Imputing Income Part II

Intentional Underemployment/Unemployment

By Danielle Sawh

This is the second article in my series on “Imputing Income”, which will examine imputing income in circumstances where a party is intentionally underemployed or unemployed. For a general overview of the principles of imputing income, please see the first article in the series here. 

Basic Principles

The underlying principle in intentional underemployment cases is that a parent must earn what they are capable of earning. There is a duty on parents to seek employment where they are healthy and able to do so. Separated parents have an obligation to financially support their children and they cannot avoid that obligation by a self-induced reduction of income.  

A party who has a support obligation is intentionally underemployed if that person voluntarily chooses to earn less than they are capable of earning. A party who has a support obligation is intentionally unemployed when they choose not to work but are capable of earning an income. (CP v DM, 2024 ONSC 6626).

Once the Court determines that income should be imputed on the basis of a party’s intentional underemployment or unemployment, it must then determine the level of income to impute. The Court will consider all of the evidence in determining the level of income to impute, including factors such as age, education, experience, skills and health of the party, their historical income when they were earning a higher income, their ability to resume an income commensurate with their past income, the availability of work and any other obligations they may have (AE v AE, 2021 ONCS 8189).

Legislative Authority

The Court’s authority for imputing income on the basis of intentional underemployment or unemployment comes from Section 19(1)(a) of the Child Support Guidelines which states:

19(1) The court may impute such amount of income to a parent or spouse as it considers appropriate in the circumstances, which circumstances include:

a) the parent or spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of any child or by the reasonable educational or health needs of the parent or spouse.

Principles from the Case Law

There are many circumstances in which a payor may be imputed income on the basis of intentional underemployment or unemployment. The following cases are only some of these circumstances:

(a) Social assistance

In the 2021 trial decision of AE v AE, Justice Chappel reiterated that the fact that a party is receiving social assistance does not bind the court in determining the party’s income for support purposes. The court must carry out its own assessment of the party’s income based on all of the evidence. In other words, just because a payor’s only income source is social assistance (e.g. ODSP, Ontario Works), this does not automatically mean that their support obligation will be calculated only on that social assistance income.

(b) Unproductive income-earning activities

A self-induced lack of income or reduction of income with no realistic prospect of future financial advancement may result in the imputation of income on the basis of deliberate underemployment (AE v AE, 2021 ONCS 8189). In other words, the Court may impute income to a party where that party has continued un-remunerative income-earning activities, or where they have pursued unrealistic or unproductive career aspirations.

A payor cannot insist on continuing self-employment or engaging in work that is intended to further their career if those activities cause them to earn less than they are capable of earning. If a payor chooses to pursue self-employment, or if they choose to obtain an education over earning an income, the Court will examine whether this was a reasonable choice.

(c) Health needs

In many cases, a payor may argue that they are underemployed or unemployed due to a health concern. The case law has set out many factors that a court must consider when assessing an argument of this nature, including: the onus is on the party arguing that they have a health limitation to provide evidence as to the nature and magnitude of the health problem, the connection between the health issues and the person’s capacity to earn any income (cogent medical evidence should be provided); the payor must establish that any medical excuse for being underemployed is reasonable; and payors must make reasonable efforts to address their medical limitations to earn income. (Mansour v Hassan, 2023 ONSC 2054).

A payor cannot make blanket statements that they are unable to work due to health limitations and expect to reduce or eliminate their support obligation. On the other hand, if a payor produces appropriate evidence to satisfy the Court that they have health limitations which impact their ability to earn an income, these health limitations will be taken into consideration.

(d) Recent ONCA decision

The Ontario Court of Appeal (“ONCA”) very recently examined a request to impute income on the basis of intentional unemployment in Kohli v Thom, 2025 ONCA 200.

In Kohli v Thom, the Ontario Court of Appeal heard the appeal of a trial decision in which the respondent argued that the appellant was intentionally unemployed and her lack of efforts to find employment or apply for government assistance was unreasonable. The trial judge agreed and held that the appellant could and should have made efforts to find work. The trial judge imputed income to the appellant in the amount of $31,000.00. This impacted the amount of child support that the parties were ordered to pay each other, and the spousal support that the appellant was awarded – the trial judge ordered the respondent to pay $0 based on the finding that the appellant could have and should have found work. The trial judge also credited the respondent with an overpayment due to the appellant’s imputed income.

The Court of Appeal found that the trial judge made an error in imputing income to the appellant.

 The ONCA reiterated that there are three questions that be answered by a court in considering a request to impute income:

1. Is the party intentionally underemployed or unemployed?
2. If so, is the intentional underemployment or unemployment required by virtue of his or her reasonable educational needs, the needs of the child, or reasonable health needs?
3. If not, what income is appropriately imputed?

The ONCA also reiterated that a Court does not need to be convinced that a payor has acted in bad faith before it can impose a support order based on imputed income. Instead, the Court must consider whether the payor’s decisions around work choices are reasonable.

What is most interesting in this decision is that the ONCA observed that the trial judge had acknowledged that the appellant was subject to family violence and there was an impact on her. The ONCA found that the trial judge “failed to grapple with the potential relevance of family violence to the appellant’s ability to work”.

The ONCA followed the guidance in the case law and held that the trial judge failed to explain why he thought the emotional and psychological consequences of family violence did not affect the appellant’s ability to work full-time at a minimum wage job. The ONCA held that the respondent was responsible for proving that the appellant was intentionally underemployed or unemployed and that the trial judge erred in finding the respondent had met that onus. The ONCA reversed the trial judge’s decision in this regard and found that not income should be imputed to the appellant, and recalculated the resulting support orders.

Imputing income on the basis of intentional underemployment or unemployment can be applied to a variety of circumstances. If you would like to speak to a family lawyer about this issue, please contact Danielle Sawh at dsawh@sorbaralaw.com.