Are you going through a divorce or separation in Alberta? Join Calgary family lawyer Charles Fair as he discusses the critical topic of financial disclosure. In this video, we'll explore why transparency is crucial during this challenging time and the legal obligations surrounding financial disclosure in divorce or separation cases. Learn about the potential consequences of not disclosing financial information and gain insights into how disclosing can help protect your rights and interests. Partnered with the Canadian Centre for Men and Families, Fair Legal provides monthly webinars on topics dealing with criminal or family matters.
WATCH: To Disclose Or Not To Disclose: Financial Disclosure – Divorce Or Separation In Alberta
Vanessa Farkas-Brahmakshatriya: Good evening, everyone. Thank you for joining us for our presentation from Fair Legal this evening on Financial Disclosure.
Well, you're still trickling in through the waiting room.
Alright. As many of you know, Charles Fair has been practicing law for over 30 years and founded Fair Legal because he is passionate about helping others, ensuring that their rights are protected, and that they are treated fairly.
Fair Legal deals with criminal, family, and civil litigation matters. As an aside, sometimes it's very good to have a lawyer who is equally knowledgeable in family law and criminal law because they often overlap.
Charles is generously volunteering his time with CCMF Alberta to deliver monthly webinars on topics of concern to the population that we aim to serve. In other words, men struggling due to intimate relationship breakdown and turmoil.
At CCMF Alberta, we are committed to meeting men where they're at, so that they can feel heard and validated, and have conversations that matter to them. We help equip men to manage stressful situations, rebuild their lives after their relationships fail, and stay connected with children.
We recognize that providing mental health support for men leads to optimal parenting outcomes, a reduction in family violence, and lower rates of suicide.
If you are looking for additional supports for your mental health as you navigate your legal challenges, here is a link to the programs page on our website. I'm just dropping it into the chat. We have a variety of different programs to help support men and fathers.
Now this is an educational offering, it is not legal advice, but there is a chance to ask questions. You can ask them at any time via the chat. Please send them to Melanie Seneviratne. You'll see her as one of the co-hosts.
She's also here as a representative of Fair Legal, and she will read the questions to Charles to answer during the Q& A period. And protect everybody's privacy. And please keep your questions related to the topic of this webinar, which is financial disclosure.
Over to you, Charles.
Charles Fair: Great.
Super. Thank you, Vanessa. It's always a pleasure doing these webinars.
I really like the mission that CCMF has and it really is an honor to be able to provide some assistance here.
So this topic might seem like a fairly dry topic, talking about financial disclosure, but I hope to make it a little more interesting and it might have a little bit of a different take on it than you might expect.
So, without further ado, I'm going to go through my slides here. So, first off, financial disclosure, what is it? Well, it's a standard list of financial documents that gets exchanged between the parties. And it's there to help the court and the parties make decisions regarding child support, spousal support, and division of family property. And it's a standard list because the courts have basically said, you know, rather than leaving people adrift as to what's required, let's come up with a standard list of the most common things that covers - that gets the kind of information that you need to make these kinds of decisions. And to make sure that they're done fairly, and based on the reality of the situation of the family.
Some people will say, well, is that all of the disclosure that is required in every case? Well, in actual fact, you can ask for additional disclosure if it's necessary. So it's a basic list. And I'm going to go through that list here just very quickly. And then we'll cover off more details.
So the number one issue, and these are - I've numbered them because the most common notice to disclose that's used has got 16 items on it and you'll often hear the court make orders like we want the disclosure items 1 through 16, or items 1 through 9, depending on what stage the proceedings are in. Sometimes, in the early stages, 1 through 16 is required. Later on, if it's just a variation, it may only be items 1 through 9. And that lingo just gets used a lot. So I thought, well, I'll just go through the list here and use the numbers that correspond with that most common list of disclosure items.
So the first one is tax returns. And by this it means the T1 general form that you use to file your taxes. And If you haven't filed your taxes then all of the slips that you would use to file your taxes, like your T4 slips, and your T5 slips, and the slips you get for unemployment insurance, all of that stuff Anything that you would submit to CRA to prepare your tax returns would be disclosable if you haven't done them.
