Income Determination – Jeffrey v. McNab, 2026 ONSC 430 – Summary

Overview

Lisa Jeffrey and Casey McNab were common-law partners for 13 years and 4 months (March 2002 to June 2015). In June 2015, McNab sold his patient transfer business for over $5 million. Jeffrey sought spousal support and a share of the proceeds. The proprietary issues were resolved in April 2025 with McNab paying Jeffrey $1,220,000. This decision addresses spousal support.

Position of the Parties

Jeffrey’s Position:

• Spousal support for 2020-2024 based on maximum possible income for McNab
• McNab’s conduct constituted unconscionable behavior warranting support until April 1, 2027 at $15,034/month
• Alternatively, ongoing support until June 1, 2029
• Non-dissipation order to remain in effect
• McNab to maintain extended health coverage

McNab’s Position:

• No ongoing support obligation
• No retroactive support owed
• Alternatively, support based on lower income for him and higher imputed income for Jeffrey
• Duration limited to 11.5 years based on his cohabitation dates

Mr. McNab’s Income for Support Purposes

McNab owned seven corporations. Only CTG Medical was profitable. Both parties agreed pre-tax corporate income should be attributed under section 18 of the Child Support Guidelines. Key disputes between the experts (APVL for Jeffrey, PMVI for McNab):

Life Insurance Premiums

The court added back approximately $15,000/year in life insurance premiums as personal expenses. McNab failed to demonstrate a legitimate business reason for the corporation to pay them.

Corporate Losses

Key Issue: Could losses from unprofitable corporations reduce CTG Medical’s pre-tax income?

McNab’s Position: Losses should offset CTG Medical’s income.

Jeffrey’s Position: Corporate losses should not reduce pre-tax corporate income of the profitable corporation.

Court’s Decision: Corporate losses cannot reduce pre-tax corporate income for support purposes.

Cases Applied:

• Mason v. Mason, 2016 ONCA 725: If a corporation suffered a loss, no pre-tax corporate income is attributed
• Colivas v. Colivas, 2017 ONSC 4730: Pre-tax corporate losses cannot reduce income under section 18(1)(a)
• Nixon v. Lumsden, 2020 ONSC 147: Courts are reluctant to permit business losses to reduce income from other sources
• Mais v. Shoman, 2024 SKCA 57: Section 18 doesn’t pierce the corporate veil or make shareholders liable for corporate debt. Deducting corporate losses is inconsistent with shareholder limited liability.

Investment Losses (88 South and MCO Connext)

CTG Medical lost approximately $830,000 investing in a failed restaurant and other ventures. The court found these losses proved the funds were available to McNab and should be attributed as income.

Capital Gain from Property Sale

McNab sold the Tecumseh property in 2020 with a capital gain of $577,319. The court excluded this from income as a non-recurring gain, applying factors from Ewing v. Ewing, 2009 ABCA 227 and citing Mosher v. Bossence, 2024 ONSC 878 and Saroli v. Saroli, 2021 ONSC 4450.

Final Income Determination

McNab’s income for support purposes:

• 2020: $517,000
• 2021: $367,000
• 2022: $427,000
• 2023: $257,000
• 2024: $350,000 (average of prior three years)

The court applied McNab’s actual income without adjustment for the spousal support ceiling.

Ms. Jeffrey’s Income for Support Purposes

Jeffrey worked odd jobs (seasonal cleaning, commission sales, winery contractor at $25/hour). She had not made serious efforts to become self-supporting since separation.

Imputed Income:

• 2021-2024: $35,000 (full-time minimum wage)
• 2025 onwards: $55,000 ($35,000 employment + $20,000 investment income based on 4% return on $500,000 from property settlement)

The court balanced her limited experience, current wage, training, and caregiver responsibilities for her mother.

Key Takeaway

Corporate losses from non-profitable corporations cannot reduce pre-tax corporate income of profitable corporations for support purposes. This is consistent with section 18 of the Guidelines, shareholder limited liability principles, and judicial reluctance to allow corporate losses to reduce income from other sources. Using corporate funds for investments—even failed ones—proves the money was available to the payor for support purposes.