Financial Gift Imputed As Income for Support Purposes


In determining a spouse’s income for the purposes of calculating child support and spousal support, gifts received from third parties are generally not included as income. However, the Court does have discretion to consider the circumstances surrounding a particular gift and to impute income in appropriate cases. The Court addressed this issue in the recent decision of Horowitz v Nightingale, 2015 ONSC 190 (                                                                                                                                                                                                                                                                                                                           

In this case, a husband and wife had been married for 16 years and had three children with special needs. The husband was a lawyer and partner of a law firm. The wife was a chiropractor who had been a homemaker until 2011, when she reopened her chiropractic practice. When they separated, the wife brought an application for temporary spousal and child support. There was no question as to the wife’s entitlement to spousal support. The issue was with the computation of the husband’s income.

One of the issues for the Court to decide was whether an annual gift of money could be considered income. For at least the last 8 years of the marriage, the husband had received $50,000 per year from his parents. The wife wanted the gift included in the calculation of the husband’s annual income. It was the husband’s position that the annual gift from his parents was not income for support purposes.

The Court looked to the evidence and found that for 8 years the husband’s parents had given him $50,000 per year, as confirmed in an email from the husband to the wife. The husband testified that he used the funds exclusively for family expenses and this had contributed to the lifestyle the family came to enjoy. Although the Court conceded that there was no obligation for the husband’s parents to continue to making the gifts, there was no evidence to indicate that they intended to terminate the annual gifts. The Court therefore concluded that the gifts were likely to continue to be made into the immediate future.

The circumstances were therefore sufficiently unusual to constitute appropriate circumstances to impute the $50,000 annual sum to the husband for the purposes of the calculation of child support. Justice Douglas also found that the same principles applied to the calculation of spousal support because there is no mechanism for income determination in the Divorce Act. The $50,000 was further “grossed up” in both instances as the husband had received it on a tax-free basis.

This decision represents a marked departure from existing case law on this issue, For more information about child support click here. For more information about this case, or if you are currently in a dispute over support, contact Jason P. Howie online or at 1-800-335-7511.

To read the full decision, click here.          

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