Child support in Alberta is based on income. But what happens when a parent quits a job, takes a lower-paying position, stops working, or simply does not earn what they are capable of earning? In those cases, the court can “impute” income, meaning it can set child support based on what the parent should be earning rather than what they report on their tax return.
For more than 20 years, Alberta made this very hard to do. That changed in 2022, when the Alberta Court of Appeal decided Peters v Atchooay, 2022 ABCA 347 and adopted a new reasonableness test. At OP Lawyers LLP, our Calgary family lawyers regularly advise parents on both sides of this issue: parents who are owed child support, and parents whose income has dropped and who want to know what they will be expected to pay.
Key Takeaways
- Alberta courts no longer need proof that a parent is deliberately trying to avoid child support before imputing income.
- The question now is whether a parent’s decision to earn less than they are capable of earning is reasonable in all the circumstances.
- The parent who is earning less generally has to prove that their lower income is reasonable, using real evidence.
- Parents are not required to maximize their income, work overtime or hold a second job, but personal career goals do not outrank a child’s right to support.
- A parent who wants to reduce child support, especially retroactively, must provide timely and complete financial disclosure.
What Does “Imputing Income” Mean?
Child support in Alberta is calculated under the Federal Child Support Guidelines (for married spouses under the Divorce Act) or the Alberta Child Support Guidelines (for unmarried parents under the Family Law Act). The wording of the two is essentially the same, and both start with the paying parent’s income.
Section 19 of the Federal Child Support Guidelines allows a court to impute income in several situations, including where a parent:
- Is intentionally under-employed or unemployed
- Is exempt from paying income tax
- Has diverted income to avoid support
- Has failed to provide income information when legally required to
- Unreasonably deducts expenses from income
The most common and most disputed ground is the first one: intentional under-employment or unemployment under section 19(1)(a). That is the ground the Court of Appeal reconsidered in Peters v Atchooay.
The Old Alberta Test: Deliberate Evasion
In 2001, the Alberta Court of Appeal decided Hunt v Smolis-Hunt. The majority held that income could be imputed for under-employment where the paying parent had deliberately set out to evade their child support obligations. This came to be known as the “deliberate evasion test”.
In practice, the Alberta test placed a heavy burden on the parent receiving support, who rarely has any insight into the other parent’s work decisions, and it made it difficult to obtain fair support for children even where a parent’s income had dropped sharply for no good reason.
The Facts in Peters v Atchooay
Ms Peters and Mr Atchooay were in a common-law relationship and have two children who lived with Ms Peters after separation. In 2014, Mr Atchooay was ordered to pay child support based on an income of $112,000, the only income information available at the time.
Mr Atchooay paid very little voluntarily over the next six years, and arrears grew to more than $122,000. In 2021, he applied to reduce his child support retroactively to 2015, relying on his much lower reported income for those years. He gave several reasons for the drop, including the loss of his driver’s licence and mental health struggles, but provided no medical evidence and little evidence of efforts to find work. The chambers judge reduced his arrears to about $43,000.
Ms Peters appealed. A five-judge panel of the Court of Appeal allowed the appeal, overturned Hunt v Smolis-Hunt, and held that no retroactive reduction of his base child support should have been made. Income was imputed to Mr Atchooay at $112,000 for 2015 to 2020.
The New Test: Is the Lower Income Reasonable?
The Court of Appeal set out a three-step framework that Alberta courts now apply when under-employment or unemployment is raised:
- Is the parent intentionally under-employed or unemployed? “Intentionally” simply means voluntarily. It does not apply where income dropped through circumstances truly outside the parent’s control, such as a layoff, reduced hours or termination without cause. However, if a parent stays under-employed for too long after an involuntary job loss, that may eventually become unreasonable.
- Does a listed exception apply? Income will not be imputed where the lower income is required by the needs of a child, or by the parent’s reasonable educational or health needs. These exceptions are not automatic or permanent.
- Should the court use its discretion to impute income? If the reduced income is voluntary and no exception applies, the court asks whether the decision was reasonable having regard to all the circumstances, and if not, how much income to impute.
The Court also confirmed that bad faith is no longer necessary, but it is still sufficient. It will never be reasonable for a parent to reduce their income for the purpose of avoiding child support.
How Courts Decide What Is “Reasonable”
The Court of Appeal gave Alberta judges a non-exhaustive list of guiding principles:
- Duty to work. A healthy parent who can work must look for work, even lower-paying work. A highly skilled parent cannot hold out indefinitely for a job that matches their previous salary or title.
