. The judge may assign an income amount to you if, for example, any of the following situations apply:

  • You are intentionally underemployed or unemployed (unless the reason is related to caring for a child, or reasonable education, or your health needs).
  • You are not required to pay federal or provincial income tax.
  • You live in a country where income tax rates are significantly lower than Canada's.
  • You get a large portion of your income from dividends, capital gains or other sources with a lower tax rate.
  • You are, or will be, receiving income or other benefits from a trust.
  • You are placing income elsewhere to conceal it (for example, putting it in someone else's name).
  • You do not reasonably use property and resources to generate income (for example, you may have too much money tied up in land or business investments, reducing the amount of cash available for child support).
  • You unreasonably deduct expenses from income.
  • You have withheld income information.

If line 150 does not contain the most recent income information

Your most recent federal tax return and your Canada Revenue Agency notice of assessment or reassessment may not be the best sources for current income information if they are not up-to-date or accurate, or a fair reflection of your income. In this case, please use more recent sources of information, such as pay slips to update the information on the tax return.

Even if your income tax information is up-to-date, it could still be inaccurate if your income has changed recently. It could also be inaccurate because you must calculate income for child support differently from the way you calculate income for income tax.

You may decide to use a figure that is different from the one on Line 150 of your most recent income tax return or notice of assessment when, for example:

  • The amount you received from a particular source of income varied over the last three years. In this case, you could decide to use an average of the amounts received from that source of income during the last three years, or,
  • The amount you received from a particular source of income does not recur regularly, such as a bonus paid to employees, because the company had an exceptionally profitable year. In this case, you may decide to include only a portion of the amount, if any.

If you are self-employed, or if you control a corporation, you must provide the corporation's financial statements. Other material you could be required to provide include income information from employment insurance, worker's compensation, disability payments, and details of any business partnerships and copies of trust settlement agreements along with the trust's three most recent financial statements.

In all cases, you must give the other parent copies of any documents you give to the court. If you live in Canada or the United States you must provide the documents within 30 days of the application being served. If you live outside Canada or the United States, you must provide the documents within 60 days of the application being served.

If you do not provide the documents necessary to prove your income, you may have to go to court. The judge may order you to provide the documents, or he or she can attribute income at a higher or lower level or impose serious penalties, including contempt of court proceedings and payment of legal costs.