Pursuant to Rule 13 of the Family Law Rules, the completion and submission of a financial statement is an imperative requirement in every family law matter. Its purpose transcends mere paperwork as it serves to ensure transparent and accurate evaluations for calculating child and spousal support, as well as fairness and equity in the realm of family law.
To provide disclosure, an individual must complete a financial statement referred to in form 13 and/or 13.1. Form 13 is typically utilized for matters which only have support claims, and Form 13.1 is used for those matters which have both support and property claims.
Along with the completion of these forms, supporting documentation is required. These documents include (1) the last three years of income taxes and Notice of Assessments; (2) documents proving the values recorded in form 13 and 13.1 (ie: bank statements, mortgage and loan document, property appraisals etc.); and (3) income in all sources.
It is crucial that both parties are forthright and honest when filing financial statements as these documents are served as affidavits. Once an error is presented as sworn evidence in an affidavit, an individual may experience additional cost or delays, agreements being rendered unenforceable, and may damage that party’s creditability.
With efforts to avoid common yet detrimental errors, there are three significant elements to consider when filing a financial statement to the courts:
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Calculating income differs in family law matters as it would for tax purposes
Determining one’s income is not the same for family law matters as it is for tax purposes. It is much broader in scope as it includes monies that may be non-taxable or unearned, such as gifts or employment paid on a cash basis. Understanding the challenges to gather this information, the Ontario Superior Court in Coghill v Coghill advises that an “individual should consider the income arising from the sources of income listed on Line 150 of their T1 General form issued by Canada Revenue Agency as an objective starting point to determine current income”. With this information, specific adjustments can be made to determine the appropriate value that will be used for calculation.
This approach works reasonably well for an individual who earns a salaried income. However, difficulty arises when a spouse has an unpredictable income or is self-employed. For a self-employed person, the choice may be to use the prior year’s income, clearly indicated as such, or to estimate the current year’s income based upon that party’s previous year’s income tax returns and any agreed upon deductions that party claims. The estimation of the income must be reasonably chosen and evidently identified on the statement by way of notes on the form. For spouses who own a business, Section 18 of the Federal Child Support Guidelines requires the inclusion of corporate income to ensure the income fairly reflects the money available for the payment of support. If it is found that funds are unreasonably held in the corporation or that personal expenses have been running through the business for tax purposes, the court may impute the income of the spouse in efforts to get a more comprehensive evaluation.
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Gathering relevant information may take longer time than expected
The process of gathering supporting documents requires careful consideration and thoroughness. By providing yourself sufficient time, you can navigate this process effectively and minimize unnecessary stress. One key aspect of timely preparation is recognizing that consulting with other professionals, such as accountants or appraisal professionals, may be required and time consuming. Allowing yourself time to communicate with these professionals will ensure that accurate information is obtained, and that comprehensive information is recovered. Another factor to consider is the limited preservation period of financial documentation by banks and accountants. Depending on the date of marriage, and the date of separation it may be necessary to explore alternative resources to obtain this information that could take days or weeks to retrieve. For instance, an individual who has a private pension may wait approximately 1 to 3 months to receive a valuation of their pension interest. Therefore, it is important for individuals to set timelines for themselves to collaborate with their lawyer and ensure sufficient time for follow-up inquiries and documentation requests which will limit the risk of any error or delays in the family law matter.
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Talk to a reputable family law lawyer
Providing financial disclosure can be overwhelming for an individual. This is why it is important to understand what information is required, how long it may take to retrieve certain data, and the importance of speaking with a family law lawyer that understands the nuisances of filing a financial statement.
Blackburn Lawyers is made up of a team of dedicated lawyers who are pleased to offer efficient and effective support to achieve a smooth process that protects both yourself and your Agreement. If you and/or a loved one have any questions about financial statements for family law matters, please contact our lawyers today.
Disclaimer: This blog sets out a variety of information relating to the law that is to be used for educational purposes and is not legal advice for your particular situation. The author(s) of this blog do not intent the blog to be a source of legal advice.
Written by: Adriana Totera
* Please note that the information in this article is not intended as legal advice, but rather as a general overview on the subject. If you are seeking legal advice, please consult with a lawyer.
