Self-Employed Divorce Financial Disclosure Guide Canada

The Document That Can Make or Break Your Financial Future

When Sarah discovered her husband’s consulting business had grown from a modest side venture to a six-figure operation during their marriage, she realized she knew almost nothing about his actual income. Meanwhile, Mark worried that his fluctuating freelance earnings would be misunderstood, potentially inflating his support obligations beyond what he could sustainably pay. Both needed the same thing: a clear, accurate Statement of Professional Activities.

This single document has become the cornerstone of self-employed divorce financial disclosure in Canada. Whether you’re the self-employed spouse trying to demonstrate your true financial picture or the other party seeking transparency about your partner’s business income, understanding this document is crucial for achieving a fair settlement.

What Exactly Is a Statement of Professional Activities?

A Statement of Professional Activities is a document that shows how a self-employed person earns money. It lists different types of work, income sources, and financial details over a certain period. Think of it as a comprehensive financial X-ray that reveals not just what someone earned, but how they earned it, when they earned it, and what it truly cost to generate that income.

This document goes by several names, which can create confusion during divorce proceedings:

• Income Report
• Earnings Statement
• Self-Employment Income Sheet
• Professional Income Declaration
• Business Activity Statement

Regardless of what it’s called, its purpose remains constant: to provide a transparent, verifiable record of self-employment income that both parties and the court can trust.

Why This Document Matters More Than Ever in 2025

Recent changes to Canadian family law have placed increased emphasis on financial transparency, particularly for self-employed individuals. Courts have become more sophisticated in identifying hidden income and are less tolerant of incomplete disclosure. The Statement of Professional Activities has evolved from a helpful supporting document to an essential requirement in most cases involving self-employed divorce financial disclosure.

The Anatomy of a Statement of Professional Activities

Understanding what this document contains helps both parties know what to expect and what to look for. A comprehensive Statement includes multiple components, each serving a specific purpose in the disclosure process.

Personal and Business Identification

The document begins with clear identification of the professional or business owner:

• Full legal name and any business names used
• Business registration numbers and GST/HST numbers
• Professional designation numbers (if applicable)
• Contact information for both personal and business purposes

This section establishes exactly who is making the disclosure and which business entities are involved.

Comprehensive Work History

Unlike a simple income statement, this document provides context by detailing:

• Current contracts and clients: Active income sources with payment terms
• Recent completed projects: Work finished within the disclosure period
• Ongoing partnerships: Business relationships affecting income
• Pending work: Contracted but not yet completed projects

This historical perspective helps establish patterns and verify claimed income levels.

Detailed Income Breakdown

The heart of the document lies in its income analysis, which must show:

• Gross revenue: Total income before any deductions
• Payment methods: How income was received (cash, cheque, e-transfer, barter)
• Timing of payments: When income was received versus when earned
• Currency considerations: For those with international clients
• Income categories: Separating active business income from investments or passive income

Supporting Documentation Requirements

A Statement of Professional Activities gains credibility through its supporting documents:

• Last three years of tax returns and Notices of Assessment
• Business financial statements (for corporations, partnerships, or sole proprietorships)
• Bank statements for all business accounts
• Credit card statements used for business
• Contracts and invoices
• Accounts receivable aging reports

The Critical Role of Dates in Professional Activity Statements

The dates on this document matter significantly in financial and legal cases. They help show how someone’s financial situation has changed over time, creating a timeline that’s essential for fair division and support calculations.

Three Pivotal Date Ranges

Date of Marriage or Cohabitation: This establishes the baseline for business growth during the relationship. If a business existed before marriage, its value at the marriage date becomes crucial for determining what portion of current value is divisible.

Date of Separation: The business value and income level at separation often determines initial support obligations and property division. This snapshot in time can significantly impact both parties’ financial futures.

Current Date: Shows the most recent financial picture, essential for ongoing support calculations and demonstrating any changes since separation.

Why Historical Perspective Matters

Canadian courts recognize that self-employment income rarely follows a straight line. By examining income patterns over time, the Statement of Professional Activities helps:

• Identify seasonal fluctuations
• Reveal growth trends or decline
• Expose unusual one-time events
• Establish sustainable income levels for support calculations

Who Creates This Document and How?

Understanding the document’s creation process helps both parties assess its reliability and completeness. The Statement of Professional Activities typically emerges through collaboration between several professionals.

The Professional Team

Accountants: They organize and confirm financial information, ensuring numbers align with tax filings and business records. A Chartered Professional Accountant (CPA) often provides the most credible statements.

