Child support in Alberta: Calculating support from entrepreneurs

On behalf of Gary Kirk of Kirk Montoute LLP posted in Family Law on Tuesday, March 27, 2018.

Calculating the amount of child support in a divorce situation is relatively uncomplicated when the person paying it has a conventional job. But what about paying child support when those who do so are self-employed? It can be a different scenario entirely when income fluctuates. An entrepreneur is allowed to deduct expenses from their income on his or her taxes, but they should be reasonable as per child support obligations.

If the court doesn’t deem certain business expenses as being reasonable, they will be added back on to total taxable income, and it is this income the court will use to calculate child support payments. An adverse inference is slapped onto the person paying support if he or she does not adequately disclose their earnings along with any benefits and the rationale behind the claimed expenses. In this case, a judge can assume the person wasn’t entirely forthcoming regarding finances because it would be detrimental to the person’s financial picture.

In some instances, a financial professional is called upon to act as a third-party financial assessor to give the court an adequate, honest picture of the financial situation of the self-employed individual. This figure may also be used to provide spousal support as well. It is important to note that a judge will always have the best interests of any children in mind.

Issues like child support under the family law umbrella in Alberta can be complicated and so difficult to understand. Obtaining legal counsel may give a person a better grasp of the legalities associated with divorce such as child and spousal support. A lawyer may be able to provide solid advice during the divorce process.

Source: lawnow.org, “Self-Employment and Family Law: Calculating Income for Support“, Sarah Dargatz, March 6, 2018

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