Generally, we try to encourage people to get your tax returns done because the court is typically not impressed if you haven't fulfilled your legal obligation to do your tax returns.
Second item, Notices of Assessment, and that's, after you file your tax returns, of course, CRA - or Canada Revenue Agency - sends you a notice of how they've assessed your taxes. And sometimes they'll send you a notice of reassessment if further information comes to light. And so those notices of both assessment and reassessment are also disclosable.
So one of the questions that people say, well, why would I need to do the tax return if I've done a Notice of Assessment? Because that's, oftentimes, what we get is just a Notice of Assessment. Well, the answer is, in the tax return, there is additional information that lawyers in the court are looking for that doesn't necessarily show up in the notices of assessment. And the biggest one would be business income, or self-employment income. And unusual expenses claimed, investment income, those sorts of things that might not show up on the Notices of Assessment directly.
Third item is pay stubs. Pay stubs are your statement of earnings that you get from your employer and you're asked for the last three.
You know, if you've only got one because you just started a job, well, you just provide one. You know, but the idea is it's a standard list of the last three statements of earnings.
Any other sources of income. So this might include unemployment insurance, or social assistance, those sorts of things.
If you are a student, sources of student funding like student loans and bursaries and grants and that sort of thing.
Then we turn to the self-employment, or the business income category. So item 6 is if you have an unincorporated business, and that just means you're just doing it under your own name, maybe you have a trade name, but that is a business income where you're self-employed.
7 is related to that, but you have a partner and you're both making income. Or if there's a group of you and you're running a business together with the view to making a profit, then you've got partnership income and that has to be disclosed.
Number 8 is corporate income. If you own more than one percent of a corporation, then you've got disclosure obligations there.
I'm not going to get into the details at this point on what the disclosure is required in each of these things. We'll come back to that later on, probably address more of that in the question period.
Then if child support is an issue, then the section 7 expenses, these are called section 7 because, in the Federal Child Support Guidelines and in the Alberta Child Support Guidelines, section 7 refers to how parents are dividing up the special expenses, the extraordinary expenses, for children. So we need to know what those are. Things like childcare. Health care premiums. Dental insurance premiums. That sort of thing.
And, by the way, this is a very brief list to give you an idea of what the kinds of things are, the details - the actual Notice to disclose has additional detail.
Educational expenses, and this would include post-secondary expenses, if that becomes relevant. And also extracurricular expenses.
So then item 10, trust information, deals with, typically, a family trust. If you're a beneficiary of a trust, then there's disclosure required of that trust information, such as the financial statements and details of what your entitlements are to that trust.
And if you don't know what a trust is you probably don't have one, so it's not to worry about it.
Number 11, bank statements and canceled checks. This is one that causes people a lot of grief sometimes.
Number 12, credit card statements.
Number 13, a budget of expenses (if spousal support is an issue).
And number 14, a statement of income, assets, and liabilities.
Number 15, statements of investments. So things like RRSP holdings. Anything like that. Brokerage statements - investment brokerage statements - and things like that, you would include under item 15.
And item 16 is, if you're claiming any of the assets as being exempt, this is where you would list them here, even though they also have to be disclosed in the other parts of your financial disclosure.
When does this have to be provided? Usually within 30 days of it being requested. But you don't have to wait until there's a request made. You know it's coming, and so you might as well start early and get it get it ready for disclosure.
So if you don't disclose, you can get court orders made against you to disclose, so then you you comply with those court orders. But that doesn't make you look very good if you've got court orders against you doing what you're supposed to do anyways. Those court orders can often start penalizing you a little bit by requiring you to pay the other side's costs for having to drag you into court to get a court order or a disclosure. But that isn't as serious as having the court make an adverse inference and impute income to you. Your actual income might be, say, $90,000, but you don't disclose, the court might impute you as having an income of $150,000, clearly, you will be motivated to provide better disclosure in that situation.
