In Ontario, millions of Aeroplan or frequent flyer points accumulated on a corporate credit card but held in a personal account are generally considered personal property. They must be valued and included in your Net Family Property calculation. The basic Superior Court filing fee to commence your proceeding and set it down for a hearing is $669 CAD.
The Hidden Value of Corporate Loyalty Programs
Many business owners and corporate executives in Ontario travel extensively for work. Whether you are flying out of Pearson International in Toronto or the Ottawa International Airport, charging business expenses to a corporate credit card often generates a massive stockpile of loyalty points. Over a long marriage, spouses can accumulate millions of Aeroplan points, translating to tens of thousands of dollars in travel value. When a divorce occurs, separating these digital assets becomes a unique legal challenge.
The central conflict often revolves around the “corporate veil.” The business owner will argue that because the points were earned through corporate expenditures, they belong to the business and shouldn’t be divided. Conversely, the CRA generally views points earned on a corporate card but credited to a personal frequent flyer account as a personal benefit. In Ontario family law, any asset holding a financial value at the date of separation must be accounted for in the Net Family Property (NFP) equalization. We strongly recommend consulting a local family lawyer from our directory to ensure these lucrative assets are not hidden from your financial statements.
Step-by-Step Process in Ontario
Dividing or equalizing frequent flyer points requires careful documentation and valuation. Whether you live in Mississauga, Hamilton, or Sudbury, the Superior Court of Justice expects full financial disclosure of all assets, including digital and loyalty points. 🗂
Step 1: Identifying the Account Holder and Terms
First, you must determine exactly whose name is on the loyalty account. Programs like Aeroplan usually assign accounts to individuals, not corporations, regardless of who pays the credit card bill. You must review the specific Terms and Conditions of the loyalty program, as many airlines explicitly state that points are not property and cannot be transferred upon divorce. However, Ontario courts focus on the value the points hold, not just the airline’s internal policies.
Step 2: Requesting Full Disclosure (Form 13.1)
The spouse holding the points must list them on their Form 13.1: Financial Statement. You will need to request statements from the date of marriage and the date of separation to calculate the growth of the points during the relationship. If a spouse attempts to hide these statements, your lawyer can serve a Request to Admit or file a motion for disclosure at the local courthouse. 📝
Step 3: Assigning a Fair Market Value
Because courts cannot easily force an airline to split an account, the points must be assigned a monetary value for the NFP calculation. There are generally two ways to value them: the replacement cost (what it would cost to buy an equivalent flight) or the cash-out value (what they are worth if redeemed for gift cards or merchandise). Commonly, points are valued between 1 to 2 cents (CAD) per point, though this requires negotiation between the parties’ lawyers.
Step 4: Equalizing or Offsetting the Value
Once a dollar value is agreed upon, that amount is added to the spouse’s Net Family Property. The spouse holding the points usually keeps the account intact but must pay the other spouse half the value in cash or offset it against other assets, such as vehicles, savings, or the equalization of the matrimonial home.
How Much Does it Cost in Ontario?
Fighting over loyalty points should be weighed against the legal fees required to argue their value. It is vital to ensure the juice is worth the squeeze. 💰
- Superior Court Fees: Filing an Application (Form 8A) costs $224 CAD (which includes the $10 federal divorce registry fee), and setting it down for a hearing is $445 CAD (Total: $669 CAD).
- Lawyer Fees: Drafting arguments regarding corporate veil piercing and point valuation takes time. Lawyers charge $350 to $800 CAD per hour.
- Valuation Experts: While you rarely need a formal Chartered Business Valuator just for airline points, if the points are attached to a larger corporate valuation, the CBV fees can range from $5,000 to $15,000 CAD.
How Long Does the Process Take?
Simply valuing points takes only a few weeks once disclosure is provided. However, resolving the entire Net Family Property equalization during a divorce generally takes 1 to 2 years in Ontario. The mandatory separation period for the divorce itself is one year. If a spouse refuses to provide their Aeroplan or credit card statements, court delays for disclosure motions can push the timeline past 2.5 years. 📅
Frequently Asked Questions (FAQ)
Can the airline refuse to split the points?
Yes. Most airline terms and conditions prohibit the transfer of points between accounts, even with a court order. Therefore, Ontario courts usually order the points to be valued in cash and offset against other assets rather than directly splitting the account.
Does the CRA consider these points taxable?
The CRA’s policy generally states that points earned on a corporate credit card but redeemed for personal use are not strictly taxed unless they are deemed an explicit employee taxable benefit. However, for family law purposes, their intrinsic value is what matters for equalization.
What if my spouse spent all the points right before separating?
If a spouse recklessly depletes a joint asset or empties a points account immediately prior to separation to defeat your claim, your lawyer can argue for “unequal division of net family property” under Section 5(6) of the Family Law Act, or ask the court to impute the value of the spent points back into their NFP.
How exactly do we determine the cash value per point?
Lawyers generally look at the airline’s internal purchasing rates, the cost of gift cards in their rewards portal, or the average industry standard (often around 1 to 1.5 cents per point). Both sides must agree, or a judge will make a ruling based on the evidence presented.
Can points earned before marriage be excluded?
Yes. Any points you held on the exact date of marriage can be deducted from your Net Family Property calculation, provided you have the historical statements to prove the balance on that specific day.
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