Income Imputation in BC Family Law

Brittney Menzel

March 12th 2026

The income of the spouses involved in a family law matter is often a highly contested issue and rightfully so. Income plays a central role in determining the dollar amount of child and spousal support, as well as the proportion that each party is required to contribute to section 7 expenses, or what is also known as special and extraordinary expenses.

The starting point for determining income is to review line 15000 of the spouse’s T1 Income Tax and Benefit Return. However, this can    quickly become complicated and inadequate in situations where line 15000 does not accurately reflect a spouse’s income. There are many circumstances where this could be the case. A common example is when a spouse is self-employed. In situations where a spouse is self-employed, there are often expenses deducted to lower the total amount of income for tax purposes. However not all expenses are acceptable deductions in the context of child support and may need to be added back to the spouse’s total income to accurately reflect income for child support purposes.

If there is a concern that a spouse’s income is not being accurately reflected in that spouse’s financial disclosure, or a spouse fails to make necessary financial disclosure, a court may set that spouse’s income at a specific amount and the court will either “attribute” or “impute” income to a spouse.  

Section 19 of the Federal Child Support Guidelines lists a number of circumstances where a court may “impute” or “attribute” income:

• where a spouse is intentionally unemployed or underemployment, other than when required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse;

• the spouse is exempt from paying federal or provincial income tax;

• the spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;

• it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines;

• the spouse’s property is not reasonably utilized to generate income;

• the spouse has failed to provide income information when under a legal obligation to do so;

• the spouse unreasonably deducts expenses from income;

• the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and

• the spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.

  
  

If one or more of the circumstances listed above exist and the parties to a family law matter are unable to agree on income for the purposes of support or special and extraordinary expenses, it may be necessary to seek an order from the court.

What if my Spouse is Intentionally Underemployed or Unemployed?

A common scenario that arises in the context of family law is a concern that a spouse is intentionally unemployed or underemployment. This issue arises in situations including, but not limited to, where a spouse is employed on a part-time basis, where a spouse transitions to a new role with reduced pay, where a spouse is unemployed entirely or where a spouse retires early.

The Court of Appeal in Marquez v. Zapiola, 2013 BCCA 433, noted when intentional unemployment and underemployment is at issue, the legal test for imputing income is one of reasonableness, taking into consideration the parties’ capacity to earn income in light of their age, education, health, work history and work availability. A spouse’s capacity to earn income will include that person’s ability to work or to be trained to work.

It is important to note that the court not only considers the income the spouse is earning but also the amount of income a spouse could earn if working to capacity - Windle v. Windle, 2010 BCSC 18. Therefore, if a spouse is earning $60,000 but is found to have the capacity to earn $90,000, a court may impute the spouse’s income accordingly. These decisions can have a significant impact on the amount of support payable.

Income imputation is complex and can have a significant impact on the amount of support you receive or are obligated to pay. Please seek legal advice to ensure the specific facts and circumstances of your case are addressed accordingly.

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