In a recent British Columbia Supreme Court decision, Webster v. Webster, 2014 BCSC 730 (“Webster”), Justice Pearlman considers whether a non-taxable “living-out allowance” should be attributed as income to Mr. Webster for the purpose of determining child support under the Federal Child Support Guidelines. Justice Pearlman reviews a number of recent cases, including the Alberta Court of Appeal’s judgment in Calver v. Calver, 2014 ABCA 63 (“Calver”).
In Calver, the Court of Appeal overturned the trial judge’s decision to impute half of the father’s annual living allowance as income, determining that it would be unfair to attribute income to a party from an allowance which is intended to cover actual travel and living costs associated with employment.
Justice Pearlman, at paragraph 35, identifies the following principles from the relevant authorities to be considered in attributing a benefit or allowance as income:
- “Generally, a living-out allowance paid for the recovery of work-related travel and living expenses will not be treated as income under the Guidelines;
- Living-out allowances are intended to compensate the recipient spouse for the extra costs associated with working away from home;
- In all the cases where courts have excluded living-out allowances from the recipient spouse’s Guideline income, there has been some evidence that the recipient actually incurred extra costs associated with working away from home, although the recipient was not required to account for the whole amount of the allowance; and
- Under s. 19(1) of the Guidelines, the court has a broad discretion to impute such amount of income to a spouse as it considers appropriate in the circumstances.”
Justice Pearlman distinguishes Webster from Calver, finding that at least for a portion of the time in question, Mr. Webster was not using the full amount of his “living-out allowance” for travel and living expenses. In October of 2011 Mr. Webster moved in with a girlfriend close to the work site and was no longer incurring the same work-related travel and living expenses that he had for 2010 and the majority of 2011. Therefore, Justice Pearlman refrained from including any of the living-out allowance in income for 2010 and 2011, but attributed half of the allowance as income for 2012 for the purpose of determining child support under the Federal Child Support Guidelines.
Of further interest is the failure of Justice Pearlman to address whether the amount should be “grossed up” as other non-taxable income. In this ongoing debate across the country, courts are not taking an all or nothing approach. Whether the benefit or allowance is included as income, or a portion thereof, appears to be dependent on the factual circumstances, including, but not limited to, the amount of the allowance actually used for its intended purpose.