Here is what the Spousal Support Calculator says...
Other pensions or superannuation
Input the annual amount of any other pensions or superannuation that the party received that have not already been included under another category (T1, Line 115).
Examples of "Other pensions or superannuation" include (ie. not exhaustive):
T4A slip, Box 16;
T3 slip, Box 31;
annuity and registered retirement income fund (RRIF), including life income fund, payments, if party is 65 or older, or if party is recipient because of death of spouse or common-law partner (T4A slip, Box 24 or Box 28; T4RIF slip, Box 16 or 20; T5 slip, Box 19);
gross amount of pensions from a foreign country (converted to Canadian dollars);
United States individual retirement account (IRA);
United States social security and Medicare premiums paid on party's behalf.
According to the CSG, annual income is determined using Line 150 ("Total income") of the T1 General form, adjusted in accordance with Schedule III and ss. 17, 18 and 19 of the CSG. This is commonly referred to as "Guidelines Income".
Note that the SSAG use the same definition of annual income as under the CSG, with some exceptions.
See the help under "Employment Income" regarding Guidelines Income caps under the CSG and ceilings, floors, and floor exceptions under the SSAG.
TIP: There is a built-in conversion feature. See the help under "Employment Income".
My Rebuttal:
I again reference my rebuttal to Old Age Security. It seems very unfair to me to include all this pension arbitrarily especially when the majority of it could have been accrued prior to the divorced couple being together.
Sunday, May 23, 2010
Income Section - CPP Disability Benefit
This is what the Spousal Support Calculator says...
CPP Disability benefit
Input the party's total annual Canada Pension Plan (CPP) disability benefits (T1, Line 152; T4A(P) slip, Box 16). This amount should also be included in "CPP Retirement benefit".
According to the CSG, annual income is determined using Line 150 ("Total income") of the T1 General form, adjusted in accordance with Schedule III and ss. 17, 18 and 19 of the CSG. This is commonly referred to as "Guidelines Income".
Note that the SSAG use the same definition of annual income as under the CSG, with some exceptions.
See the help under "Employment Income" regarding Guidelines Income caps under the CSG and ceilings, floors, and floor exceptions under the SSAG.
TIP: There is a built-in conversion feature. See the help under "Employment Income".
My Rebuttal:
This is one of those moments which makes me wonder if Family Lawyers are truly mentally retarded.
This amount is already INCLUDED in Box 20 as detailed in my previous post so it is obviously EXCLUDED from the spousal support calculation.
If you notice on a T1, Box 152 isn't even included when calculating total income.
I decided to test it to make sure it isn't duplicating the disability benefit but sure enough it is. I'm sure all disabled people will appreciate knowing that this calculator will duplicate their CPP Disability payments throwing the calculation out by 100's of dollars per month.
If you are dealing with someone who is receiving a disability payment, enter it only once (either in this field or CPP Retirement Benefit field.
Will someone please hit me over the head with a hammer 10 times so I can lose 50 basis points in IQ and become a family lawyer. Thanks.
CPP Disability benefit
Input the party's total annual Canada Pension Plan (CPP) disability benefits (T1, Line 152; T4A(P) slip, Box 16). This amount should also be included in "CPP Retirement benefit".
According to the CSG, annual income is determined using Line 150 ("Total income") of the T1 General form, adjusted in accordance with Schedule III and ss. 17, 18 and 19 of the CSG. This is commonly referred to as "Guidelines Income".
Note that the SSAG use the same definition of annual income as under the CSG, with some exceptions.
See the help under "Employment Income" regarding Guidelines Income caps under the CSG and ceilings, floors, and floor exceptions under the SSAG.
TIP: There is a built-in conversion feature. See the help under "Employment Income".
My Rebuttal:
This is one of those moments which makes me wonder if Family Lawyers are truly mentally retarded.
This amount is already INCLUDED in Box 20 as detailed in my previous post so it is obviously EXCLUDED from the spousal support calculation.
