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Oct 17, 2018

Income declared on a tax return isn't the last word when calculating child support

By Adam N. Black
Special to the National Post View original

For a self-employed individual, the amount of income used to determine a child-support obligation rarely mirrors the income declared on that person’s income tax return. In fact, an individual’s income tax return is just the starting point when it comes to calculating the amount of support payable by one parent to the other.

In AMW v. BW 2018, a recent case coming out of the Court of Queen’s Bench of Alberta, Justice Mah squarely addressed the impact of self-employment on the determination of income for child support purposes. In that case, the support payor, BW, owned interests in three corporations through a somewhat complex network of shareholdings with other individuals. All three corporations were engaged in the oilfield industry.

The support recipient, AMW, asserted that BW manipulated the finances of the companies to artificially reduce his income for support purposes. AMW took the position that BW’s income had been significantly understated since 2016 when the parties entered into an agreement pursuant to which BW was to pay child support of $1,104 per month for one child based on annual income of $126,540. AMW sought additional child support from 2016 based upon a proper and fulsome determination of BW’s income for support purposes. Of course, BW disagreed, taking the position that he had overpaid child support since 2016.

This article was originally published in the National Post. To read the complete article, please visit the National Post's website