Third thing that the court can do is they can order that third parties provide the information to you. That can get a little embarrassing, depending on who the third party is. But that could include employers, and banks, and possibly even other family members.
Then there's penalties for contempt of court. If you're still ignoring the court order, then the court can start imposing fines, such as $50 a day for every day that you don't provide the disclosure. Or one case I've been dealing with recently, the penalties are $300 a day, so those penalties can add up quite quickly.
What's interesting about those penalties is that they are not payable to the other side, typically. They are payable to the court. And so, later on, there might be an argument about where those monies should go.
So, other penalties for contempt of court can include, the most drastic one, which is that you are put in jail until you figure oue what it is that you're supposed to do.
So those are increasing consequences of non disclosure. So you want to pay attention to getting your disclosure obligations done in a timely manner.
But, you know, really there's a benefit of the full disclosure anyways. It builds trust and promotes cooperation between the parties. It facilitates settlement. And it reduces stress and uncertainty.
So this next section is, maybe, where it gets a little more interesting. Because I often say, you know, one of the problems with lawyers in this area is you go to see a lawyer, a family law lawyer, because you've got a relationship problem, right? You don't have an accounting problem. You've got a relationship problem. You've been arguing. You've separated. You need to sort out things with the children. Sort out things with the property. And it shouldn't feel like you're going to see an accountant. And, all of a sudden, your lawyer is asking you for a bunch of financial stuff. And it's an important part of the family law legal process, but it's not the only part. So just bear that in mind. It might sound like we're accountants when we ask for the information, but, unfortunately, it's easier to get it out of the way anyway.
So, common excuses. One is that it's not needed. And this one is, well, the other side knows what my income is. Yeah, well, the lawyer for the other side doesn't know what your income is. The court doesn't know what your income is. And how does the other side really know for sure what your income is, or your property is? So you may believe that it's not needed, but, even if you don't have something, at least you should say, I don't have something, this is all I have, that in itself is disclosure. So, the not needed one is a common one.
The next one is typically not said, but I suspect that it might be going on there. You know, personally, I have memories of my parents just screaming at each other over financial matters when we'd go away for the weekend up to the cottage in Ontario. And I gotta say, that kind of mental baggage sort of stuck with me for a long time. So it was difficult, I think, for me to keep my financial records in good order. I'm well past that now, but it can be, you know, you may not be an organized person and you might not be willing to say that. You might not be able to - you don't have the record, you threw them out, you can't find them, you don't know how to get them.
Another one is, well, this isn't applicable. I don't have a business, so why am I even saying anything about that?
Or another one that is more important, I suppose, is, well, we already agreed that these assets of mine are going to be exempt. Well, that may be the case, but you're still going to have to disclose everything that you've got, even if it's not subject to a a property division.
Another one is I don't have the time and this is often the case if you're working full time, you've got kids, you want to make sure that you're spending your time with your kids when you're getting them, and you're working overtime because you just don't have enough money to cover all the additional expenses that come with having a separated family. And it's tough. I get it. You often have difficulty getting the time aside. And it's really time consuming, especially if you don't know how to get this stuff together. It's too hard. You don't know how to do it. You don't know where to find this stuff. That's another excuse.
This last one I'm going to touch on as well is it's too embarrassing.
And the last one, it's my business or it's my privacy. And this one would come up when you are - particularly with bank statements and credit card statements - the concern here is that maybe there's some lifestyle expenditures that you don't really want the other side to know.You know, the expensive gift bought for a friend, that sort of thing. And I gotta say that the best way of dealing with that is disclose it to your lawyer. Have your lawyer talk about it. And it's often the case that, if you delay and withhold the disclosure, then the other side is going to say, oh, there must be something embarrassing there. There must be something that we can use. And so they dig in and go looking for it.
So you're better off just disclosing everything and and not to worry about what might never become an issue. And, quite frankly, a lot of lifestyle issues, the court really doesn't care about it.
Sometimes people are embarrassed about things like a gambling addiction, and there's money flowing out the door on gambling stuff. And, you know, again, the court might care about it, but might not care about it in the way that you think. So, again, you're better off disclosing and just dealing with it.