If you notice on a T1, Box 152 isn't even included when calculating total income.
I decided to test it to make sure it isn't duplicating the disability benefit but sure enough it is. I'm sure all disabled people will appreciate knowing that this calculator will duplicate their CPP Disability payments throwing the calculation out by 100's of dollars per month.
If you are dealing with someone who is receiving a disability payment, enter it only once (either in this field or CPP Retirement Benefit field.
Will someone please hit me over the head with a hammer 10 times so I can lose 50 basis points in IQ and become a family lawyer. Thanks.
Income Section - CPP Retirement Benefit
This is what the Spousal Support Calculator says...
CPP Retirement benefit
Input the party's total annual Canada Pension Plan (CPP) benefits (T1, Line 114; T4A(P) slip, Box 20), including any CPP disability benefits .
According to the CSG, annual income is determined using Line 150 ("Total income") of the T1 General form, adjusted in accordance with Schedule III and ss. 17, 18 and 19 of the CSG. This is commonly referred to as "Guidelines Income".
Note that the SSAG use the same definition of annual income as under the CSG, with some exceptions.
See the help under "Employment Income" regarding Guidelines Income caps under the CSG and ceilings, floors, and floor exceptions under the SSAG.
TIP: There is a built-in conversion feature. See the help under "Employment Income".
My Rebuttal:
Box 20 Taxable CPP Benefits on the T4A(P) includes boxes 14, 15, 16, 17, 18 which are as follows:
Box 14 Retirement Benefit
Box 15 Survivor Benefit
Box 16 Disability Benefit
Box 17 Child Benefit
Box 18 Death Benefit
I agree that Box 14 and Box 15 should be included for spousal support purposes.
Box 16 Disability Benefit
I'll address this issue in my next blog. What a nightmare!!
Box 17 Child Benefit
This benefit is available to children once they turn 18 if they have a disabled parent. It is the childs income whether the parent receives it or not.
So there are two issues here.
1. If the spousal calculation is done for a child whose parent is disabled or
2. If the spousal calculation is done for a parent who is disabled.
My view is that since CRA deems that this is the childs money, under (1) it is included in income and under (2) it is excluded from income.
I think anyone with these circumstances should insure that the child receives the money and not the parent to prevent a parent from misusing the money
Box 18 Death Benefit
(Note sarcasm here) Great to know if you have a loved one that passes away, you will be gouged for spousal support when you probably use the money for funeral arrangements. Obviously EXCLUDED
CPP Retirement benefit
Input the party's total annual Canada Pension Plan (CPP) benefits (T1, Line 114; T4A(P) slip, Box 20), including any CPP disability benefits .
According to the CSG, annual income is determined using Line 150 ("Total income") of the T1 General form, adjusted in accordance with Schedule III and ss. 17, 18 and 19 of the CSG. This is commonly referred to as "Guidelines Income".
Note that the SSAG use the same definition of annual income as under the CSG, with some exceptions.
See the help under "Employment Income" regarding Guidelines Income caps under the CSG and ceilings, floors, and floor exceptions under the SSAG.
TIP: There is a built-in conversion feature. See the help under "Employment Income".
My Rebuttal:
Box 20 Taxable CPP Benefits on the T4A(P) includes boxes 14, 15, 16, 17, 18 which are as follows:
Box 14 Retirement Benefit
Box 15 Survivor Benefit
Box 16 Disability Benefit
Box 17 Child Benefit
Box 18 Death Benefit
I agree that Box 14 and Box 15 should be included for spousal support purposes.
Box 16 Disability Benefit
I'll address this issue in my next blog. What a nightmare!!
Box 17 Child Benefit
This benefit is available to children once they turn 18 if they have a disabled parent. It is the childs income whether the parent receives it or not.
So there are two issues here.
1. If the spousal calculation is done for a child whose parent is disabled or
2. If the spousal calculation is done for a parent who is disabled.
My view is that since CRA deems that this is the childs money, under (1) it is included in income and under (2) it is excluded from income.
