Article Summary
Child support in Alberta has traditionally been calculated based on the payor parent's declared income. However, what happens when a parent is unemployed, underemployed, or paid in cash? In these situations, courts may impute income based on earning capacity rather than reported income. A significant shift in Alberta case law now makes it easier for recipient parents to challenge inadequate support payments by placing the onus on payors to prove their income is reasonable.
Tags:
Family
Child Support
Featured case: Peters v. Atchooay, 2022 ABCA 347 and Hunt v. Solis-Hunt, 2001 ABCA 229
Understanding Child Support Calculation
Both custodial and non-custodial parents share financial responsibility for their children's upbringing. In most cases, the monthly child support payment is determined using line 150 of the payor parent's income tax return, as per the Federal Child Support Guidelines. This straightforward approach works well when income is clearly documented and reflects the payor's true earning capacity. For a more comprehensive understanding of child and spousal support calculations in Alberta, including tax implications and enforcement, we recommend reading our detailed guide on support calculations.
However, complications arise when a payor parent is:
Unemployed despite having the ability to work
Underemployed relative to their qualifications and experience
Receiving cash income that isn't fully declared
Intentionally reducing their income to minimize support obligations
In these situations, courts can "impute" income—that is, assign a specific income amount to the payor based on what they should reasonably be earning rather than what they report.
Alberta's Historical Approach: A Higher Burden
Until recently, Alberta courts approached imputed income differently than other Canadian provinces. Since the 2001 case of Hunt v. Solis-Hunt, 2001 ABCA 229, Alberta courts required the recipient parent to prove that the payor was deliberately underemployed or unemployed for the specific purpose of avoiding child support obligations.
This standard created a significant evidentiary burden for recipient parents, who often struggled to prove the payor's subjective intentions. In contrast, courts in other provinces applied a more balanced approach that considered whether the payor's employment choices were reasonable given their child support obligations.
The Turning Point: Peters v. Atchooay
The 2022 Alberta Court of Appeal decision in Peters v. Atchooay, 2022 ABCA 347 marks a watershed moment in Alberta family law. This landmark ruling effectively reversed the burden of proof by requiring the payor to demonstrate their income is reasonable, bringing Alberta's approach in line with other Canadian jurisdictions.
The New Three-Part Test
Peters v. Atchooay established a more nuanced test for imputing income that considers:
Intentional Underemployment or Unemployment: The court examines whether the payor is intentionally underemployed or unemployed by considering factors like age, education, experience, qualifications, and earning capacity. This assessment is based on objective standards rather than requiring proof of intent to avoid support payments.
Applicable Exceptions: The court considers whether any exceptions under section 19 of the Child Support Guidelines apply to the situation. These exceptions include legitimate reasons for reduced income such as reasonable educational pursuits, health issues, or child care responsibilities.
Judicial Discretion: If the payor is intentionally underemployed or unemployed without falling under an exception, the court may exercise its discretion to impute income based on what the payor could reasonably earn given their capabilities and circumstances.
Why This Matters
This shift in judicial approach significantly impacts how child support cases are handled in Alberta. By placing the onus on the payor to justify their income level, the court acknowledges the reality that recipient parents (often primary caregivers) frequently lack access to information about the payor's true financial circumstances.
The Peters decision recognizes that children deserve support commensurate with both parents' true earning capacity, not just what a parent chooses to earn or report. This approach ensures that children's financial needs aren't compromised by a payor's unreasonable employment choices or income reporting practices.
Practical Implications for Alberta Parents
This legal development has important implications for both recipient and payor parents in Alberta:
For recipient parents who believe the payor is capable of earning more than they report, the threshold for challenging support amounts is now lower. While evidence of the payor's earning capacity is still required, proving deliberate evasion of support obligations is no longer necessary.
For payor parents, it's now more important to demonstrate that employment decisions are reasonable and legitimate if income is below potential. Documentation of job search efforts, medical limitations, educational pursuits, or other factors affecting earning capacity may be crucial in justifying current income levels.
Looking Forward
The Peters decision aligns Alberta with the rest of Canada in focusing on the reasonableness of a payor's income relative to their capabilities and obligations. This child-centred approach prioritizes the financial security of children whose parents have separated.
As this legal standard continues to be applied in Alberta courtrooms, we can expect further refinement of what constitutes "reasonable" employment choices and income levels for support-paying parents. Future cases will likely provide additional guidance on how courts weigh factors like regional economic conditions, industry-specific challenges, and legitimate career transitions when assessing imputed income.
If you receive or pay child support in Alberta and believe the amount may need reassessment based on this evolving legal standard, The Calgary Legal Team can help. Our experienced family lawyers understand the nuances of these recent developments and can assist you in navigating the changing legal landscape of child support in Alberta.
