Advantage Family Law flags divorce support issues for business owners

Advantage Family Law says business ownership can complicate support calculations in Alberta divorces because salary, dividends, corporate benefits and retained corporate income may not match personal tax returns. The Calgary firm says separating spouses may need broader financial disclosure, including corporate records, to assess income fairly.

Why it matters: - Business ownership can change how courts assess income for child support and other support obligations. - Personal tax returns alone may not show the full financial resources available to a business owner. - The way corporate money, expenses and deductions are treated can affect support outcomes during separation or divorce.

What happened: - Advantage Family Law in Calgary highlighted the financial complications that can arise when a business owner separates or divorces. - The firm said corporate and personal finances often overlap, making support calculations more complex. - Christopher Bungey, Senior Divorce Lawyer at Advantage Family Law, said determining income can require more than reviewing a personal tax return.

The details: - Business owners may receive compensation through salary, dividends, corporate benefits or other sources. - Some business income may stay inside a corporation instead of being paid out personally. - Alberta and federal child support rules allow income to be assessed when reported personal income does not fully reflect available resources. - Financial disclosure can include personal tax returns, corporate financial statements and other records. - Alberta child support guidance recognizes that self-employment and corporate-income cases can be more complex than standard salary cases. - A business expense that is deductible for tax purposes does not automatically count the same way for child support. - Under the Federal Child Support Guidelines, a court may examine whether deducted expenses are reasonable. - The guidelines say reasonableness is not determined only by whether an expense is allowed under the Income Tax Act. - The Federal Child Support Guidelines also address shareholders, directors and officers of corporations. - If reported annual income does not fairly reflect money available for child support, a court may consider all or part of a corporation’s pre-tax income. - Courts may adjust support income where income has been diverted or unreasonable deductions have been claimed. - Business owners may need to provide business financial statements, bank records and corporate tax returns during the financial disclosure process.

Between the lines: - The firm is signaling that divorce cases involving private companies often turn on tracing money across both personal and corporate accounts. - That matters because tax treatment and family-law treatment do not always match. - The message also suggests that support disputes may hinge on documentation, not just declared income.

What's next: - Separating spouses who own businesses should expect deeper financial review when support is calculated. - Courts may look beyond personal returns if the disclosed income appears incomplete or distorted. - Advantage Family Law says it works with clients facing these business-related family law issues.

The bottom line: - For business owners, divorce can become a financial disclosure case as much as a legal one.