I think anyone with these circumstances should insure that the child receives the money and not the parent to prevent a parent from misusing the money
Box 18 Death Benefit
(Note sarcasm here) Great to know if you have a loved one that passes away, you will be gouged for spousal support when you probably use the money for funeral arrangements. Obviously EXCLUDED
Income Section - Old Age Security Pension (OAS)
This is what the Spousal Support Calculator says...
Old Age Security pension (OAS)
Input the party's Old Age Security pension (T1, Line 113; T4A(OAS) slip, Box 18).
According to the CSG, annual income is determined using Line 150 ("Total income") of the T1 General form, adjusted in accordance with Schedule III and ss. 17, 18 and 19 of the CSG. This is commonly referred to as "Guidelines Income".
Note that the SSAG use the same definition of annual income as under the CSG, with some exceptions.
See the help under "Employment Income" regarding Guidelines Income caps under the CSG and ceilings, floors, and floor exceptions under the SSAG.
TIP: There is a built-in conversion feature. See the help under "Employment Income".
My Rebuttal
A full OAS pension is dependent on two categories:
Caregory (1) You lived in Canada for at least 40 years after age 18 or
Category (2) You reached the age of 25 on or before July 1, 1977, and at that time:
1. you lived in Canada, or;
2. you did not live in Canada but you had some residence in Canada after the age of 18, or;
3. you were in possession of a valid Canadian Immigration Visa; and
4. you lived in Canada for the 10 years immediately before the approval of your OAS application.
If you did not live in Canada continuously for the 10 years immediately before the approval of your application, you may still qualify for a full pension if you meet both conditions below:
• you lived in Canada for the entire year immediately before the approval of your application; and
• you lived in Canada (since age 18) for at least 3 years for every 1 year of absence from Canada during these last 10 years.
Partial Pension
A partial pension is calculated at the rate of 1/40th of the full pension for each complete year of residence in Canada since age 18.
The minimum period you need to qualify for a partial pension is 10 years of residence in Canada after reaching age 18 (as long as you live in Canada when you receive your OAS pension). In other words, if you lived in Canada for 10 years after your 18th birthday, you may qualify to receive 10/40ths or one-quarter of the full Old Age Security pension.
Once a partial pension is approved, we can never increase the number of years of residency on which your pension is based. You will however, qualify for any cost-of-living increases.
Now it seems to me that alot of this is dependent on living in Canada for a number of years. I find it unfair to include the whole pension arbitrarily.
Old Age Security pension (OAS)
Input the party's Old Age Security pension (T1, Line 113; T4A(OAS) slip, Box 18).
According to the CSG, annual income is determined using Line 150 ("Total income") of the T1 General form, adjusted in accordance with Schedule III and ss. 17, 18 and 19 of the CSG. This is commonly referred to as "Guidelines Income".
Note that the SSAG use the same definition of annual income as under the CSG, with some exceptions.
See the help under "Employment Income" regarding Guidelines Income caps under the CSG and ceilings, floors, and floor exceptions under the SSAG.
TIP: There is a built-in conversion feature. See the help under "Employment Income".
My Rebuttal
A full OAS pension is dependent on two categories:
Caregory (1) You lived in Canada for at least 40 years after age 18 or
Category (2) You reached the age of 25 on or before July 1, 1977, and at that time:
1. you lived in Canada, or;
2. you did not live in Canada but you had some residence in Canada after the age of 18, or;
3. you were in possession of a valid Canadian Immigration Visa; and
4. you lived in Canada for the 10 years immediately before the approval of your OAS application.
If you did not live in Canada continuously for the 10 years immediately before the approval of your application, you may still qualify for a full pension if you meet both conditions below:
• you lived in Canada for the entire year immediately before the approval of your application; and
• you lived in Canada (since age 18) for at least 3 years for every 1 year of absence from Canada during these last 10 years.
Partial Pension
A partial pension is calculated at the rate of 1/40th of the full pension for each complete year of residence in Canada since age 18.
