Imputing Income Part VI

Monetary Gifts as Income

By Danielle Sawh

As we have explored in this article series, a payor’s presumptive income as it appears on Line 150 on their income tax return is not the end of the assessment of their income for support purposes. When a party receives regular gifts from their parents, the Court may impute the amount of those gifts as income for support purposes.

While the last five articles in this series have examined enumerated circumstances under Section 19 of the Child Support Guidelines, Section 19 is not an exhaustive list. Imputing income on the basis of gifts from parents comes from the development of the case law over time.  

Factors to Consider

In 2007, the Ontario Court of Appeal (“ONCA”) set out the following factors to consider in assessing whether the receipt of gifts should constitute income for the purposes of support:

1. the regularity of gifts;
2. the duration of their receipt;
3. whether the gifts were part of the family’s income during cohabitation that entrenched a particular lifestyle;
4. the circumstances of the gifts that earmarked them as exceptional;
5. whether the gifts do more than provide a basic standard of living;
6. the income generated by the gifts in proportion to the payor’s income;
7. whether they are paid to support an adult child through a crisis period or period of instability;
8. whether the gifts are likely to continue; and
9. the true purpose and nature of the gifts.

Bak v Dobell, 2007 ONCA 304.

Income Imputed

In 2015, the ONCA heard an appeal from a trial decision in which the trial judge imputed income to the payor husband in the amount of $120,000. The trial judge held that the husband’s income came from three sources: (i) employment income, as disclosed in his annual income tax returns; (ii) monetary gifts received over the years from one or both of his parents; and (iii) annual dividend income as reported on the husband’s tax returns. Of interest to this article, the trial judge found that “through the marriage, very generous gifts were given to the parties” and that “funds will continue to be given to the husband by his mother, whether by gift, or through some other tax-friendly plan”.

The Ontario Court of Appeal agreed with the trial judge, and held that there was evidence establishing a “settled pattern of monetary gifts to the husband by one or both of his parents, over many years, to assist him in maintaining his family’s lifestyle, to finance specific family expenditures – such as private school tuition or camp expenses for the children – or to underwrite the costs of the husband’s various business ventures”. The ONCA found that these gifts were substantial. The ONCA specifically stated that the husband was able to support himself, and had received regular and substantial gifts from his parents for many years. The ONCA further held that these gifts helped the husband establish a lifestyle well in excess of a basic standard of living for himself and his family during the marriage.  Ultimately, the ONCA decided not to interfere with the trial judge’s imputation of income to the payor.

Korman v Korman, 2015 ONCA 578.

The Court in FBM v BF, 2019 ONSC 708 also dealt with the issue of imputing income on the basis of receipt of gifts from parents. In this case, the Court summarized a pattern of cases following Korman: In Malkov v Stovichek-Malkov, the Court found that when gifts to the husband appeared to be a long-term subsidy (i.e. payments for housing, utility costs, realty taxes) as if the husband was a beneficiary of income or benefits from a trust, this appeared to be income. In Kkabbazy v Esfahani, the Court imputed income to the husband on the basis of evidence that he typically received and expected to receive funds “as needed” to support his lifestyle from his family. In Teitler v Dale, the Court imputed income to the husband over his assertion that the money he received from his parents were loans and not gifts – he had produced no evidence that he had repaid any part of the alleged loans and his expenses were far in excess of his asserted income.

In FBM, the Court found that “the evidence is that the grandfather has provided the father with generous financial support throughout his cohabitation with, and marriage to, the mother and following the separation. Significant gifts of money have been made on a fairly regular basis, which have allowed the father, for the bulk of his adult life, to choose to engage in non-remunerative pursuits. When the father acquired the Urban Nirvana spa business and attempted to operate it, he did so with the financial assistance from the grandfather. When the father faced litigation, the grandfather paid for his legal counsel. The grandfather has also paid for some of the reintegration therapy on behalf of the father.”

These payments allowed the family to enjoy a certain lifestyle that the father continued to enjoy post-separation. These funds did more than provide a “basic standard of living”. The Court found that the true purpose of the grandfather’s generous gifts to the father appeared to be to provide the father with an income to support a comfortable lifestyle for himself and the children. As a result, the Court found these were appropriate circumstances in which to impute income.

