Resources & Insights

Calculating Child Support for Incorporated Child Support Payors.

A recent Court of Appeal decision has clarified how to determine income for child support purposes in a situation where the support payor owns a corporation.

The child support payor in question owned and controlled a professional corporation.

Revenue received by the child support payor went into his professional corporation and he then received from the corporation personal income ( dividends ) shown at line 150 of his personal income tax return

The legal issue in question was whether, in calculating income available for the payment of child support, was the support payor’s line 150 income the basis for calculating child support or was there other income available to the support payor for the payment of child support?

The support payor argued that his income, for child support purposes, should be calculated by adjusting the dividend income he received to reflect the actual cash dividends received.

The court ruled that, in calculating income for support purposes the corporate income method is likely to be the fairest method of determining income of an individual who wholly control corporations.

The court ruled that the pretax revenue received by the professional corporation was determined to be the income available for the payment of child support.

Barrie Hayes, Partner