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peter8688 01-04-2006 03:44 PM

Impact of Stocks on Child Support
My ex has come back to me claiming that I need to include a year end profit estimate for a stock option I have, and that this needs to be added on to my income for purposes of establishing the level of support payment.
The stock option package I have was given to me by the company I work for, and occured 2 years after the divorce.
I have never heard of this. Is this something new and is in fact a requirement?

logicalvelocity 01-04-2006 04:38 PM


Your stocks may effect or increase your reported income on line 150 of your respective income tax return,

Line 150 of your tax return is used to cross reference the amount of payable child support using applicable tables.

If your income fluctuates from year to year, it's a general rule of thumb to take the last 3 taxation years income taken from line 150 of same returns to determine an average income and cross reference this against child support guidelines.

(year 1 + year 2 + Year 3 = $XXXXX dollars divide by 3)

Ontario child support guidelines can be found here.

peter8688 01-04-2006 04:47 PM

Thanks. I do understand the averaging concept but the income is pretty constant. The concern I have is that I am looking at my stock option as a means to support retirement. I do not have an intention to cash it in for quite some time but now I'm being asked to include the potential benefit of this in my current income.
This would increase the support payment significantly and put me at potential risk in being able to keep my house. Can the 'book' profit of unrealized income be included in this way?

logicalvelocity 01-04-2006 05:12 PM

I do not think you have to include the stocks or be forced to include this into your income for respective income tax especially if they remain as an assest.

You will have to include same when you actually do collapse the investment. This would be their time to vary the child support not before.

Its a case of putting the wagon before the horse. They are an asset not an income at the current time. Would you include the value of RSP's or pensions as income even though you have not cashed them in.

Payable Child support is generally calculated from PAST income not future. No one can foresee into the future.

Sounds like they are attempting to bully or coerce you into upping your income by including the stocks as potential income for payable child support purposes.

Remember this also, if an order is in place with this higher amount, you will have to take the matter back to court to vary the order to reflect your actual earnings once things settle down.

Keep a stance.

logicalvelocity 01-04-2006 06:51 PM


Here is a link to Child Support Guidlines for claims brought forth under the Family Law Act of Ontario.


Determination of annual income

15. (1) Subject to subsection (2), a parent’s or spouse’s annual income is determined by the court in accordance with sections 16 to 20. O. Reg. 391/97, s. 15 (1).


(2) Where both parents or spouses agree in writing on the annual income of a parent or spouse, the court may consider that amount to be the parent’s or spouse’s income for the purposes of these guidelines if the court thinks that the amount is reasonable having regard to the income information provided under section 21. O. Reg. 391/97, s. 15 (2).

Calculation of annual income

16. Subject to sections 17 to 20, a parent’s or spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T1 General form issued by the Canada Customs and Revenue Agency and is adjusted in accordance with Schedule III. O. Reg. 446/01, s. 4.

Pattern of income

17. (1) If the court is of the opinion that the determination of a parent’s or spouse’s annual income under section 16 would not be the fairest determination of that income, the court may have regard to the parent’s or spouse’s income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years. O. Reg. 446/01, s. 5.

Non-recurring losses

(2) Where a parent or spouse has incurred a non-recurring capital or business investment loss, the court may, if it is of the opinion that the determination of the parent’s or spouse’s annual income under section 16 would not provide the fairest determination of the annual income, choose not to apply sections 6 and 7 of Schedule III, and adjust the amount of the loss, including related expenses and carrying charges and interest expenses, to arrive at such amount as the court considers appropriate. O. Reg. 391/97, s. 17 (2).

Shareholder, director or officer

18. (1) Where a parent or spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the parent’s or spouse’s annual income as determined under section 16 does not fairly reflect all the money available to the parent or spouse for the payment of child support, the court may consider the situations described in section 17 and determine the parent’s or spouse’s annual income to include,

(a) all or part of the pre-tax income of the corporation, and of any corporation that is related to that corporation, for the most recent taxation year; or

(b) an amount commensurate with the services that the parent or spouse provides to the corporation, provided that the amount does not exceed the corporation’s pre-tax income. O. Reg. 391/97, s. 18 (1).

Adjustment to corporation’s pre-tax income

(2) In determining the pre-tax income of a corporation for the purposes of subsection (1), all amounts paid by the corporation as salaries, wages or management fees, or other payments or benefits, to or on behalf of persons with whom the corporation does not deal at arm’s length must be added to the pre-tax income, unless the parent or spouse establishes that the payments were reasonable in the circumstances. O. Reg. 391/97, s. 18 (2).

Imputing income

19. (1) The court may impute such amount of income to a parent or spouse as it considers appropriate in the circumstances, which circumstances include,

(a) the parent or spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of any child or by the reasonable educational or health needs of the parent or spouse;

(b) the parent or spouse is exempt from paying federal or provincial income tax;

(c) the parent or spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;

(d) it appears that income has been diverted which would affect the level of child support to be determined under these guidelines;

(e) the parent’s or spouse’s property is not reasonably utilized to generate income;

(f) the parent or spouse has failed to provide income information when under a legal obligation to do so;

(g) the parent or spouse unreasonably deducts expenses from income;

(h) the parent or 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

(i) the parent or spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust. O. Reg. 391/97, s. 19 (1); O. Reg. 446/01, s. 6.

Reasonableness of expenses

(2) For the purpose of clause (1) (g), the reasonableness of an expense deduction is not solely governed by whether the deduction is permitted under the Income Tax Act (Canada). O. Reg. 391/97, s. 19 (2).


20. Where a parent or spouse is a non-resident of Canada, the parent’s or spouse’s annual income is determined as though the parent or spouse were a resident of Canada. O. Reg. 391/97, s. 20.

Are your stock holdings part of a self directed RSP? If so I believe they have to be excluded.

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