Financial disclosure in family law is critical to the success and resolution of all family law cases. Without it, parties cannot fairly negotiate, litigate, or have any kind of productive discussions regarding their property or support issues. If you fail to disclosure, lie, or hide your assets, you risk a judge making an adverse inference against you. This means that the judge may grant your ex spouse more of the family assets, impute a higher income on you, or grant costs or special costs against you.
If you suspect that your spouse has refused to make full financial disclosure, contact us now on (604) 620-8682. Our BC Vancouver Family Law Lawyers are highly skilled in exposing and uncovering the truth about your ex’s financial affairs and ensuring non-disclosure is exposed and punished.
What is Financial Disclosure?
The duty to provide financial disclosure derives from of the Family Law Act. This provides that a party to a family law dispute must provide to the other party full and true information for the purposes of resolving a family law dispute. This duty applies to all family law disputes regardless of the dispute resolution process (ie. mediation, negotiation or court proceedings).
A financial statement is a court form, in which you set out all your financial information including your income, expenses, assets and debts. Completing this form, including the required attachments, is called financial disclosure. The financial statement must be sworn or affirmed – this means that the person swearing the affidavit must tell the truth in the form. If they don’t, they are breaking the law.
Supporting Documents to Provide to Your Ex as Part of Financial Disclosure
You should provide documents which back up the information that you have listed in your financial statement. Supporting documents include things like:
- proof of income from all sources;
- recent pay stubs;
- copies of your income tax returns (notice of assessment, recent tax returns, notices of reassessment) with all schedules and attachments;
- bank statements;
- credit card statements;
- mortgage documents;
- line of credit statements;
- money owed to you;
- business interests;
- BC property assessment notices;
- Copies of all bank, RRSP, and investment accounts.
This is not a complete list of the documents that may be required to understand a party’s financial situation as the documents you need to produce will depend on the particular facts of your family law case. For example, if you have valuable jewellery, collectable cars or artwork, you should provide appraisals of those items.
If you don’t have a copy of your recent tax returns and notices of assessment, contact Canada Revenue Agency (CRA).
What if My Ex and I Don’t Agree on the Value of Our Assets?
The value of real estate, businesses, cars, art and collectables can be harder to determine. If you and your ex don’t agree on something, you can hire a professional to determine the value of these assets. The costs of the valuation is often shared between you and your ex. In other circumstances, you may be able to agree on an estimate value by using comparables, for example you could look at car ads online to get a ballpark estimate of how much your car is worth.
What if My Ex and I Don’t Agree on Income?
Generally, support payments depend on a person’s reported income. If your spouse is employed and receives a salary, the court will look to their line 150 income on their T1 tax returns to determine their employment income and support obligation.
A person who owns a business or is in a business for themselves is in a position manipulate their line 150 income in order to make it appear as if they earn less money than they actually do. This means that if either you or your spouse are self-employed, determining income for support purposes is more complicated.
For example, business owners are able to deduct business expenses from their gross profits. Some of these deductions may have a personal benefit (ie. home office, cell phone, car payments). In other cases, deductions may be used to hide income otherwise available to the payor spouse. The burden of proving the reasonableness of the deductions lies with the spouse making the deduction. It is not the other party’s responsibility to hire an accountant or other professional to assess and challenge the reasonableness of the deduction.
Uncovering a business owner’s true income for support purposes may require additional information such as bank account statements, profit and loss statements, business ledgers, or financial affidavits to create an accurate financial picture for the court. The law permits imputing income for support purposes where there has been inadequate disclosure of a spouse’s income, as is often in the case of self-employment income.
Consequences of Non-Disclosure in a Family Law Case
If your spouse fails to provide financial disclosure, or provides information that is incomplete, false or misleading, they run the risk of having the court make an adverse inference against them. Non-disclosure is not permitted to escape child or spousal support obligations. Adverse inference can include attributing additional income for support purposes, reapportionment of family property, striking or dismissing family law claims, or costs awards.
It is critical to the success of your case that both parties provide full and frank financial disclosure. Failing to do so has been called “the cancer of family law litigation”.
Misunderstanding your duty to disclose can have adverse consequences on your case. If you are unsure or would like to speak to an experienced family law lawyer regarding your duty to disclose, call our bc family law lawyers now on (604) 620-8682.