I found this case on the Law Society web site. Does this mean the Law Society also encourages "fraud", and encourage people to evade their child support obligations, on their website?:
Stock options not considered income for child support purposes
In a Guidelines test case, an Ontario Superior Court Judge has ruled that profits from employee stock options and vested unexercised stock options do not form part of "annual income" for the purpose of calculating child support.
The case involved a couple who divorced in 1991. The father, the vice-president of a major high-tech company, was required by the terms of the divorce settlement to pay $3,000 per month in child support for his three children. In 1993, he exercised some stock options and sold shares resulting in a profit of $385,048, and in 1999 he exercised more stock options and sold shares which resulted in a profit of $3,181,315. He still retained further stock options. His annual income before stock options was $377,000. The mother applied to increase the amount payable for child support, arguing that the money realized from the exercise of stock options and sale of shares should be included in income for the purpose of calculating child support.
Mr. Justice Douglas Rutherford relied on s. 17(1)(c) of the Child Support Guidelines in excluding from income the proceeds from the sale of shares in 1993 and 1999. He reasoned that "they are large amounts which do not form a pattern of ‘income’," and that "these large elements of the respondent’s wealth have come into his hands in relatively recent years and this is not one of those cases in which the children may now be deprived of a high-end lifestyle which they enjoyed before the divorce . . . the children have always been more than adequately supported."
Justice Rutherford further refused to impute income to the father based on the valuation of money which could be realized annually by exercising vested share options and selling these shares, reasoning that "that would be to take the value of property which is not income and treat it as income."
References:
Arnold v. Washburn, [2000] O.J. No. 3653 (S.C.J.), online: Quicklaw (OJRE).
C. Schmitz, "$3.5 M in Stock-Option Profits Don’t Count for Child Support" The Lawyers Weekly, vol. 20, no. 21 (October 6, 2000), pp. 1, 11.
Date digested: October 18, 2000
Found at:
http://library.lsuc.on.ca/GL/stay_i... considered income for child support purposes