The first step in determining child support is to calculate the payor’s income pursuant to the Federal Child Support Guidelines [Guidelines]. This can be a complicated process when the payor has a fluctuating income, is a corporate shareholder, or operates a sole proprietorship. This paper helps guide readers through the income calculation process and provides an overview of the adjustments to sources of income as set out in Schedule III of the Guidelines, such as employment expenses, social assistance, and dividends from taxable Canadian corporations. The authors also provide practical considerations for income calculation when dealing with a sole proprietorship and for the inclusion of rental income. Relevant tax forms from the Canada Revenue Agency are included as appendices.

This paper is part of a collection presented at LESA’s Reading Tax Returns and Corporate Financial Statements program in Edmonton on December 1, 2015 and in Calgary on December 8, 2015.