Child Support When You're Self-Employed in Ontario

The Challenge of Self-Employment and Child Support

Calculating child support when a payor is self-employed is one of the most contested issues in Ontario family law. Unlike salaried employees — where income is easily verified through T4 slips — self-employed individuals have significant flexibility in how they report income and structure their compensation.

Determining Income for the Guidelines

Under the Federal Child Support Guidelines, income for self-employed persons is generally determined using Schedule III adjustments to the payor's total income as reported on their federal income tax return. Common adjustments include:

• Adding back personal expenses claimed as business expenses (personal vehicle use, meals, home office beyond legitimate portions)
• Adding back depreciation (CCA) where it exceeds actual economic depreciation
• Averaging income over several years where income is volatile

Income Through a Corporation

Many self-employed individuals operate through a corporation and draw salary or dividends at their discretion. Courts look through the corporate veil to assess the total income available to the payor — including retained earnings left in the corporation if the retention is not justified by the legitimate needs of the business. Section 18 of the Child Support Guidelines specifically addresses corporations controlled by the payor.

Imputing Income

Courts have the power to "impute" (attribute) income to a payor that is higher than their reported income if the court finds they are deliberately underreporting income or are intentionally underemployed. Imputation can be based on the payor's earning capacity, historical income levels, lifestyle, and other evidence of financial resources.

Disclosure Obligations

Self-employed payors must provide: their tax returns for the three most recent years, notices of assessment, corporate financial statements, and any other documentation needed to determine their income. Failure to make full disclosure can result in adverse inferences by the court.