F.B.M. v. B.F., 2019 ONSC 70

In Petrini et al v Caprara, the payor’s parents financially supported the family during the relationship. The payor resided with his parents, rent-free, after separation. The payor’s bank accounts showed a flow of funds into and out of those accounts that exceeded the payor’s disclosed income. The payor did not dispute that his parents gave him money, and he was prepared to impute $20,000 net to his income. His argument was that not all of the gifts/payments that his family gave him should be considered income.

The Court turned to the Malkov case in which the support payor never paid for housing, utilities, insurance, condo fees or realty taxes, and the Court found that such housing benefits, which were paid for by the payor’s father, were gifts that constituted income.

In Petrini, the Court held that because the payor admitted that he similarly did not pay housing expenses, that an income should be imputed to him. The Court arrived at a total gross amount of $95,000 to be imputed to the payor, on top of his employment income of $52,000 on the following basis:

1. $5,000 per month (for a total of $60,000 per annum) representing what the payor would likely be paying in rent for the home he resided in;
2. $5,000 per annum representing the amount of utilities the payor would likely be paying, if he paid for his own utilities; and
3. A 35% gross-up for taxes, which was the proposal made by the payor.

Petrini et al v Caprara, 2025 ONSC 4512

Income Not Imputed

On the other hand, there are circumstances in which gifts from family may not be appropriate for an imputation of income.

In Bak v Dobell, the ONCA heard an appeal from an application where the support recipient sought to increase the payor’s child support by imputing income based on the payor’s lifestyle and his receipt of gifts from his father. At trial, the Court refused to impute income to the payor, and the support recipient appealed this decision.

In that case, the support payor (“Dobell”) had long-term problems, including diagnosed severe personality disorders including Antisocial Personality Disorder and Borderline Personality Disorder. He also struggled with symptoms of ADHD and mood swings. These chronic and severe disorders resulted in his inability to maintain employment.

Dobell’s father financially assisted Dobell in trying many careers, but he was not able to sustain employment. Dobell’s father also gave him funds for his day-to-day needs. In addition, Dobell’s father funded all of his medical, psychological, chiropractic, legal and vet bills, and he purchased a home for Dobell’s use. Dobell made efforts to be employed from time to time, but he was unable to maintain his employment due to his diagnoses. Dobell’s father testified at trial that the money he gifted to Dobell was given in an effort to promote Dobell’s self-sufficiency and pending that self-sufficiency, to keep Dobell from starving and “off the streets”. The trial judge accepted that Dobell’s father gave him money out of a sense of obligation and to prevent Dobell from otherwise being “a burden on the taxpayer”.

The ONCA held the following:

1. The funds given to Dobell to finance his employment training were akin to an investment by Dobell’s father in Dobell’s future, that may have led to Dobell generating income on his own. As such, these gifts were made for the specific cost of career advancement and should not be imputed as income;
2. The property that Dobell’s father purchased for him was for the purposes of giving Dobell a place to live so that he would not live on the street. Dobell did not have the freedom to sell this property and use the funds for any other purpose. As such, these gifts should not be imputed as income;
3. The medical, psychological, chiropractic, legal and vet bills paid by Dobell’s father were truly in the nature of gifts to assist with unusual and non-recurring expenses, and should not be imputed as income; and
4. The monthly financial support that Dobell’s father gave him were not trust funds, as argued by the support recipient. This money was completely controlled by Dobell’s father, and the amount was closely tied to Dobell’s basic needs. The Court assessed the factors set out at the start of this article and found the trial judge was entitled to refuse to impute these gifts as income. The ONCA reiterated that the trial judge considered that the intended duration of the gifts was limited, the gifts were only intended to encourage Dobell’s self-sufficiency, the gifts were made to a disabled child and were more in the nature of support for an adult child than in the nature of an allowance, and the amount of the gifts only supported a basic lifestyle.

The unique aspect of the Bak v Dobell case is that the evidence supported a finding that the periodic support given by Dobell’s father to Dobell was in the nature of support for a disabled adult child who was otherwise unable to support himself. The Court found that this type of support is to be encouraged, not discouraged. The evidence established that Dobell would be unable to support himself without the support of his father. The ONCA did not interfere with the trial judge’s decision not to impute these gifts to Dobell.

In today’s economy, it is quite common for adult children to receive monetary gifts from their parents. In the context of separation and support, it is important to understand how these gifts may be viewed by a Court. For more information on this and any other family law issue, contact Danielle Sawh at dsawh@sorbaralaw.com.