Not All Income Is Equal: How Alberta Courts Assess Income for Child and Spousal Support

A common misconception in family law is that child support and spousal support are calculated by simply taking a payor’s total income from their tax return (often Line 15000) and plugging that number into a calculator.

In Alberta, that approach is often incomplete and, in some cases, misleading. While Line 15000 is usually the starting point, it is not always the final answer. Courts are required to consider how income is earned, whether it is recurring, whether it reflects real cash flow, and whether the payor has control over how and when it is received. As a result, two people with the same reported income may have very different support obligations depending on the type of income involved.

This distinction is particularly important where income includes dividends, rental income, business income, or other tax-preferred or irregular sources. Family law software is designed to account for these differences, but only if income is properly characterized in the first place.

Child Support: Guidelines Income Is Not Always Mechanical

Child support in Alberta is governed by the Federal Child Support Guidelines, which generally begin with a parent’s “total income” as reported to the CRA. However, the Guidelines expressly allow courts to adjust income where the tax return does not fairly reflect a parent’s actual ability to contribute to their child’s support. Courts have consistently applied this principle, particularly in cases involving corporations, investments, and business structures.

Employment Income: Usually the Baseline

Employment income, such as salary or hourly wages, is typically the most straightforward form of income for child support purposes. It generally reflects predictable, recurring cash flow and is usually captured accurately in total income.

That said, complications can arise where employment income includes bonuses, commissions, or significant overtime. In those cases, Alberta courts often examine income patterns over time and may average income over multiple years if relying on a single year would distort the payor’s true earning capacity.

Corporate Income, Dividends, and Personal Benefits

Where income flows through a corporation, courts take a much closer look at what a payor is actually receiving.

For example, in Wildeman v Wildeman, 2015 ABQB 195, the Court addressed a situation where the payor received economic benefits through closely held corporate structures involving both himself and his new partner. Rather than relying solely on reported personal income, the Court examined whether the payor was receiving personal benefits and value through the corporation, including expenses paid on his behalf.

The Court confirmed that where a parent derives value through a corporation – whether by dividends, shareholder benefits, or personal expenses paid by the company – the Court is entitled to look past how the income is structured to capture the real economic benefit available for child support. The decision reinforces a key principle in Alberta family law: income determination focuses on economic reality rather than labels or technical structure, particularly where the payor has control over how income is structured.

This analysis frequently arises where income is paid as dividends rather than salary, where business expenses reduce taxable income without reducing cash flow, or where income is retained within a corporation in a way that affects support obligations.

 

Investment Income, Rental Income, and One-Time Amounts

Investment income and rental income are generally included in child support calculations, but not always at face value.

In Davidson v Davidson, 1998 ABQB 800, the Court was asked to fix child support based on all cash received by the payor in a particular year, including employment income, dividends, interest, rental income, and capital gains. Doing so would have resulted in a very high income figure for that year.

The Court declined to simply adopt the highest possible number. Instead, it emphasized that some of the investment-related income was tied to assets that were being divided as part of the property settlement and would not necessarily continue in the future. The Court fixed income at a lower level that better reflected the payor’s ongoing earning capacity, rather than a one-time spike.

The principle from Davidson remains highly relevant today: while dividends, rental income, and capital gains can be included in income, courts may adjust or normalize those amounts where they are non-recurring or not a reliable indicator of future ability to pay support.

Spousal Support: A Broader and More Flexible Analysis

Income characterization becomes even more nuanced in the spousal support context. Unlike child support, spousal support is not determined by a strict table based solely on income. Whether under the Divorce Act or Alberta’s Family Law Act, courts focus on means, needs, and ability to pay, with particular attention to cash flow and tax consequences.

While courts often start with income concepts similar to those used for child support – frequently using the Spousal Support Advisory Guidelines as a framework – they exercise significantly greater discretion to ensure the outcome reflects financial reality.

This approach is illustrated in GSH v KRH, 2017 ABQB 807, which was a spousal support variation case following a substantial change in income. The Court emphasized that spousal support cannot be determined mechanically from a single gross income figure. Instead, it reassessed support based on updated financial information, focusing on the parties’ after-tax positions and real ability to pay, rather than treating every dollar of reported income identically. Importantly, the Court placed considerable weight on the payor’s existing child support obligations, acknowledging that those payments directly affected what the payor could realistically afford to pay in spousal support.

The decision reflects a broader Alberta trend: tax-preferred income, irregular income, or non-cash amounts may be weighted differently in spousal support analysis where they do not translate into available cash or sustainable means.

What Alberta Courts Consistently Emphasize

Across Alberta cases, several themes recur.

For child support, courts focus on real economic benefit, not just what appears on a tax return. Where income is controlled, diverted, or reduced through corporate structures or deductions, courts may adjust or impute income to reflect true capacity.

For investment and rental income, courts are cautious about relying on single-year spikes or income streams tied to assets that may not continue to generate income in the future. Where appropriate, income from these sources is often averaged over a period of time to better reflect ongoing earning capacity.

For spousal support, courts place greater emphasis on cash flow, after-tax outcomes, existing child support obligations, and overall fairness, recognizing that different types of income can affect the parties very differently in practice.

These principles apply regardless of whether support is being determined at the outset or revisited on a variation application.

Above all, these cases confirm that outcomes are highly fact-driven. Disclosure quality, recurrence of income, and control over how income is characterized often matter more than whether income is labelled as employment, dividends, or rental income.

The Bottom Line

Support calculations in Alberta are not just accounting exercises. They are fairness exercises, grounded in the realities of how income is earned, controlled, and experienced by the parties.

Two people with the same Line 15000 income may have very different support obligations depending on whether that income comes from a steady paycheque, dividends from a controlled corporation, rental properties with significant deductions, or one-time investment gains. Properly identifying and analyzing income at the outset can reduce conflict, avoid unfair results, and minimize the risk of future court applications.

If income is complex, careful legal advice early on can make a meaningful difference.

Case Law Links:

Wildeman v Wildeman, 2015 ABQB 195 (CanLII), <https://canlii.ca/t/ggtd4>

Davidson v. Davidson, 1998 ABQB 800 (CanLII), <https://canlii.ca/t/5pz2>

GSH v KRH, 2017 ABQB 807 (CanLII), <https://canlii.ca/t/hpgz1>

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