Working out child support arrangements can be difficult in the best of times. A difficult situation can be made even more difficult when one parent hides income or exaggerates their living expenses. The courts typically rely on a paying parent’s T1 tax return to determine income. But that’s not the only avenue the courts can take to determine how much a paying parent should have to pay. In a recent case from British Columbia, a mothers credibility was called into question after it was found that she grossly understated her income while inflating her expenses.
The parents have a single child, who was 10-years-old at the time of the trial. She lives primarily with the father, and the mother had been ordered to pay child support based on an annual income of $200,000. The case was brought to court after the father sought retroactive child support dating back to January 1, 2016. Meanwhile, the mother claimed that her income is actually just over $5,000 per year.
A Material change in circumstances
The mother said that since the original support order was made, her income has been drastically reduced, having not exceeded $6,000 per year. As a result she asked for the court to have another look at her income and reduce child support obligations accordingly.
The mother testified that she earns no significant income, relying on her friends to cover her living expenses. Her living expenses, amounting to $414,206.88, were extraordinary when compared to her declared income of $5,806. She told the courts that the shortfall between her income and expenses is funded through both unsecured and secured debts that she continued to accumulate on a monthly basis. However, she also lists to properties worth a combined $5,312,000.
The mother’s accounting was concerning to the court. She listed over $3.7 million in secured debts, including mortgages and mortgage loans, as well as $1.5 million in unsecured debts including property tax, Revenue Canada debts, and personal loans.
The father’s position
The father highlighted a number of issues with the mother’s statements. He noted that she swore to spending $7,200 per year on food as well as $2,400 per year on restaurant bills, which alone amounts to nearly half of her income. He also questioned the $1,200 she listed for pet food since she owns a pet food company.
The father also noted that the mother failed to list her business interests in her financial statements as well as income from appearances on Food Network television shows, which she advertised on her Instagram account. She also appeared in two seasons of a reality TV show and did not list the income from those shows on her tax return.
The father provided a number of examples from the mother’s Instagram account, describing them as
“… demonstrating the luxurious life that the (mother) continues to enjoy despite her claims of hardship. Attached hereto as exhibit “C” are true copes of screenshots of the (mother’s) Instagram account depicting her vacations to Los Angeles (including time spent in luxury hotels such as Peninsula and Beverly Hills hotels), Venice Beach, Palm Desert (including time spent at the luxury hotel, The Ritz Carlton), Napa Valley and Las Vegas (including time spent at the luxury hotels Wynn and Encore), boating trips to Salt Spring Island, meals at Spago, attending the spa at the Fairmont Hotel in Whistler, skiing trips, a baseball game in Seattle, hosting champagne brunches at Jody’s Maison, and of caviar for breakfast.”
The court’s analysis
The court was critical of the mother’s history of non-disclosure as well as her exaggeration of expenses and liabilities. The court refused to accept her income of $5,000, imputing it at $200,000 per year, leaving her obligated to pay child support in the amount of $1,693 per month.
To speak with an experienced Windsor lawyer about high-asset divorce issues, call Jason P. Howie at 519.973.1500 or contact us online. Many of our clients are referred to us by former and current clients, as well as by lawyers, accountants and other professionals.