Future support payments must rely on financial disclosures, not past tax returns: BC Court of Appeal

In a recent spousal and child support case, the BC Court of Appeal ruled that future income must be determined based on financial disclosures rather than simply relying on previous tax returns.

The dispute in Chandler v. Chandler, 2024 BCCA 325, centred on the calculation of incomes for support purposes, particularly one party’s earnings from a physiotherapy business.

The appellant, Dr. Christopher Chandler, challenged the trial court's method of determining his former spouse’s income, arguing that the judge incorrectly applied s. 16 of the Federal Child Support Guidelines to assess the income of his former spouse, Jocelyn Chandler. He claimed that s. 18, which addresses corporate income, should have been used, as Jocelyn runs her business through a personal services corporation and a partnership. Additionally, Dr. Chandler opposed the trial judge’s decision to predetermine Jocelyn’s income for 2023 and beyond based on her past tax returns, contending that her future income should be determined through annual financial disclosures.

The Court of Appeal upheld the trial judge’s determination of Jocelyn’s income for 2020 to 2022, stating that the available financial information at the time was limited but sufficient to justify the application of s. 16. The court agreed that there was no basis to use s. 18, which would have considered pre-tax corporate income, as the financial records were incomplete and Jocelyn had only recently restructured her business.

However, the appeal court found that the judge erred in setting Jocelyn’s income for 2023 onward based solely on her 2022 tax return. The appeal court noted that future income should be calculated based on updated financial disclosures, as required by an earlier court order. It ruled that Jocelyn’s income for 2023 and subsequent years must be reassessed annually using the most current financial information available.

The family dispute has been ongoing since the couple’s separation in 2017 and has involved numerous court hearings on issues such as parenting, property division, and financial support. Both parties have faced financial strain due to extensive litigation.

The appeal court highlighted the complexity of determining support payments for individuals with self-employment or business income and reinforced the need for complete and up-to-date financial records in such cases. The court’s ruling allowed for the recalculation of future support payments, ensuring that the most accurate and current financial information is used in determining income for support purposes.