The child support laws in Alberta can be complex as couples try to recalibrate their lives in the aftermath of a separation.
One of the main considerations with child support is each parent’s income. Some confusion exists with how this income is assessed in particular, whether the current or past year’s income is used in calculations.
It’s essential to understand your rights and obligations with child support, so let’s take a closer look at how support amounts are determined in Alberta.
What constitutes income in Alberta?
The provincial Child Support Guidelines are used for adult interdependent partners, while federal guidelines are applied for married couples with children.
Regardless of the legislation used, parents’ annual income is regarded as more than simply their employment income. The number used is in the “Total Income” line 150 of an annual T1 form. This entry consists of various types of income, including:
- Employment income (salary, wage, bonuses, commissions, etc.)
- Pensions and RRSP income.
- Government assistance income (e.g., social assistance, disability, workers’ compensation, etc.)
- Investment income (taxable dividends, interest, rental income, etc.)
- Taxable capital gains.
- Self-employment income.
- Income from trusts.
Self-employed parents, in particular, often struggle to calculate the correct child support amounts owing. An accountant or an experienced child support lawyer can usually assist with this.
Sometimes, the T1 line 150 number results in unreasonably high child support payments. If so, the court can base calculations on income from the past three years for a fairer outcome.
Similarly, if the number is unreasonably low, a judge can impute income to a parent, setting the total income at a higher amount and raising the child support obligation for that parent. This may apply if the parent is intentionally under-employed or unemployed, diverting income intentionally to avoid child support, exempt from paying federal or provincial tax, lives in a country with a lower tax rate than Canada or certain other circumstances exist.
Is child support based on current income or past year’s income?
Child support calculations are generally based on the most recent annual income of both parties. However, as already mentioned, if the amount calculated is unreasonably onerous, a judge can consider income from three years and use a reasonable average.
In reality, neither parent usually has full oversight of the current year’s annual income when they separate. Therefore, parents typically estimate their incomes based on the previous year’s income, recent pay stubs, expectations of bonuses and commissions, etc.
How often does child support change in Alberta?
Once a child support agreement is made in Alberta, the paying parent must continue to pay that amount until the agreement expires or another arrangement is agreed upon.
The calculation may be reviewed annually. However, only the support amount changes; the other terms will remain the same, meaning that a new court order is not necessary unless the parents cannot agree on the recalculation.
Recalculation of child support based on income changes
The Alberta Child Support Recalculation Program annually recalculates child support payments based on current income tax information, helping to maintain fair child support payments based on up-to-date data.
Once the payor’s income details are verified using the latest tax information, a recalculation is made, and both parents are notified of the new recalculated amount. This avoids the need to go to court, except if there is a disagreement and either parent applies to the court for a new order.
Annual review
For an annual review of child support to occur, both parents must provide updated financial information each year based on their income tax information. The Recalculation Program can assist parents without court approval, provided the original order includes a recalculation clause.
For self-employed parents, a new amount will need to be agreed upon between the parents or with the help of legal counsel.
Triggering amount
In Alberta, parents are also entitled to insert a clause into a child support agreement identifying an income amount that triggers a recalculation such as an amount 25 percent above or below the parent’s current income.
Do both parents need to disclose their income for child support in Alberta?
Both parents need to disclose their income in child custody cases if any of the following apply:
- There is a shared parenting arrangement in place.
- There are section 7 “special and extraordinary” expenses to be shared.
- There is a claim of undue hardship.
- There is a child at or over the age of majority and child support is being calculated differently than if that child were a minor.
- Either party makes more than $150,000 per year.
- Either party has been acting in the place of a parent to the child of their partner.
Otherwise, only the paying parent’s income must be disclosed.
What needs to be disclosed for child support calculations?
For the purpose of calculating child support, parents must provide the following:
- Income tax returns for the most recent three tax years.
- Notice of assessment and reassessment for the most recent three tax years.
Other documentation may be requested, including recent pay stubs or a salary letter from a parent’s employer, financial statements for self-employed parents or information about employment insurance, workers’ compensation, disability or other social assistance.
What happens if I don’t disclose my income?
If a parent refuses to disclose income information for the child support calculation, the court can take steps to obtain this information or impute an income to the parent.
The offending parent may be ordered to pay the legal costs incurred by the other parent in pursuing court action or may even be held in contempt of court, leading to potential fines and/or imprisonment.
How can a family lawyer help with your child support obligations?
Many separating couples rely on the advice of a seasoned family lawyer to help with the intricacies of child support calculations.
Considered legal advice, assistance in disclosing income, help with making the relevant calculations, and support with enforcing the terms of the agreement mean that some of the pressure of ending a relationship can be eased while your children’s best interests are protected.
If you live in the Calgary area and need assistance with child support matters, the experienced lawyers at Jennings Family Law can help you. Call (403) 316-0138 to request a confidential consultation, contact us directly online, or email Warren Jennings directly at warren@jenningsfamilylaw.com.
