The latest Alberta Court of Appeal decision in Peters v. Atchooay, 2022 ABCA 347, has changed how imputing income for spousal or child support will be decided in Alberta. The previous “deliberate evasion test” approach, which required proof of specific intent to avoid child support obligations, has been replaced with a “reasonableness test.”
The Court decided that the test should be replaced with a test of reasonableness when imputing income under s 19(1)(a) for child support. They provided four reasons for this conclusion:
- the principles of statutory interpretation do not support the deliberate evasion test;
- the test has proven to be impractical and burdensome;
- the modern approach to child support emphasizes the best interests of children, and
- Alberta is the only province in Canada with this test, while other provinces use the reasonableness test.
The Court concluded that the standard should be same as the rest of Canada. The court’s decision promotes fairness and places the burden on the payor opposing imputation to show that a drop in historical income was beyond their control and not voluntary. The decision also emphasizes the importance of timely financial disclosure and outlines a three-factor application for considering imputing income under Section 19(1)(a) of the Child Support Guidelines.
The Court provides an analysis for determining whether income should be imputed to a parent under s 19(1)(a) for child support purposes.
- Firstly, it is considered whether the parent is intentionally under-employed or unemployed, with examples of when imputation is not available provided.
- Secondly, the exceptions to imputation listed in s 19(1)(a) are examined.
- Lastly, the court exercises its discretion to impute income when the voluntary under-employment or unemployment is not covered by the exceptions.
The Court also provided a non-exhaustive list of principles which provide guidance for determining whether to impute income under section 19(1)(a). These include the duty to work, consideration of earning capacity, discretion, the obligation to support children, contextualization of reasonableness through agreements and parenting arrangements, and the importance of financial disclosure. Reasonableness is not fixed in time, and the onus rests on the party opposing imputation to prove certain circumstances or establish reasonableness. Objective evidence is required at each stage of the analysis.
The court further notes that not all cases of a reduction in income will support imputing income to the payor parent, and that personal goals and lifestyle choices do not take priority over a parent’s obligation to financially support their children. This decision has brought Alberta in line with other Canadian provinces and promotes a child-centered approach to child support.
One additional effect of this decision will be imputing income to stay at home parent if they have the capacity to be employed even at an entry level position. The current ranges of such imputing estimated by legal counsel are between $20,000 – $40,000 annually.