The minimum period you need to qualify for a partial pension is 10 years of residence in Canada after reaching age 18 (as long as you live in Canada when you receive your OAS pension). In other words, if you lived in Canada for 10 years after your 18th birthday, you may qualify to receive 10/40ths or one-quarter of the full Old Age Security pension.
Once a partial pension is approved, we can never increase the number of years of residency on which your pension is based. You will however, qualify for any cost-of-living increases.
Now it seems to me that alot of this is dependent on living in Canada for a number of years. I find it unfair to include the whole pension arbitrarily.
Saturday, May 22, 2010
Income Section - Other Employment Income
This is what the Spousal Support Calculator says...
Input any other annual employment income that the party received (T1, Line 104), not included in "Employment income".
Examples of "Other employment income" include (ie. not exhaustive):
employment income not reported on a T4 slip (eg. tips; occasional earnings);
net research grants;
clergy's housing allowance (T4 slip, Box 30);
income maintenance insurance plans (wage-loss replacement plans) (T4A slip, all or portion of Box 28);
veterans' benefits (T4A slip, Box 28);
certain GST/HST rebates;
royalties for a party's work or invention;
amounts received under a supplementary unemployment benefit plan (a guaranteed annual wage plan);
taxable benefit for premiums paid to cover you under a group term life-insurance plan (T4A slip, Box 28);
employee profit-sharing plan (T4PS slip, Box 35);
medical premium benefits (T4A slip, Box 28);
wage earners protection plan (T4A slip, Box 28).
According to the CSG, annual income is determined using Line 150 ("Total income") of the T1 General form, adjusted in accordance with Schedule III and ss. 17, 18 and 19 of the CSG. This is commonly referred to as "Guidelines Income".
Note that the SSAG use the same definition of annual income as under the CSG, with some exceptions.
See the help under "Employment Income" regarding Guidelines Income caps under the CSG and ceilings, floors, and floor exceptions under the SSAG.
TIP: There is a built-in conversion feature. See the help under "Employment Income".
MY REBUTTAL
Generally I am in agreement that most of this income should be included for child/spousal support calculations.
However I have two issues that I would like to cover - one of which they mention and one of which they don't.
Employee Profit Sharing Plans (EPSP)
This is probably the most common income that people would see on this line. Usually the employer requires the employee to make a contribution and then the employer will match it based on a defined percentage (ie 100%, 50%, 25%). It is the company match that appears on this line.
At first glance, it appears this should obviously be included. However, consider this scenario. What if both spouses are working and one takes advantage of it by saving his/her money while the other does not?
I am tired of our society punishing savers and rewarding spenders. It needs to be determined if both spouses have equal opportunity to have their employer contribute to an EPSP. If they both do and one does not take advantage of it, I would support an imputed amount for the non-contributing spouse.
Foreign Income
Another common inclusion on this line is foreign income (usually US Income)
Canadian citizens have to report their worldwide income on their Canadian return.
However you can't just arbitrarily add Line 104 when it includes foreign income.
The nature of this income needs to be determined to see whether it should be included.
If it is US Income, you need to request the US 1040 (similar to our T1) to assess its nature.
In addition, CRA applies an exchange rate to this amount based on an average of the previous year. Considering the volatility of the US$/C$ exchange rate, an assessment needs to be made of whether that rate CRA uses is realistic on a going forward basis.
I had a question recently about disability top up payments from WSIB. As WLRP and SUB benefits are included, I would have to support top up payments from WSIB included in income for CS/SS. It may not be on this line but it should be included in my view.
Input any other annual employment income that the party received (T1, Line 104), not included in "Employment income".