Bookkeepers: They maintain the detailed daily records that feed into the statement. Their meticulous tracking of income and expenses provides the raw data.

Business Valuators: For business valuation divorce purposes, a Chartered Business Valuator (CBV) may need to assess the fair market value of the business itself, not just its income.

Lawyers: They ensure the document meets legal requirements and addresses all necessary disclosure elements for family court.

The Creation Process

The typical timeline for creating a comprehensive Statement of Professional Activities involves:

1. Initial data gathering (1-2 weeks): Collecting all financial records
2. Organization and analysis (1-2 weeks): Categorizing income and expenses
3. Verification (1 week): Cross-referencing with tax returns and bank statements
4. Professional review (1 week): Accountant or valuator validation
5. Legal review (3-5 days): Ensuring compliance with disclosure requirements

Finding and Verifying the Statement of Professional Activities

Both parties need to know where to locate this crucial document and how to verify its accuracy.

For the Self-Employed Spouse

If you need to provide this document, check:

• Your accountant’s office: They often keep comprehensive financial records
• Bookkeeping files: Whether physical or digital (QuickBooks, Sage, etc.)
• Tax preparation records: Your tax preparer may have detailed worksheets
• Business financial software: Many programs can generate detailed reports

For the Other Spouse

If you’re seeking this document from your self-employed partner:

• Request it formally through your lawyer as part of mandatory disclosure
• Ask for all supporting documentation, not just the summary
• Verify dates ensure you’re getting current information
• Cross-reference with available tax returns and bank statements

Red Flags to Watch For

Both parties should be alert to signs of incomplete or misleading statements:

• Missing time periods or gaps in reporting
• Round numbers that suggest estimation rather than actual figures
• Inconsistencies with lifestyle or known expenses
• Absence of supporting documentation
• Significant unexplained changes from previous years

How Courts Use Professional Activity Statements

Canadian family courts have developed sophisticated approaches to analyzing self-employment income, making the Statement of Professional Activities a crucial piece of evidence.

Beyond Line 15000: The Reality of Income Assessment

Courts routinely look beyond the reported income on tax returns. They may consider:

• Pre-tax corporate income: Money retained in corporations
• Legitimate business expenses: Distinguishing necessary costs from personal benefits
• Depreciation and capital cost allowances: Non-cash deductions that don’t affect actual income
• Income splitting: Amounts paid to family members that may not reflect actual work performed

The Lifestyle Analysis

When a Statement of Professional Activities shows low income but the family lived comfortably, courts conduct lifestyle analyses:

• Examining credit card statements for spending patterns
• Reviewing mortgage and loan applications for stated income
• Analyzing household expenses versus reported income
• Considering assets acquired during the marriage

Imputation of Income

If the court finds the Statement of Professional Activities understates income, they may impute (assign) higher income based on:

• Historical earning patterns
• Industry standards for similar professionals
• Business gross revenues and typical profit margins
• Evidence of deliberately reduced income near separation

The Impact on Property Division and Support

The Statement of Professional Activities directly influences both major financial aspects of divorce: property division and support obligations.

Business Valuation Divorce Considerations

For property division, the statement helps establish:

• Business value: Revenue trends indicate business worth
• Goodwill: Professional relationships and recurring clients
• Work in progress: Unbilled time or incomplete projects
• Bad debts: Realistic collection expectations

The distinction between personal earning capacity and actual business value becomes crucial. A successful consultant might have high income but minimal business value if success depends entirely on their personal efforts.

Support Calculation Complexities

For support purposes, the statement reveals:

• Average sustainable income: Not just good years or bad years
• Necessary business expenses: Costs required to maintain income
• Future earning capacity: Based on historical patterns
• Ability to pay: Actual cash available after business needs

Managing the Emotional Aspects

While focusing on the document itself, it’s important to acknowledge the emotional weight it carries. For both parties, this statement represents more than numbers—it’s about trust, fairness, and future security.

For the Self-Employed Spouse

You may feel:

• Exposed: Your business operations laid bare
• Misunderstood: Worry that fluctuating income won’t be fairly assessed
• Protective: Concern about revealing competitive business information
• Overwhelmed: By the documentation requirements

Remember that transparency, while uncomfortable, typically leads to better outcomes than resistance.

for the Other Spouse

You might experience:

• Suspicion: Wondering if all income is disclosed
• Confusion: Self-employment finances can be genuinely complex
• Frustration: At the time required for proper disclosure
• Anxiety: About your financial future

Professional help in understanding the statement can alleviate many of these concerns.