If you feel like you've made some bad decisions, particularly in the area of gambling, or excessive purchasing, or lifestyle issues, you know, you're better off - at least disclose it to your lawyer, have the discussion about how to deal with it. It's much better than standing up in court and sounding like you are hiding something, because that's how it comes across. If you have a good reason for hiding something, well, then the lawyer can deal with it.
Oftentimes, when we have concerns about privacy, things like these bank records have bank account numbers and addresses and things like that, you could say, well, I don't want the other side to know what my address is. Or I don't want them to know my bank account numbers. And this can really happen when the other side has a history of identity theft. So, obviously you want to minimize the amount of information that they can have to use against you. And, in that case, you want to make sure that you - again, you've got to disclose, but then talk to the lawyer.
My practice is, number one, unless a court order or a rule requires that financial documents be filed with the court, I tend not to file them with the court. I tend to... produce them to the parties that need to see them, whether that's the other side, another lawyer, or a mediator, arbitrator, but I'm not going to automatically file things with the court because, as much as there are protections for people to access the court records, the court system is ultimately a public system and the public can get access to those records. And it may be easier than you think. And so, in that case, what we do is we make sure that the particularly sensitive information is redacted, but we do it in a way that also makes sure that the other side can verify what's going on with the documents.
So, for example, one of the things that we do with disclosure - and I'm going to talk about the bank statements, for example - and I tend to do this, as well, when my client gives us the documents, what we do is I have my assistant go through the documents and say, all right, are there any bank transfers in and out of the account to another bank account number. And if there are, then we say, okay, do we have the statements for that other bank? Because we want to make sure that they, that we're getting all of the bank statements. If we don't do it, the other side's going to do it. And, again, it's going to start to look problematic if you've said, oh, I just forgot those. Well, it's not that hard to find it, and so you're better off that we take a look at it before we send it off to the other side.
The other thing that might be the case is that those other records might be, say, an account that's in somebody else's name, or in a joint name with somebody else. Well, that's obviously an issue that needs to be discussed with your lawyer, because that other person may have legitimate privacy interests that need to be protected. So there can be reasons why those other bank records are not disclosed, but better to figure that out early.
Similarly, you can see we sometimes will track, say, payments to a credit card coming out of an account. We want to make sure that the same credit card - the payments on the credit card - are showing up on that card. Because if they're not showing up there, that means, oh, there must be another credit card. And we do the reverse. There's payments to the credit card that aren't coming from the bank account. And we say, okay, who else is involved here? Where is this other money coming from?
So lawyers are not typically forensic accountants, but there's some really basic stuff that we can - and, I think, should - be doing to verify the financial statements. Better that your own lawyer does that than have the other lawyer make a lot of hay about that in court.
So here's some helpful tips.
So, first off, it's important to start early in the process. Yeah, I get it, this is a relationship problem that you have, but start gathering the materials that you can.
And get help. Get help from a lawyer. Get help from a bookkeeper. An accountant. Particularly if you've got business income. You know, sometimes, especially if you're in the trades, or you've got a really small business, you don't want to spend a lot of money on bookkeeping and accounting. A lot more record keeping is involved in that process and you might be really behind on it. But better get started, get some help on it. If you have trouble organizing stuff, not everybody's good at organizing the documents, get some help from somebody. There are actually people who will help clean your house and organize your house. And they'll also help to organize your financial documents because they know what they look like. They know how to keep the stuff organized and presented in an easy to use fashion.
Next tip is, send what you have when you get it rather than waiting until you have everything. Send what you have as it comes so that, at least, your lawyer knows what it is that you're working on. And that you are actually making some headway.
The other thing is, if you are an organized person, you know, you're going to save some legal fees if you keep this stuff organized as much as possible yourself. So if you're required to disclose items 1 through 16, then set up a binder, or group your documents in tab 1, tab 2, et cetera. Makes your lawyer's job a lot easier to review those documents, and that keeps your legal fees down as well.