Examples of "Other employment income" include (ie. not exhaustive):
employment income not reported on a T4 slip (eg. tips; occasional earnings);
net research grants;
clergy's housing allowance (T4 slip, Box 30);
income maintenance insurance plans (wage-loss replacement plans) (T4A slip, all or portion of Box 28);
veterans' benefits (T4A slip, Box 28);
certain GST/HST rebates;
royalties for a party's work or invention;
amounts received under a supplementary unemployment benefit plan (a guaranteed annual wage plan);
taxable benefit for premiums paid to cover you under a group term life-insurance plan (T4A slip, Box 28);
employee profit-sharing plan (T4PS slip, Box 35);
medical premium benefits (T4A slip, Box 28);
wage earners protection plan (T4A slip, Box 28).
According to the CSG, annual income is determined using Line 150 ("Total income") of the T1 General form, adjusted in accordance with Schedule III and ss. 17, 18 and 19 of the CSG. This is commonly referred to as "Guidelines Income".
Note that the SSAG use the same definition of annual income as under the CSG, with some exceptions.
See the help under "Employment Income" regarding Guidelines Income caps under the CSG and ceilings, floors, and floor exceptions under the SSAG.
TIP: There is a built-in conversion feature. See the help under "Employment Income".
MY REBUTTAL
Generally I am in agreement that most of this income should be included for child/spousal support calculations.
However I have two issues that I would like to cover - one of which they mention and one of which they don't.
Employee Profit Sharing Plans (EPSP)
This is probably the most common income that people would see on this line. Usually the employer requires the employee to make a contribution and then the employer will match it based on a defined percentage (ie 100%, 50%, 25%). It is the company match that appears on this line.
At first glance, it appears this should obviously be included. However, consider this scenario. What if both spouses are working and one takes advantage of it by saving his/her money while the other does not?
I am tired of our society punishing savers and rewarding spenders. It needs to be determined if both spouses have equal opportunity to have their employer contribute to an EPSP. If they both do and one does not take advantage of it, I would support an imputed amount for the non-contributing spouse.
Foreign Income
Another common inclusion on this line is foreign income (usually US Income)
Canadian citizens have to report their worldwide income on their Canadian return.
However you can't just arbitrarily add Line 104 when it includes foreign income.
The nature of this income needs to be determined to see whether it should be included.
If it is US Income, you need to request the US 1040 (similar to our T1) to assess its nature.
In addition, CRA applies an exchange rate to this amount based on an average of the previous year. Considering the volatility of the US$/C$ exchange rate, an assessment needs to be made of whether that rate CRA uses is realistic on a going forward basis.
I had a question recently about disability top up payments from WSIB. As WLRP and SUB benefits are included, I would have to support top up payments from WSIB included in income for CS/SS. It may not be on this line but it should be included in my view.
Thursday, May 20, 2010
Income Section - Employment Income
This is what the Spousal Support Calculator says...
If the party is employed (ie. receives a T4 slip), input the appropriate gross annual income prior to deductions, including any taxable benefit amounts that are or will be subject to income tax (T1, Line 101; T4 slip, Box 14).
According to the CSG, annual income is determined using Line 150 ("Total income") of the T1 General form, adjusted in accordance with Schedule III and ss. 17, 18 and 19 of the CSG. This is commonly referred to as "Guidelines Income".
The most current information is to be used (CSG, s.2(3)). However, a court will use last year’s income to determine income for CSG purposes under CSG, s. 16, in the absence of any evidence that things have changed significantly, at least on an interim motion. See: Bortolotto v. Bortolotto, 2002 CarswellOnt 1717 (Ont. Master). See also: Suto v. Suto, 2002 CarswellBC 1905 (B.C.S.C.) and Mooney v. Mooney, 2002 CarswellBC 1933 (B.C.S.C.).
Note that the SSAG use the same definition of annual income as under the CSG, with some exceptions.
CSG, Guidelines Income Cap:
When a child support payor's Guidelines Income is over $150,000 (CSG, s.4), if the court considers the table amount of child support based on the full Guidelines Income to be inappropriate, the court may apply the table amount of child support for the first $150,000 of income, and use its discretion to determine the appropriate amount of additional child support based on the balance of the income, plus special/extraordinary expenses, if any.
