By Stephy Li* and Jeff Li
In family law matters involving child or spousal support, courts do not always rely solely on the income a party represents. In certain circumstances, the court may attribute income to a party that is not formally earned, known as imputed income. A common question is whether financial assistance from parents, often described as “gifts”, can be treated as income for support purposes.
Imputed income refers to income that a court assigns to a party even though that income does not appear on their tax return or is denied by the party. The purpose of imputing income is to ensure that support obligations reflect a party’s true financial capabilities, rather than only their reported earnings. Imputed income is commonly applied when a party is unemployed, underemployed, receiving financial benefits from non-traditional sources, or has access to resources that affect their capability to pay support.
When Parental Gifts Can Be Imputed as Income
Courts may include parental gifts as income where the financial assistance forms part of a party’s regular financial resources. In Bak v. Dobell, the Court of Appeal for Ontario listed a variety of factors relevant in determining whether imputation is appropriate, including but not limited to the following:
- Regularity of the gifts;
- Duration of their receipt;
- Impact on the recipient’s lifestyle;
- Likelihood of the gifts’ continuation; and
- The true purpose and nature of the gifts.
In Korman v. Korman, the husband received substantial and ongoing financial assistance from his parents over many years. These funds supported his lifestyle, business activities, and family expenses. The trial judge imputed $120,000 in annual income to the gift recipient, and the Ontario Court of Appeal upheld that decision, finding that the parental support had become a settled and predictable pattern that effectively supplemented the husband’s income.
Similarly, in Horowitz v. Nightingale, the husband received approximately $50,000 per year from his parents for eight consecutive years. The court found that the payments were regular, supported the family’s standard of living, and were likely to continue. As a result, the court included the parental gifts as part of the husband’s income for both child and spousal support purposes. These cases demonstrate that where parental gifts are consistent and substantial in courts, there is a high likelihood that they will be considered as the party’s income.
When Parental Gifts Do Not Count as Imputed Income
Not all parental financial assistance will be treated as income. Courts are careful to distinguish between ongoing financial resources and assistance that is limited, conditional, or purpose-specific. In Bak v. Dobell, the court declined to include parental assistance as income. The funds were intended to support a disabled adult child and were largely controlled by the parents. The court emphasized that the assistance was meant to address the specific need, rather than serve as an ongoing source of income for the recipient.
Courts are also unlikely to impute income where parental assistance is occasional, provided for specific or unusual expenses, or limited to meeting basic living needs rather than enhancing lifestyle.
Parental gifts are not automatically considered as income for support purposes. However, where such gifts are regular, substantial, and function as an ongoing financial resource, courts may impute income. Cases such as Korman and Horowitz demonstrate when imputation may apply, while Bak highlights important limitations.
To conclude, courts may look beyond tax returns when assessing support obligations. Courts consider the frequency, amount, purpose, and predictability of parental support, as well as how the funds are used. Regular and predictable parental assistance may increase a party’s imputed income, but not all gifts will be treated the same way. The treatment of the gift in law will depend on specific facts and its true nature.
*Stephy Li is a student volunteer at the Law Office of Jeff Jiehui Li.