Next one is kind of odd, you send everything. And that's, again, really it's related to the next thing. You want to send everything to your lawyer. So send what you have, when you have it, but send everything, don't hold anything back, because holding it back means you're not getting the advice that you need, which is the last tip here. Make sure you ask for legal advice about what the documents are and whether they have to be disclosed.
I do want to go back to some of the common ones. I don't have a slide for this, but one of the - the overall process is, as we noted, the disclosure is required 30 days afterwards, after that notice to disclose is made. But if you've got a big gap in time between when one party is disclosing and the other party is disclosing, that can result in one party potentially, and unfairly, disclosing more than the other party is. So, if that's possibly a concern in your case, then, again, that's something that you want to talk to your lawyer about. Because there are ways that we can address that. And, hopefully, avoid trouble with the court later on.
So that's a brief overview of financial disclosure. I'm going to open it up for questions.
Melanie Seneviratne: Okay.
The first question I have is: What about overseas properties? And how does that play into everything? And how how do you prove it if the other party denies it?
Charles Fair: Great question. And there's not an easy answer. There's various parts of it.
The first thing I need to say is that the Alberta courts do not have jurisdiction to make orders regarding properties that are outside of Alberta. That being said, there's still an obligation to disclose that because the Alberta court may be able to make adjusting orders in Alberta.
If you think there are substantial assets that the other side has in another country, then really what you need to do is get legal help in that other country. And, depending on what the rules are there and the rules here in Alberta, it's possible to get orders from the court in Alberta that are then sent over to the court in the foreign jurisdiction to ask for that court's assistance in resolving things.
But this can be a complicated area. And, in my experience, very difficult to resolve. Oftentimes, you see the properties that are overseas changing hands into family members and it can be difficult to track that stuff down.
Melanie Seneviratne: Next question. If the courts order both parties to disclose lines 1 to 16, does it matter whether or not you are self-employed? In other words, as an example, I'm not self-employed but I supplied lines 1 to 16 to the courts. But my spouse only provided line 2, the Notice of Assessment. So was she wrong? She is not employed, but she is on AISH. And again, this is just an example.
Charles Fair: The answer is, yes, she's wrong. And, unfortunately, that decision to just provide the Notices of Assessment, it's disrespectful. And kind of a - and I don't mean that in a - that somebody's being rude - but it presumes that everybody should think that you are fully disclosing without you actually fully disclosing.
Now, if somebody's on AISH, then you may have some difficulties with whether they have the ability to provide the disclosure. But if they've got a Notice of Assessment, that means that they can access their - something that is closer to an actual tax return by accessing the CRA website.
Unfortunately, the courts don't always recognize that. It used to be that you could get a detailed copy of the Notice - the T1 general - from CRA. And now it appears that all you can get is a summary of your tax return. And it looks like a Notice of Assessment. And so it's often confused with that Notice of Assessment. But it's better than just the Notice of Assessment. Not as good as a T1 general, but better than a Notice of Assessment.
So, ultimately, if somebody is not familiar with how to get records from CRA, it's possible to get an accountant or a bookkeeper to access those records for you. At Fair Legal, I've got the ability to - I have a representative ID profile with CRA. So, every so often, I get a client that really has difficulty getting their records together. So if the client gives me access to their CRA account, I can go in and take a look and obtain the information that way.
The process is fairly streamlined, more streamlined than it used to be, but, again, that's fairly rare because if somebody can get access to their account to authorize me, then they should be able to find this stuff themselves.
And, really, I think if somebody is to answer the question, really somebody should just fill out the form. If they don't have other sources of income, then they should just say so. Unfortunately, the documents that are often - you know, the pro forma documents - don't really make it clear to say, you know, this doesn't apply, say so. Because how is the other person supposed to know? You could be on AISH, but you might have a little side business on the internet and making quite a bit of money on the side.
The family court doesn't really care about that. Whether or not, you know, you're not reporting your income to CRA. They are concerned about the children and your sources of income. And that's it. So, you know, you've got that other income, just disclose it.