SSAG, Guidelines Income Ceilings, Floors and Exceptions:
For the SSAG, when a spousal support payor's Guidelines Income is over $350,000, the formulas should no longer be automatically applied to divide income beyond that threshold. Instead, the court will have to exercise discretion in fixing the amount of spousal support. Similarly, when a spousal support payor's Guidelines Income is under $20,000, no spousal support is payable unless an exception is made (ie. payor spouse has significantly reduced expenses). Where a spousal support payor's income is between $20,000-$30,000, there is also the possibility of an exception to the formulas to eliminate a “cliff effect” of the floor of $20,000. In these cases, it might be necessary to depart from the lower end of the range, depending on the payor’s circumstances and his/her ability to pay.
TIP: There is a built-in conversion feature that will automatically convert weekly, bi-weekly, and monthly amounts into annual figures. For example, input 1000w for weekly income of $1,000, press enter and the software automatically multiplies the number by 52, and results in $52,000; For bi-weekly income of $1,000: input 1000b (results in $1,000 x 26 = $26,000). For monthly income of $1,000, input 1000m (results in $1,000 x 12 = $12,000).
MY REBUTTAL
First it is critical to identify whether this is "Employment Income for an Employee" or "Employment Income for a Corporate Owner".
Employment Income for an employee
Box 14 includes the following amounts:
(1) Employee Base Pay
(2) Employee Bonus
(3) Box 30 Board and Lodging
(4) Box 31 Special Work Site
(5) Box 32 Travel in a Prescribed Zone
(6) Box 33 Meical Travel Assistance
(7) Box 34 Personal Use of an employers automobile
(8) Box 36 Interest Free and Low Interest Loans
(9) Box 38 Security Options Benefits
(10) Box 40 Other Taxable Allowances & Benefits
(11) Box 70 Municipal Officers Expense Allowance
(12) Box 71 Status Indian Employee
(1) Employee Base Pay
If an employee is on a semi-monthly or monthly payroll then base pay will be accurately reflected in Box 14.
This is not the case for an employee on a bi-weekly or a weekly payroll. Most employers now use the calculation / 365 * 14 for bi-weekly and / 365 * 7 for weekly. This is to account for the occasional 27 and 53 pay period years. So for the 26 pay period and 52 pay period years, income will be understated in Box 14and for the 27 pay period and 53 pay period years, income will be overstated in Box 14.
(2) Employee Bonus
Employees have the ability to defer (this means the bonus was earned in one tax year but paid in another) Deferred bonuses must be paid in the next tax year after deferral. An assessment needs to be made whether Box 14 includes two bonuses, one bonus or no bonus and an app[ropriate adjustment be made.
In addition, bonuses can fluctuate wildly from year to year. I am of the view that the "target bonus" should be used rather than the actual bonus paid. Absence of a target bonus I would support an average of the past 3-5 years bonuses to get a reasonable figure.
#3 - #11 with the exception of #9
I am ok with these being income inclusions and they should reflect the proper annual amount. Most common is #10 Box 40 Taxable Allowances & Benefits
#9 Box 38 Security Options Benefits (a.k.a. Stock Options
First of all, you need an explanation of a stock option. A stock option means an employee has an option to purchase a stock at a set price. When an employee exercises a stock option it means they are purchasing it at a set price and immediately selling it at the higher price.
I don't support this being included in income as it certainly does not reflect income for that particular year and its basically impossible to determine how many years it reflects. My best suggestion is that if stock options are an issue, there should be some agreement about how they are to be shared and should be excluded for child and spousal support purposes.
#12 Box 71 Status Indian Employee
I'll deal with this later in the section non taxable income.
Bottom Line - Box 14 of the T4 may or may not reflect an individuals income for year.
Employment Income for a Corporate Owner
The Spousal Support Guidelines are absolutely abysmal in dealing with corporate owners. First of all, corporate owners are exempt from EI but pay double CPP so the spousal support calculator won't take the right EI and CPP deductions.
