Can the Court “Guess” Your Income? Understanding Imputed Income in Alberta Family Law: The Case of Peters v Atchooay
- Misturah (Misty) Oshodi
- 3 days ago
- 3 min read
One of the most common disputes in family law is not whether support should be paid, but how much. And when one party’s income is unclear, inconsistent, or suspiciously low, the Courts may step in and do something many people don’t expect: assign (or “impute”) an income that differs from what the person claims to earn
The Legal Framework
Under the Federal Child Support Guidelines, courts may impute income in several circumstances, including where a party is:
Intentionally underemployed or unemployed;
Failing to provide adequate financial disclosure;
Earning income that does not reflect their true capacity; or
Diverting or hiding income.
The objective is straightforward: support reflect a payor’s actual earning capacity, not merely their reported income.
In Peters v Atchooay, the Alberta Court of Appeal delivered a significant decision that reshapes how courts assess imputed income and retroactive reductions in child support. But to fully appreciate its impact, we must understand where Alberta law stood prior, particularly in Hunt v Smolis-Hunt.
The Background of Peters v Atchooay
In Peters v Atchooay, Mr. Atchooay accumulated over $122,000 in child support arrears between 2014 and 2020. Years later, he sought a retroactive reduction, arguing that his income during that period was significantly lower. The lower court accepted this argument in part and reduced his arrears to approximately $43,111.37. Ms. Peters appealed.
The Old Approach: Hunt v Smolis-Hunt
Before Peters, Alberta courts followed the framework set out in Hunt v Smolis-Hunt. Under that approach, income was typically imputed only where the payor was intentionally underemployed or deliberately avoiding support obligations.
This “deliberate evasion” standard placed a relatively high burden on the recipient. It required proof not only of reduced income, but also blameworthy conduct. In practice, this created a gap: a payor could earn less than their true capacity yet avoid imputation if there was insufficient evidence of intentional avoidance.
The Shift in Peters v Atchooay
In Peters, the Court of Appeal rejected the restrictive approach in Hunt. Instead, it adopted a reasonableness test, aligning Alberta with the broader Canadian jurisprudence. The key question is no longer whether the payor acted in bad faith, but whether their employment situation is reasonable in light of their support obligation.
This marks a significant shift. Courts are now focused on earning capacity rather than intent, and bad faith is no longer a prerequisite for imputing income.
Disclosure: The Deciding Factor
While the legal shift is important, the outcome in Peters ultimately turned on a more fundamental issue: a complete failure to provide financial disclosure.
Mr. Atchooay failed to disclose his financial circumstances for years. made minimal voluntary payments; and attempted to rely on late disclosure to justify a retroactive reduction. The Court was clear that this approach is unacceptable. A payor cannot ignore disclosure obligations; and later seek the Court’s assistance to retroactively adjust support in their favour.
Retroactive Reduction and the Colucci Framework
The Court also applied the principles from Colucci v Colucci. To obtain a retroactive decrease in child support, a payor must first establish a material change in circumstances.
However, without timely disclosure, that threshold cannot be met. Mr. Atchooay failed to provide proper disclosure when his income allegedly changed. Accordingly, his application for retroactive reduction failed.
Imputation in Practice
Applying the new reasonableness standard, the Court found that imputing income was appropriate. The following key concerns were noted:
A sustained and unexplained drop in income;
Lack of evidence of efforts to secure employment;
Failure to meet support obligations; and
Conduct suggesting avoidance of enforcement.
The Outcome
The Alberta Court of Appeal allowed the appeal and overturned the reduction. It upheld an imputed income of $112,000.00, leaving Mr. Atchooay responsible for child support based on his imputed income.
Key Takeaways
1. Alberta has moved beyond Hunt: The focus is no longer on proving deliberate evasion, reasonableness now governs.
2. Earning capacity matters more than reported income: Courts will assess what you could earn, not just what you say you earn.
3. Disclosure is non-negotiable: Failure to disclose can defeat your claim entirely.
4. Retroactive reductions are exceptional: Courts will not reward delay or non-compliance.
Final Thoughts
Peters v Atchooay marks a clear evolution in Alberta family law. By moving away from the restrictive approach in Hunt v Smolis-Hunt, the Court has reinforced a child-focused principle: Support obligations are grounded in capacity, not convenience.
For litigants, the message is straightforward: be transparent, be proactive, and ensure that your financial reality aligns with your legal obligations.
Comments