Melanie Seneviratne: Okay.
The next question is: I am indigenous and receive - and have received - random payments from my band, from land claims, settlements, et cetera. These are non-taxable income. Do these need to be included in my financial disclosure?
And then a follow up question to that is: Would any future payments from my band be included for child or spousal support payment calculations?
Charles Fair: Wow, that's an interesting question. And I'm going to say that I think the answer is more complicated than I can fully address here.
So, number one, if the payments are not for income - in other words, not in exchange for services rendered - or payments to assist you with living expenses, then I would argue that those payments are really property payments. And I think that there's a good argument that they might be exempt. So you need to disclose them because they are relevant to your financial circumstances, to make sure that the court is making the right kinds of order, but they are really like property payments, not like - especially if it's compensation for a land claim and the band is distributing those funds to its members - then I would think that as more of a property payment.
Now, the other interesting thing is, if you are working on a reserve, and have status, then your income may be tax exempt. And so that raises an interesting question, is who gets the benefit of that tax exempt status? And I believe that there's been some case law on that issue that says that that benefit is not something that is necessarily something to be shared with the non-native spouse.
Now, I think that it may be problematic when we're talking about child support because the child is presumably entitled to some of that benefit. But it is an interesting question and I don't know for sure whether the courts have ruled on this definitively.
I've had some opportunity to look at it to a limited degree in one of my recent cases and the result was favorable to my client, is all I can say.
The other thing to note is that the number that the court typically uses for determining income for child support purposes is what we typically call "line 150 income". It's now, like, line 150,000 or something. It's that total taxable income. So it's your gross income before taxes are deducted. So, whether your income is tax free or not, that is your line 150 income. And the fact that there's different tax deductions, or no tax deducted, doesn't affect the line 150 number.
However, there are ways for the court to adjust income to account for different tax treatment. And this comes up particularly in business income, where, if you're self-employed or you got a small corporation, you own more than 1% of it, and the business - the corporation - pays for your car, pays for some of your mortgage because you work some of the - they cover some of your home office expenses, they pay for some of your meals, and pay for a gym membership, and that kind of thing, those benefits can be added back into your income, even though they may be tax deductible from a corporate income tax perspective, they can be added back into your income because that seems to be the right thing to do.
So I don't know whether the court has really addressed that issue of the tax exempt status of on reserve income because one of the arguments that can be made is this is a benefit that is based on indigenous status, not on things like, you know, corporate benefits and stuff like that. But it's a complicated, interesting question. And I don't have 100% certainty in my answer.
Melanie Seneviratne: Okay.
The next question is: The ex-wife has been refusing to disclose her "true income" to the courts for over four years. She owns her own business and pays herself a small salary, which she claims is what she only makes. I know her true income because, when we lived together, I had access to the company accounting software. She makes ten times more than I do and uses shareholder loans, management fees, and other tactics to conceal her true income. Because of this, I must pay more in child support payments than I should, and she refuses to do shared parenting to keep to make sure that I keep paying. How do I get her real income information for the courts to see?
Charles Fair: You ask the court to order it.
That's why, if you look at the actual - what I'm going to do here is I'm going to - can you see this?
Melanie Seneviratne: Yes.
Charles Fair: Okay.
So, I'm going to just take a look at - this is the typical disclosure here.
So under item 8, this is the kind of situation that's described here. The financial statements of the corporation and its subsidiaries for its three most recent taxation years. Financial statements includes, not just the profit and loss statement or the income statement - that's, you know, the gross revenues minus expenses - but it also includes the balance sheet. And we don't have time to get into the ins and outs of business accounting, but, if you have those financial statements, it's not very difficult to see exactly where the monies are being kept in the corporation when they really should be paid out. Or, you know, for example, here's the next statement here, (b) a statement showing a breakdown of all salaries, wages, management fees, or other payments or benefits paid to yourself, or to persons or corporations, with whom the corporation, and every related corporation, does not deal at arm's length for the corporation's 3 most recent taxation years. That provision, 8b, is there, again, to require full disclosure of those things like, you know, you pay yourself a salary, but you don't include the - you keep money in the corporation rather than paying it out to yourself.Or you you pay it out as a shareholder loan and, you know, it depends on which direction those payments are going, but those shareholder loan payments don't show up on your line 150 income. But they do here under 8b because, you know, other payments or benefits paid to yourself.