Secondly corporate owners have a deferral option similar to an employee bonus. What needs to be assessed is Schedule 125 of the Corporate T2 (Income Statement) to see what owner salary was expensed.
Another issue is that frequently corporate year ends are not calendar year ends (ie December 31) so in that case the T1 salary might be totally irrelevant as it is based on what was paid in a calendar year whereas the corporate expensed salary is based on the non calendar year.
The guidelines say income should be based on Line 150 with adjusments in Sections 17, 18 and 19. Is anyone getting an idea yet that Line 150 is completely irrelevant in determining annual income for an individual? This will become even clearer in future posts I will make.
I have no comment on their calculations when an income is over 150,000 or 350,000 or under 20,000 however I assume by discretion they mean guessing which means they will probably do the wrong thing.
Well that was just the first line of the Spousal Support Calculator.
Unbelievable, eh?
If the party is employed (ie. receives a T4 slip), input the appropriate gross annual income prior to deductions, including any taxable benefit amounts that are or will be subject to income tax (T1, Line 101; T4 slip, Box 14).
According to the CSG, annual income is determined using Line 150 ("Total income") of the T1 General form, adjusted in accordance with Schedule III and ss. 17, 18 and 19 of the CSG. This is commonly referred to as "Guidelines Income".
The most current information is to be used (CSG, s.2(3)). However, a court will use last year’s income to determine income for CSG purposes under CSG, s. 16, in the absence of any evidence that things have changed significantly, at least on an interim motion. See: Bortolotto v. Bortolotto, 2002 CarswellOnt 1717 (Ont. Master). See also: Suto v. Suto, 2002 CarswellBC 1905 (B.C.S.C.) and Mooney v. Mooney, 2002 CarswellBC 1933 (B.C.S.C.).
Note that the SSAG use the same definition of annual income as under the CSG, with some exceptions.
CSG, Guidelines Income Cap:
When a child support payor's Guidelines Income is over $150,000 (CSG, s.4), if the court considers the table amount of child support based on the full Guidelines Income to be inappropriate, the court may apply the table amount of child support for the first $150,000 of income, and use its discretion to determine the appropriate amount of additional child support based on the balance of the income, plus special/extraordinary expenses, if any.
SSAG, Guidelines Income Ceilings, Floors and Exceptions:
For the SSAG, when a spousal support payor's Guidelines Income is over $350,000, the formulas should no longer be automatically applied to divide income beyond that threshold. Instead, the court will have to exercise discretion in fixing the amount of spousal support. Similarly, when a spousal support payor's Guidelines Income is under $20,000, no spousal support is payable unless an exception is made (ie. payor spouse has significantly reduced expenses). Where a spousal support payor's income is between $20,000-$30,000, there is also the possibility of an exception to the formulas to eliminate a “cliff effect” of the floor of $20,000. In these cases, it might be necessary to depart from the lower end of the range, depending on the payor’s circumstances and his/her ability to pay.
TIP: There is a built-in conversion feature that will automatically convert weekly, bi-weekly, and monthly amounts into annual figures. For example, input 1000w for weekly income of $1,000, press enter and the software automatically multiplies the number by 52, and results in $52,000; For bi-weekly income of $1,000: input 1000b (results in $1,000 x 26 = $26,000). For monthly income of $1,000, input 1000m (results in $1,000 x 12 = $12,000).
MY REBUTTAL
First it is critical to identify whether this is "Employment Income for an Employee" or "Employment Income for a Corporate Owner".
Employment Income for an employee
Box 14 includes the following amounts:
(1) Employee Base Pay
(2) Employee Bonus
(3) Box 30 Board and Lodging
(4) Box 31 Special Work Site
(5) Box 32 Travel in a Prescribed Zone
(6) Box 33 Meical Travel Assistance
(7) Box 34 Personal Use of an employers automobile
(8) Box 36 Interest Free and Low Interest Loans
(9) Box 38 Security Options Benefits
(10) Box 40 Other Taxable Allowances & