– By Marlise Foster, Legal Assistant
Why is it so important
Lawyers are often asked why a Financial Statement needs to be completed. The short answer is that it is required by the Supreme Court of British Columbia as part of almost every family law proceeding once, and not complying with the Court’s rules comes with potentially very serious repercussions.
The reason that courts require a Financial Statement is because it provides a comprehensive overview of a person’s financial position, which is necessary for the courts to resolve issues like property division, child support, and spousal support. An oft cited case from the BC Supreme Court [hyperlink Cunha v. Cunha] describes the lack of financial disclosure as the “cancer” of family law cases. The court cannot divide property that it doesn’t know exists, and that is why Financial Statements are always sworn or affirmed – i.e. a person is saying, under oath, that they are making full disclosure of all assets, debts and income. This gives the court, and the other party, confidence in resolving matters.
The Financial Statement must be served on the other party within 30 days (60 days if the other party lives outside of Canada or the United States of America) after service of the Notice of Family Claim (Rule SCBC 5-1(11)) – this time may be adjusted by a court order.
If you have been served with a Financial Statement, you have 30 days from the date you were served to file and serve your Financial Statement on the Claimant – party who served the Notice of Family Claim and Financial Statement on you.
According to SCBC Rule 5-1 a Financial Statement must be prepared and submitted to court if:
a) a person is seeking to obtain or to change, suspend or terminate an order for child support;
b) a person is seeking to obtain, review or change, suspend or terminate an order for spousal support;
c) a person is seeking to obtain or to change, suspend or terminate an order for relief under Part 5 of the Family Law Act which deals with property division;
d) a person is seeking to set aside or replace the whole or any part of that portion of an agreement that deals with child support;
e) a person is seeking to review, set aside or replace the whole or any part of that portion of an agreement that deals with spousal support.
The Financial Statement consists of 6 Parts:
3. Property, Assets and Debts
4. Special or Extraordinary Expenses
5. Undue Hardship
6. Persons in Household
In order for a lawyer’s office to prepare a complete Financial Statement the following documents and / or information are required by the court:
Part 1 – Income:
1. T1 General Tax Returns for the most recent 3 years – these must be the complete documents you received when filing your taxes, not only the Summaries;
2. Notices of Assessment for the most recent 3 years;
3. T4’s for the most recent 3 years;
4. Goods and Services Tax credit for the most recent 3 years – if applicable;
5. Canada Child Tax benefit credit for the most recent 3 years – if applicable; and
6. Last three pay stubs showing your income to date.
Part 2 – Expenses:
1. Monthly expenses you must pay in order to take care of your household, such as bill payments, mortgage and car payments, daily living expenses, etc.
Part 3: Property, Assets and Debts:
1. Property assessments of your home – if applicable;
2. Vehicle(s) in your possession and its current value;
3. Current balances from your bank(s) for:
i. all bank accounts – include the account numbers and institutions
ii. all Credit Card accounts – include the account numbers and institutions
iii. all investment accounts
– include the account numbers and institutions
iv. mortgage(s) – if applicable
– If you do online banking, the summary sheet(s) when opening your account(s) online is sufficient to prepare the Financial Statement.
Part 4 – Special and Extraordinary expenses:
1. Receipts for all special and extraordinary expenses you are currently paying for the
Special and Extraordinary expenses include all extra-curricular activities that the child(ren) are participating in, ie. sport activities, arts, etc.; any activities that you need to pay for that is not included in the child(ren)’s school activities.
Part 5 – Undue Hardship
What is undue hardship? Sometimes circumstances beyond your control may cause undue hardship. This may include:
a. unusually high level of debts reasonably incurred to support the spouses and their children prior to the separation or to earn a living;
b. unusually high expenses in relation to exercising access to a child, ie. if one parent lives in a different province;
c. a legal duty under a judgment, order or written separation agreement to support any person;
d. a legal duty to support a child, other than a child of the marriage, ie. a step child, who is under the age of majority, or the age of majority or over but is unable to provide for themselves the necessaries of life due to an illness, disability or other cause; and
e. a legal duty to support any person who is unable to obtain the necessaries of life due to an illness or disability.
Part 6 – Persons in Household
All persons living in one household who is earning an income, must be listed along with the amount of income they receive.
Once the Financial Statement has been prepared, it must be sworn or affirmed in the presence of a person who is a Commissioner for taking affidavits for British Columbia, ie a lawyer or Notary Public. By signing it, you promise that the information provided in it is true.