Now, and again, so (c) a record showing your shareholder's loan transactions for the past 12 months. So the court is aware of that.
And, again, I'm not a tax person, but if you find yourself in a situation where you are having to challenge the disclosure that you're getting from somebody else, then you need to get some advice along the way.
And that's what we do. I mean, I know how to go about digging at this stuff to get at the more information from the other side.
Again, you need to - like, for example, on the shareholders loan transactions, and again, I'm not a tax expert - but, at some point, if the money's coming out of the corporation as a shareholder loan, then at what point does it become income if it's never paid back? Well, that's the issue. And that's where you might need to get some corporate tax advice to say, okay, those shareholder loans are really income.
Another thing that can happen is the money just sits in the corporation and it shows up on the balance sheet - this is under 8a - it sits in the balance sheet as retained earnings. And those retained earnings are basically money that a corporation may legitimately hang on to because of the nature of the business. Because they need it to cover off seasonal variations, or they're growing and they need a certain amount of funds on hand, that's legitimate. But if you are regularly paying yourself half of what your true income is and just letting the corporation build up an asset base and it's retained earnings, then that's not legitimate.
So, again, that's how you get at it. You insist on the financial statements. And, again, there are provisions under the business corporations act, and under family law, you can start compelling that disclosure. You could get an auditor involved with court order. You could put the company into receivership. There's all sorts of nasty things you can do. They can be expensive difficult things to do, but if you think there's a lot of money there that's not being reported, then it's probably worthwhile doing.
And, again, the simplest way to do it is to say, well, if he or she isn't disclosing that information, it must be because their income is not actually, $60,000, it's $360,000, and so, you know, this is what their income should be deemed. That can have a salutary effect on getting the disclosure going.
Melanie Seneviratne: Okay.
The next question is: I'm a frontline worker that was mandated to work as a nurse. Can I have my retro income imputed to calculate child support?
Charles Fair: You know, I had a case that had a similar kind of issue. The other side was in a union environment and through the union negotiation process that dragged on for several years, eventually, the union member got a fairly hefty retroactive pay.
What was disturbing about that case is that there was a rush to settle it on improper disclosure - or incomplete disclosure - and certainly there was no disclosure of these impending negotiations and that was done by a mediator that was not particularly insistent on making sure there was full disclosure. The mediation kind of fell apart. And eventually what we did is we simply took that retroactive pay and allocated it to the year that it seemed to be allocatable to, and then recalculated the child and spousal support based on allocating the numbers where they're supposed to be. So it's not really a matter of imputing income in the same way, but it may seem like it's an imputation of income.
Melanie Seneviratne: Okay.
The next question I wanted to ask - or I'm going to ask - is how does financial disclosure work in the event that the disclosure was exchanged fairly early but then everything got parked to deal with the parenting matter? It may be that the financials may not be discussed for many more months as full focus is currently on the parenting matter.
So, in this case, how does the six months of most recent financial disclosure rules work? When this gets picked back up, does the new documentation need to be exchanged? Or do we go back to the original six months of disclosure that were exchanged at the onset of the separation?
Charles Fair: Well, this comes up, unfortunately, more often than you would expect, or than you would hope. And the bottom line is that the more recent stuff, it has to be updated and the court will order updated disclosure.
And this is for two reasons. One is, when it comes to child support in particular, the child support is a right of the child, and that is to be supported from the incomes of the parents as they are, not as they were six months or a year previously. So there is an obligation for continuing disclosure to make sure that the child support is appropriate for the parents' current income.
