Disclaimer: This article aims to provide educational information surrounding child support. It is not intended to serve as legal advice. Consult with a lawyer and exercise your discretion before taking action based on the information provided in the blog.

Child support is primarily based on income. However, what if your income isn’t as simple as a regular paycheque? For instance, if your compensation includes bonuses, how does that affect your child support obligations?

(We have previously discussed child support, self-employed parents and imputing income in these articles.) 

This article will explore how bonuses are factored into child support calculations and the impact they can have on both the amount and timing of payments.

What sources of income are included in the Federal Child Support Guidelines?  

In Ontario, for married parties, child support is calculated based on the Federal Child Support Guidelines, which defines what is included as income. For unmarried parties, child support is determined under the Family Law Act.  Courts usually start with Line 15000 of your income tax return (your total income), but it does not stop there.

The Guidelines consider more than just your salary. They include commissions, dividends, pensions, and, yes, bonuses. If this increases your overall earnings, it will generally be included in the calculation of your income for support purposes.

Is my bonus income included in my annual income when determining support payments? 

Generally speaking, yes. Courts consider regular and performance-based bonuses as part of your income. If you consistently receive an annual payout, even if the amount varies, it will likely be included.

However, the court also looks at the nature and predictability of the bonus:

• Consistency – Is this a recurring part of your compensation?
  
• Predictability – Can you reasonably expect it each year?
  
• Purpose – Was it tied to your regular performance, or was it a unique event?

For example, in Knapp v. Knapp, the payor argued that his bonus should not be included as income when determining his ability to pay child support. The reasoning was that it was his first in four years and that future bonuses were not guaranteed. The court disagreed, noting that the current bonus impacted his ability to pay support, even though future bonuses weren’t guaranteed. Future support could be adjusted if his income changed materially.

How does irregular income impact the timing of child support payments? 

When income is irregular or includes periodic commissions, determining when your support is paid can change. Courts aim for fairness, taking into account your cash flow and the predictability of your income.

For example, in Easton v. Coxhead, the husband earned a base salary plus predictable bonuses that could make up half his income. He argued that he should share the bonus only when it was received rather than paying monthly support based on an estimated annual total. The court agreed that sharing a bonus upon receipt can be the fairest approach, especially when income fluctuates.

However, your bonuses may be regular and can be reasonably expected each year. In that case, the court would likely calculate monthly support payments based on your total expected income, even if the bonus hasn’t been received yet. When the bonus is unpredictable, we’ve seen that the court may order a lump sum adjustment to support after the bonus is actually paid.

Key Takeaways & Factors to Consider When Calculating Child Support

• Count on your bonus being included in your income, but the nature, consistency, and predictability of the bonus play an important role. Courts will assess whether it’s a regular part of your compensation or a one-time event.
• Cash flow concerns are valid. Courts recognize that paying support based on income you haven’t yet received can create financial strain. If your bonuses make up a significant portion of your income, courts may allow for adjustments to support when the bonus is paid out.
• Be transparent and provide a complete financial disclosure. Courts expect you to disclose all sources of income, including bonuses and other irregular income, to ensure fair support calculations.
• Get legal advice. We recommend consulting a lawyer if your income fluctuates or includes large or unpredictable payments. We can help you structure support payments to align with your income and avoid costly legal disputes.

Plat Simionati LLP: Family law is what we do, and we do it well.

At Plat Simionati LLP, we specialize exclusively in family law. Our services cover a range of family law matters, including child and spousal support, property division, and more.

Besides traditional family law services, we are also happy to offer collaborative family law and mediation services. 

We know that co-parenting after a separation or divorce can be complex. Regardless of what you and your family are facing, our team is here to provide strategic advice. 

Family law is what we do, and we do it well.