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When you separate or divorce from a partner, the well-being of the children you share with them will often be your number one priority. Ontario law also prioritizes the best interests of the child when parents separate. For this reason, one or both parents will be legally ordered to pay child support to the other parent to ensure their child has sufficient financial resources. The parent who must pay and the amount they pay will vary based on the child’s living situation and each parent’s income.
One factor that may affect the calculation of child support payments is the payor parent being self-employed. Our family lawyer, Paul Slan, breaks down child support in Ontario and how it can be calculated when parents are self-employed.
At Gelman & Associates, our Toronto child support lawyers have years of experience helping families navigate their legal rights and obligations. If you have questions about a child support order in Ontario, schedule a consultation with our legal team today.
How is Child Support Calculated in Ontario?
Child support is the money one or both parents pay to the other to support their children financially after a separation or divorce. Allocation of table child support payments is dependent upon the amount of time the child spends with each parent, and the allocation of special expenses is proportionate to each party’s income.
Child support must be paid as long as the child is a dependent. This could mean up until the child turns 18. However, child support payments may be required after a child turns 18 if they have a disability, illness, or are going to school full-time.
In Ontario, two main types of child support exist:
- Table Child Support: Table child support is the basic amount of child support a payor parent pays to cover day-to-day costs for their child. It is calculated using Ontario’s Child Support Guidelines, which take into account the payor’s income and the number of children they have. Table child support is mandatory and must be paid monthly.
- Special or Extraordinary Expenses: Also known as Section 7 expenses, a payor parent may need to pay additional money on top of their table amount to cover expenses like:
- Daycare
- Post-secondary education tuition
- Uninsured medical costs
- Extracurricular activities
- And more
Special or extraordinary expenses will typically be divided proportionally depending on each parent’s income. For optional expenses, like extracurricular activities, parents must consent in advance, and failing to consent may lead to a dispute resolution process being utilized.
In the case that parents split parenting time equally, the parent with the higher income may need to pay the parent with the lower income the difference between their individual table amounts.
Calculating Child Support for Self-Employed Parents
When calculating the amount of child support you owe, your income will be one of the most important determining factors. When you’re self-employed, it can be more complex to calculate the total amount of income you receive on a monthly or yearly basis. This is because, unlike salaried employees, self-employed parents do not have straightforward incomes or receive statements that declare their total earnings.
If you’re self-employed, you might collect a relatively low personal salary, although you retain income within a corporation. In addition, you may be able to write off personal expenses as business deductions. Your income might also fluctuate widely depending on the month or year. These unique factors of self-employment are important to consider, as courts tend to look at your actual available income, not just your reported income, when calculating support.
When determining a self-employed parent’s income for support purposes, courts (and lawyers) may examine:
- Corporate financial statements
- Tax returns and T1/T2 forms
- Business records (if you’re involved in a sole proprietorship or partnership)
- Personal spending habits vs. declared income
- Your retained earnings from a corporation
- Add-backs for personal use expenses you claimed as business deductions
- And more
If your earnings are particularly irregular or fluctuate often, the court may average your income over the last 3 years to decide on an appropriate child support payment. If you’re worried about reporting income correctly as a self-employed parent, working with an experienced family lawyer is recommended. A legal professional will know how to interpret your business and tax documents while guiding you through the full financial disclosure process.
What if a Self-Employed Parent is Hiding Income?
Sometimes, payor parents try to get away with paying less child support than they should because they believe they can hide certain self-employment income. This is a violation of child support guidelines in Ontario, as both parents must provide complete and up-to-date income information to ensure a fair amount of support.
Some warning signs that a self-employed parent is hiding their income might be:
- If they are living a luxurious lifestyle that does not match the income they’ve reported
- They report having minimal or no assets despite spending large amounts of money
- They frequently travel or make large purchases in their personal or professional lives
If you believe this to be the case, your lawyer may hire a forensic accountant to audit the finances of the self-employed parent to reveal hidden income. To determine a support amount in these cases, courts may examine additional evidence like financial disclosure documents or the lifestyle the self-employed parent leads.
Are You Paying Child Support as a Self-Employed Parent? Contact Gelman & Associates Today
Children are entitled to financial support under Ontario and federal law. As a payor parent, it is your responsibility to ensure that your child is provided for. When you’re self-employed, determining your income and accurately calculating your child support payment can get complicated. By working with an experienced family lawyer, you can make sure that you complete full financial disclosure.
If you have questions about your child support payments as a self-employed parent, or you believe a self-employed parent is hiding income, schedule a consultation with our Toronto child support lawyers today. We can help you understand your legal rights and obligations so that your child’s well-being is protected.