Second reason why it gets updated is because property division is as of the date of trial, not as of the date of separation. And so, changes in the assets and liabilities of the parties may affect the property division because the property division is done when everything is finally done, either at a trial or at a settlement. And that can be - it's not necessarily that the post-separation assets and liabilities are divided equally, but that is a presumption. And so, again, you want to be - this is where, in those cases, you want to make sure you're working closely with your lawyer to get good advice on how that works.
What you don't want to be doing is transferring assets into a friend's name or a family member's name to, kind of, keep them out of the picture.
That gets you into a lot of trouble if it happens.
Melanie Seneviratne: Okay.
Charles Fair: And that's where it gets caught, is, if there's early disclosure, then the later disclosure does it again, and somebody says, hey, what's going on here? So that's, unfortunately, the ongoing disclosure obligation is there until the bitter end, unfortunately.
Vanessa Farkas-Brahmakshatriya: Next question is: My ex is a high paid union employee and his contract states they can roll over up to 485 hours between vacation and overtime, banked hours, at 60 per hour. Does my ex have to disclose? Is that considered diverting income? Example, because his pay stubs do not document this extra income because it's in a separate payroll system.
Charles Fair: The basic rule is, everything that's related to financial stuff is disclosable. Whether it is shareable for spousal support is a slightly different question than whether it's shareable - or part of that share - the income for the calculation of child support.
And this is beyond the scope of what we can talk about tonight, but one of the concerns, you could say, well, there's no property to be divided, but you still have to provide the property disclosure because the decisions you make about your property can be relevant to the court deciding that you're parking your money in some way that doesn't make any sense, and you should be making that property available to produce an income.
That can happen if somebody has a lot of assets and they decide to park those assets in non income generating form and the court says, no, no, no, you can't do that. Or you can, I mean, we're not going to force you, but we'll deem your income as if you were properly allocating your assets.
And I think that that would probably be the answer in a situation where you've got rollover income from one year to the other, and that sort of thing. Somebody says, no, you know, at some point you may be obligated to take that income. Whether you choose to or not, the court is - that's difficult to for the court to force somebody to do that. But it is possible to simply impute the income as if the person has done it.
Melanie Seneviratne: Okay.
And the last question we have today is: Where is the best place to find information on spousal support and Section 9?
Charles Fair: Your lawyer?
Vanessa Farkas-Brahmakshatriya: I was thinking, I'm not sure if there is anything, like, in the Alberta Courts website that provides detailed information.
Charles Fair: Yeah, you know, this is beyond the scope of this today, but, you know, when it comes to spousal support, it's a lot more difficult than child support, because there's three questions that have to be answered.
Number one, is there entitlement to spousal support? And you take a look at the Divorce Act to see what those factors are that go into determining entitlement.
Secondly, there's a question of how much spousal support is payable.
Third question is how long that support is payable for. And then there's related questions like, okay, what about post separation increases or decreases in income, how does that affect spousal support? How does... new partners affect spousal support? The age of the recipient at the date of separation, that can affect spousal support. So spousal support, there's a lot of issues at play there.
If you go on to the federal government's website, I believe it's the Department of Justice, and you look up the Spousal Support Advisory Guidelines, I think there's something like 109 pages. It'll give you at least a starting point as to how spousal support is dealt with. Those guidelines are not binding on the court but they are often followed in settlement negotiations, and sometimes the courts do follow those guidelines. Those are, they are different than child support guidelines because they're not mandatory.
But that's probably a good place to start to get an idea of what the range of spousal support that courts typically order. Because that's how those spousal support guidelines came into place.
Melanie Seneviratne: Great. That's it for questions that we can take today.
Charles Fair: Well, thank you. It's been a pleasure, as always.
Vanessa Farkas-Brahmakshatriya: Yes, likewise. Thank you, Charles.
And to our participants, thank you very much for joining us and I hope that you found this helpful.
And there will be a recording available, and the link will go out to everyone who registered for this webinar.
Calgary lawyer Charles Fair brings over 30 years of experience to Fair Legal in criminal, family and civil litigation. Charles draws on his personal experiences related to each field of law which helps him to understand and relate with each of his clients. He is compassionate, caring, and will always be your champion for justice when life gets messy.