Business Income and Division for Divorces and Separations
In Ontario, the division of business income is a significant aspect of divorces and separations. When spouses with shared business interests decide to part ways, determining how to handle business income becomes crucial. The division may involve assessing the value of the business, including assets, revenue, and future earning potential. Factors such as the level of each spouse’s involvement in the business and its contribution to the marital partnership are considered. Courts aim for an equitable distribution that reflects the financial contributions and sacrifices made during the marriage. Seeking legal advice is often essential to navigate the complexities of business income division and ensure a fair resolution in accordance with Ontario family law.
FAQs
Is my spouse entitled to a share of my business in a divorce?
Yes, the business is considered a family asset and is subject to division, similar to other assets. However, a date of marriage deduction can be obtained for the business's value at the time of marriage, reducing the amount subject to division.
I'm in a common-law relationship, is my partner entitled to a share of my business?
No, in a common-law relationship, assets, including businesses, are divided based on ownership. However, the non-owning partner may file a claim for a portion of the business's value if they made contributions.
Does my spouse become a shareholder in my business after the divorce?
No, only the value of the business is divided in a divorce, not the actual ownership. The ex-spouse does not become a shareholder.
I'm self-employed, how is my income and/or business valued?
Typically, a certified business valuator is hired to assess self-employed income and business value for divorce proceedings.
My spouse did not contribute to building my business, are they still entitled to a share of it?
Yes, a spouse's lack of direct contribution or involvement in building the business does not affect their entitlement to a share of family assets, which includes businesses owned by either spouse.
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