Best Practices for Both Parties

Success in navigating self-employed divorce financial disclosure requires proactive steps from both spouses.

If You’re Self-Employed

Start Early: Begin gathering documentation immediately upon separation. The more organized your records, the smoother the process.

Be Comprehensive: Include everything, even income sources you think might not count. Let professionals determine relevance.

Maintain Separation: Keep business and personal expenses clearly divided going forward. This clarity helps everyone.

Document Changes: If income drops or spikes, document why. Context prevents misunderstandings.

Consider Timing: Major business decisions during divorce can appear strategic. Document legitimate business reasons for changes.

If Your Spouse Is Self-Employed

Educate Yourself: Basic understanding of their business helps you ask informed questions.

Request Everything: Don’t hesitate to ask for complete documentation. It’s your right.

Verify Independently: Cross-check disclosed income against known expenses and lifestyle.

Seek Professional Help: A forensic accountant can identify discrepancies you might miss.

Stay Factual: Focus on financial evidence rather than accusations.

Common Pitfalls and How to Avoid Them

Both parties can benefit from understanding typical mistakes in handling Professional Activity Statements.

Incomplete Disclosure

The Pitfall: Providing only favorable years or excluding certain income sources. The Solution: Full disclosure from the start saves time, money, and credibility.

Mixing Personal and Business

The Pitfall: Unclear boundaries between personal and business expenses. The Solution: Clear categorization with supporting documentation for all business expenses.

Timing Manipulation

The Pitfall: Deferring income or accelerating expenses around separation. The Solution: Maintain normal business practices and document any legitimate changes.

Underestimating Complexity

The Pitfall: Assuming self-employment income is straightforward. The Solution: Engage qualified professionals early in the process.

The 2025 Landscape: Recent Developments

Canadian family law continues evolving in response to the growing gig economy and self-employment trends. Recent developments affecting Professional Activity Statements include:

Enhanced Disclosure Requirements

Courts now expect more detailed breakdowns of:

• Digital income streams (online courses, subscriptions, affiliate income)
• Cryptocurrency and digital asset transactions
• Platform-based earnings (Uber, DoorDash, freelance marketplaces)
• Passive income from automated business systems

Technology Integration

Modern statements increasingly incorporate:

• Cloud-based accounting data
• Digital payment processor records
• E-commerce platform reports
• Automated income tracking

Standardization Efforts

Professional organizations are working toward standardized formats for these statements, making them easier to prepare and compare across cases.

Moving Forward: Using the Statement Constructively

The Statement of Professional Activities, while potentially contentious, can actually facilitate fair resolutions when handled properly. Both parties benefit from accurate, complete disclosure that establishes a true financial picture.

Building Agreement on Numbers

Once both parties understand and accept the income figures, negotiations can focus on fair distribution rather than disputes over facts. This shift from conflict to problem-solving often leads to more sustainable agreements.

Planning for Post-Divorce Success

The detailed analysis required for the statement often reveals opportunities for both parties:

• The self-employed spouse gains clarity on their business operations
• The other spouse understands income volatility and can plan accordingly
• Both can make informed decisions about future financial arrangements

The Lasting Impact of Getting It Right

A properly prepared Statement of Professional Activities does more than satisfy legal requirements—it sets the foundation for both parties’ financial futures. When both spouses understand the true financial picture, they can make informed decisions about property division, support arrangements, and their own financial planning.

For the self-employed spouse, the process often provides valuable business insights. The detailed analysis required can reveal inefficiencies, opportunities, and trends that benefit future operations.

For the other spouse, understanding the complexities of self-employment income leads to more realistic expectations and better financial planning for life after divorce.

Conclusion: Transparency as the Path Forward

The Statement of Professional Activities represents more than a legal requirement—it’s an opportunity for both parties to ground their divorce negotiations in financial reality rather than speculation or mistrust. While the process of creating and analyzing this document can be challenging, particularly given the emotional context of divorce, its thorough completion benefits everyone involved.

Canadian couples navigating divorce with self-employment income face unique challenges, but proper documentation and professional guidance can transform these challenges into opportunities for fair resolution. Whether you’re preparing the statement or reviewing one provided to you, remember that accuracy and completeness serve everyone’s interests in achieving a sustainable financial future post-divorce.

The path through self-employed divorce financial disclosure may be complex, but with proper understanding of documents like the Statement of Professional Activities, both parties can emerge with clarity, fairness, and the foundation for their independent financial futures.