Since her separation, Sophie has never dared to take steps to ensure that her child obtains child support. When she raised the issue, her ex-partner, who is a business owner, warned her that his income would be too low to pay her anything.
Posted at 6:30 a.m.
“I was afraid that he would drop his salary below mine and that I would find myself paying the pension. It scared me,” this mother told me, whose real first name I am hiding to preserve her family relationships.
So far, the informal financial agreement reached with the father of her child suits her. But she is increasingly worried about the future. Self-employed, Sophie is considering a career change to improve her income prospects, which could force her to return to school.
As for her ex, she has lived with him long enough to know that his income is high, and that it varies enormously from one year to the next, going from simple to double. Sophie is torn. She would like her child to benefit from child support that respects the law, but fears the process before a mediator. “It’s going to be complicated. He’s going to put obstacles in my way. » Is she right?
If the entrepreneur accepts mediation, he will not be able to escape his financial obligations simply by playing with the figures on his income tax return, assure the three family mediators I contacted.
“There are plenty of people trying!” “, relates Josée Dionne, lawyer and family mediator at the Dunton Rainville firm. But the chances of success are almost zero.
In mediation, it is imperative to provide the financial statements of your business. Its profits, expenses, as well as dividends and bonuses paid to shareholders can be scrutinized. If profits rise, but the owner has reduced the income he pays himself, for example, it will be necessary to justify it… to the ex who is normally familiar with the “tax optimization strategies” used in the past.
People think they can underpay themselves to avoid a pension. That would be too easy!
France Bourgie, tax specialist at the Fiscalité Cible firm
If it is possible for an entrepreneur to play with his salary, his dividends or his bonuses for tax reasons, this type of decision changes nothing when setting alimony. It’s simple: all income counts in the calculation, including rental income and investment income.
In principle, people who appear before a mediator are in good faith and seek to reach an agreement without going to court. Self-employed workers and business owners quickly learn that it is in their interest to be transparent and honest, otherwise they may have to pay for the services of an expert to verify the financial documents they have provided.
“We have no control over people’s stubbornness. But 75% of the world agrees in mediation,” explains Lili Beka, notary and family mediator for Inform’elle, an NPO providing legal information in family law. When the process fails, it is often because the financial situation is complex or one party appears to be playing with the numbers.
Proof of trainingn of life
When the case ends up before the courts, “the court can ask for proof of lifestyle,” explains Manon Leclerc, a self-employed lawyer and accredited mediator in family law.
The judge will then analyze the bank and credit card statements to inventory expenses and establish annual expenses. He will even look at the passport to list the trips taken. All this with the aim of establishing an income consistent with the lifestyle. Judges have the power to go back a few years to establish an average income over three or five years.
The company’s financial statements will also be analyzed, particularly its expenses. If a person has their lifestyle financed by their company, this will be taken into account in the calculation. In addition, “between 5 and 15% of retained earnings are added to declared income,” notes Me Dionne, citing case law. And if someone sold their business, their capital gain will be considered in the calculation.
A similar lifestyle assessment process is carried out when one of the ex-spouses works undeclared.
There are a lot of them… hairdressers, people who do Uber and who don’t declare their real income.
Lili Beka, notary and family mediator for Inform’elle
Once again, the court will be able to set a fictitious income. The judges “are used to this kind of acrobatics”.
You should also know that in the event of a lawsuit, the wealthier spouse of the two could have to pay their ex’s lawyer fees in the event of a significant income disparity. The less well-off must request a “provision for costs”, which is common, maintain Me Leclerc and Me Dionne.
Of course, pensions are not set in concrete. Entrepreneurs can get sick, go bankrupt, sell their business, get a contract that doubles the size of their business. The ex-spouses will therefore have to sit down to review the agreement as often as necessary.
This whole process can be scary. Money matters have the potential to be explosive and can interfere with maintaining cordial relationships. Above all, Sophie fears becoming poorer and finds it unfair that her son does not receive a proper monthly sum.
She now knows that the mediators and judges saw snow. And if it is possible for an entrepreneur to play with the income he declares, the game stops dead when it comes to setting alimony.