- Earning capacity is the starting point. Courts compare actual income to what the parent is capable of earning, based on age, education, experience, skills, health, availability of work and other obligations.
- No duty to maximize income. A parent is not automatically required to take the highest-paying option, work overtime or hold a second job. A reasonable career choice will not lead to imputed income.
- The child comes first. Self-fulfilment is a factor, but it does not outweigh a child’s right to support. The bigger the drop in support, and the bigger its impact on the child, the more compelling the justification must be.
- Pre-separation arrangements are not decisive. An agreement made during the relationship, such as one parent pursuing a low-paying career, carries less weight after separation.
- Parenting time matters, but is not a shield. A parent who reduces their work to spend more time with the children may have a valid reason, but courts are alert to parents who rely on shared parenting to justify an unreasonable drop in income.
- Reasonableness can change over time. A decision that was reasonable at one point may not remain reasonable for the entire period that support is owed.
When income is imputed, the amount must be grounded in the evidence. It does not always have to be the parent’s full earning capacity. A figure between actual income and earning capacity may be more appropriate in some cases.
Who Has to Prove What?
In an initial child support application, the parent seeking to impute income must first show some evidentiary basis, such as a sustained drop in the other parent’s income. This is usually a low bar. The burden then shifts to the other parent to justify their actual income.
In a variation application, such as when a paying parent asks to reduce support, the burden stays on the parent asking for the change. They must prove that their lower income was involuntary, falls within an exception, or is reasonable in all the circumstances.
Either way, bare assertions are not enough. If a parent says a health condition prevents them from working, medical evidence will generally be required for the whole period. If they say they cannot find work, they must show their job search efforts.
Financial Disclosure and Retroactive Child Support
Peters v Atchooay also applied the Supreme Court of Canada’s framework from Colucci v Colucci, 2021 SCC 24, for applications to reduce child support retroactively. The key lesson is simple: financial disclosure is everything.
- A paying parent cannot rely on late disclosure to show a change in circumstances. If a parent hid or ignored their income information for years, they generally cannot later point to a drop in income to reduce what they owe.
- Where a change in circumstances is proven, a retroactive reduction presumptively goes back only to the date the other parent received effective notice, typically when meaningful financial disclosure was provided, and no more than three years before formal notice.
- Vague statements, such as “I can’t earn what I used to,” are not effective notice without actual financial information.
For paying parents, the practical message is to disclose changes in income promptly and apply to vary the order without delay. For receiving parents, it means unpaid support built up while the other parent stayed silent is likely to be protected.
How OP Lawyers LLP Can Help
Imputed income disputes are often the single biggest factor in how much child support is paid. The outcome usually turns on the quality of the evidence, which is why early advice from a Calgary child support lawyer can make a significant difference.
At OP Lawyers LLP, our Calgary family lawyers can help you:
- Determine whether income should be imputed to the other parent, and how much
- Gather and present evidence of earning capacity, job search efforts or health limitations
- Respond to a claim that you are under-employed or unemployed
- Apply to vary child support after a job loss or change in income
- Pursue or defend a claim for retroactive child support or child support arrears
- Negotiate a child support agreement or represent you in the Alberta Court of Justice or the Court of King’s Bench
If you have questions about child support, imputed income or child support arrears in Calgary or elsewhere in Alberta, contact OP Lawyers LLP to book a consultation with an experienced Calgary family lawyer.
Frequently Asked Questions
Can I reduce my child support in Alberta if I quit my job?
Not automatically. If you leave a job voluntarily, the court will ask whether your decision was reasonable in all the circumstances. If it was not, the court can impute income to you at the level you are capable of earning.
Do I have to work overtime or take a second job to pay child support?
Generally, no. Alberta courts do not require parents to maximize their income. However, you must make reasonable efforts to earn what you are capable of earning, and your career choices must take your child’s needs into account.
What if I lost my job through no fault of my own?
An involuntary layoff or termination is not intentional under-employment. However, you are expected to look for new work, keep records of your efforts, and provide financial disclosure promptly. Remaining unemployed for an extended period may eventually be found unreasonable.
Does Peters v Atchooay apply to unmarried parents?
Yes. The Court of Appeal confirmed the same analysis applies under both the Federal Child Support Guidelines and the Alberta Child Support Guidelines.
Disclaimer: This blog post is intended for informational purposes only and does not constitute legal advice. For advice specific to your circumstances, please consult a qualified Calgary family lawyer at OP Lawyers LLP or another legal professional.