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For Forensic Accountants & Family Law

Net Worth Method Calculator

Reconstruct unreported income using the Net Worth Method. Build a side-by-side asset, liability, and expenditure analysis — used by forensic accountants, family lawyers, and in CRA reassessments.

Last updated: 2026-04-23

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Assets at period start

Cash, investments, real estate, vehicles, etc.

$
$
$
$
Total: $590,000.00

Assets at period end

Same categories — record end-of-period values

$
$
$
$
Total: $697,000.00

Liabilities at period start

Mortgages, loans, credit card balances, taxes owing

$
$
$
Total: $320,000.00

Liabilities at period end

End-of-period balances on the same liabilities

$
$
$
Total: $291,000.00

Personal expenditures during the period

Living costs paid from income (don't include investment purchases — those show in assets)

$
$
$
$
$
$
$
$
Total: $52,000.00
$

Total declared income from T4s, T5s, T1, T2125, etc. (after tax — should match disposable income).

Net Worth Method analysis

Period: 2024-01-01 → 2024-12-31

Net worth at start
$270,000.00
Net worth at end
$406,000.00
= Increase in net worth
$136,000.00
+ Personal expenditures
$52,000.00
= Total income required to support lifestyle
$188,000.00
− Reported income
−$85,000.00
Unexplained income (potential underreporting)
$103,000.00

The subject acquired assets and supported expenditures beyond what reported income would allow. Document the discrepancy and pursue explanations (gifts, inheritance, asset sales, loans, undeclared income).

Investigative framework — not a determination. The Net Worth Method is a starting point. Unexplained income may have legitimate sources (gifts, inheritance, loan proceeds, asset disposals, opening cash). Document and reconcile each source before drawing conclusions for court, CRA reassessment, or family law disclosure.

Categorize a year of statements in minutes, not days

The slowest part of a Net Worth analysis is extracting and categorizing transactions from PDFs. StatementsToExcel converts CIBC, RBC, BMO, Scotiabank, TD, and more into clean Excel — built for the workflow.

How this calculator works

The Net Worth Method follows a simple equation:

Increase in Net Worth + Personal Expenditures − Reported Income = Unexplained Income

Step by step:

  1. List assets at the start and end of the period. Cash, bank accounts, investments, real estate, vehicles, businesses, receivables.
  2. List liabilities at start and end. Mortgages, loans, credit card balances, taxes owing.
  3. Net worth = assets − liabilities, calculated at both dates.
  4. Increase in net worth = end − start. This is the wealth accumulated.
  5. Add personal expenditures during the period — money the subject spent on living, separate from investment.
  6. Result is the total income required to support the observed lifestyle and asset accumulation.
  7. Subtract reported income. The remainder is unexplained — either underreported income, or income from non-taxable sources that need to be documented (gifts, inheritance, loan proceeds, etc.).

The reliability of the analysis depends on the quality of the underlying data. Bank statements, credit card statements, brokerage statements, mortgage confirmations, and asset appraisals all feed into a defensible reconstruction.

Source & methodology

Methodology follows the standard Net Worth Method as applied by the CRA in indirect income reconstructions and by forensic accountants in litigation support. The output is an investigative starting point, not a legal determination. Each unexplained income figure must be reconciled against documented sources before being relied upon in court, audit response, or settlement negotiation.

Frequently Asked Questions

What is the Net Worth Method?
The Net Worth Method is an indirect method of reconstructing income, used by the CRA in audits, by forensic accountants in fraud and divorce investigations, and by family lawyers preparing financial disclosure. It compares the change in a subject's net worth (assets minus liabilities) plus their personal expenditures to their reported income. Any difference is "unexplained" income — potentially undeclared, hidden, or from sources requiring documentation.
When is this method used?
Common scenarios: CRA tax reassessments where books are unreliable; divorce cases where one spouse alleges hidden income; insurance fraud investigations; estate disputes; criminal financial investigations; and self-employment audits. It works particularly well when a subject has cash income that doesn't flow through traceable accounts.
Is the unexplained income figure proof of fraud?
No. The Net Worth Method produces a starting figure that requires investigation. Legitimate sources of "unexplained" income include: gifts, inheritances, loan proceeds, sales of personal assets, repayments of loans receivable, opening cash positions, and previously taxed savings. The method surfaces a question to investigate, not a conclusion.
How accurate are the asset and liability values?
Garbage in, garbage out. Asset values should reflect fair market value at each date (real estate appraisals, brokerage statements, vehicle Black Book values). Liabilities should come from mortgage statements, lender confirmations, or credit reports at the same dates. The smaller the period and the closer the documentation, the more reliable the conclusion.
Where do I get the personal expenditure numbers?
Bank statements and credit card statements are the primary source. Manually categorizing 12 months of transactions across multiple accounts is the slowest part of building a Net Worth Method analysis. StatementsToExcel converts those PDFs into clean, categorization-ready Excel/CSV in seconds. Forensic accountants use it to compress what used to be a multi-day data prep job into a single afternoon.
Can I print this for court or a CRA file?
Yes. Click "Print worksheet" to produce a clean printable view. Forensic accountants typically attach this as a working schedule, with supporting documentation (statements, appraisals, loan confirmations) in appendix.

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