What Happens If Your Ex Is Hiding Income?

When your relationship ends, financial disclosure is not simply a formality; it is a legal obligation. Under Canadian Family law, each of you must provide complete and accurate information about your financial circumstances, including your income.  As one Ontario judge put it, it’s “the most basic obligation in family law and it is immediate, automatic and ongoing” (J.G. v. D.M., 2023 ONSC 1177).

If that income is misstated – whether deliberately or through carelessness – the legal consequences can be significant.  Here’s what you need to know.

Where Does the Duty Come From?

As we tell our clients, the obligation to disclose income arises under both federal and provincial law:

• If you are married but getting divorced, it arises under federal Divorce Act. It’s the starting point for determining claims for spousal or child support, including entitlement and amount.
• If you are not married but are part of separating couple, then the duty arises under the Ontario Family Law Act, and the Family Law Rules. Each of you is required to complete and swear a financial statement setting out your income from all sources, along with supporting documentation. Again, this goes into determining certain support and property-based entitlements.

Either way, the obligation is the same: You and your Ex are both required to be complete, accurate, and transparent about your income and related financial position.

What Counts as “Income”?

Many people assume income is limited to salary or wages. In Family law, it is often broader.

Depending on your situation, income may include:

• Employment earnings, including bonuses and commissions
• Self-employment or business income
• Dividends and investment income
• Rental income
• Certain employment benefits or allowances
• In some cases, income retained within a corporation

If you are self-employed or operate a business, the law expects a more detailed level of disclosure. This can include financial statements, corporate records, and information about expenses and retained earnings.

Because the definition is flexible, any efforts to minimize or conceal income – whether through corporate structures, cash transactions, or selective reporting – are closely examined.

What Happens if Income is Misrepresented?

Income misrepresentation can take different forms.  If you are up against a sneaky, deceptive Ex, they might try to avoid their support obligations by failing to disclose a source of income altogether, understate what they earn, or structure their finances in a way that obscures their true income.

If they are self-employed or operate a closely-held corporation, they might conceal income or manipulate the corporate structure to avoid giving a fuller picture.

In both cases, the courts are attuned to these kinds of deliberate-concealment schemes, and know not to take reported income at face value, necessarily.

But even if your Ex has no intention to mislead you or the court, they can run afoul of the law if they offer up incomplete or inaccurate disclosure. Their legal obligation is not simply to avoid dishonesty; it is to ensure full, meaningful, and ongoing disclosure.

Legal Remedies Where Income is Misstated

If your Ex does not properly disclose their income, the court has a number of tools in its toolkit, which it can use to address the issue.

Imputing income. This is one of the most common remedies. If the court is not satisfied that your Ex’s reported income reflects their actual financial circumstances, it may assign a higher income figure for the purpose of calculating support.  This can happen if they are:

• Under-employed or unemployed without a reasonable explanation
• Retaining income within a corporation
• Failing to provide adequate disclosure
• Reporting income that does not match their lifestyle

Imputed income is, by its nature, an estimate.  If your Ex avoids disclosure and leaves the court to guess at the true figures, they run the risk that the court will err on the high side.

Adverse inferences. Where your Ex’s disclosure is incomplete or unreliable, the court may draw adverse inferences. In practical terms, this means that any gaps or inconsistencies in the financial disclosure may be interpreted against them, and the court will proceed to make findings based on incomplete information.

A recent example is seen in a case called Polack v. Larabie, 2025 ONSC 250. The couple had been in a 22-year relationship, and the man had been the primary breadwinner, earning $120,000 a year at one point. However once they separated, the man stopped providing meaningful financial disclosure; he failed or refused to produce basic documents – such as pay stubs, tax returns, bank account statements, and proof of debts – despite repeated court orders. At the same time, he claimed to be destitute, living with his father, and receiving social assistance, with no clear explanation for the apparent disappearance of his prior income and assets.  The court did not permit the matter to stall:  It simply proceeded with the case based on the limited evidence available, and made the inference that the man’s finances were much better than he claimed.  In fact, the court accepted the woman’s version of what she estimated the man’s financial situation to be, and proceeded to calculate spousal support and equalization accordingly.

Orders for Further Disclosure. The court can order your Ex to produce additional documents, including banking records, corporate records, or information held by third parties. If your Ex does not comply, the consequences can escalate.

Costs Consequences.  If your Ex’s failure to disclose causes you delay or unnecessary expense, they may be ordered to pay some or all of your legal costs. Courts routinely treat non-disclosure as a serious issue when awarding costs.

Setting Aside Agreements or Orders. If it turns out your Ex provided inaccurate information, and it formed the basis of a court order or an agreement, the court can make an order to set it aside, after re-opening the matter. This is particularly important if you and your Ex are negotiating a settlement.

Striking Pleadings. If your Ex continues to default on the obligation to provide financial disclosure, then the court may also opt to strike out their pleadings, meaning it will remove their formal claims and responses from the court record.  The result is that your Ex loses the right to participate in the case at all (subject to whatever exceptions the court may allow), and the matter will proceed without their involvement.

An example of a court imposing this kind of remedy is seen in Alami-Narenji v. Ahmadi, 2026 ONSC 1646. In that case, the couple had two young children, and were dealing with parenting, child support, and property issues. The father operated a business and owned rental property, but repeatedly failed to provide meaningful financial disclosure. Despite court orders requiring detailed production – including corporate records, banking documents, and an expert income valuation – his disclosure remained incomplete and the figures were internally inconsistent.  The court noted that striking pleadings was a remedy of “last resort”, but it was prepared to order it in this case.  However, it gave the father one last chance to comply by a certain deadline; if he did not, he would lose all right to participate in the case.

Practical Considerations

From a practical standpoint, we always encourage our clients to approach disclosure carefully and thoroughly from the outset – just like the law requires. Disputes over income and finances are among the most common sources of conflict in Family law matters, and they require extra time and money to resolve.  We are experts at helping with the process; feel free to give our offices a call.

Strike Pleadings:

In practical terms, if your Ex does not comply with the statutory disclosure obligations, the court is unlikely to shine favourably on his or her case.

J.G. v. D.M., 2023 ONSC 1177 (CanLII), <https://canlii.ca/t/jvsvc>, rThe father had failed to comply with the automatic and ongoing disclosure obligations under Ontario law, which was the most basic obligation.

In J.G. v. D.M., 2023 ONSC 1177 (CanLII)  court refused to reduce the father’s support arrears, which were accumulating because he stopped paying support for several years when his self-employment income ended up being much lower than expected, he claimed.  The father had ignored multiple disclosure orders from the court.  His actions – or lack of them – were deliberate efforts to frustrate the court process.  His unreasonable continuing lack of disclosure justified an adverse inference about his income, and the court imputed a higher amount that the father claimed he had earned.  The court ruled that all of the arrears remained fully payable.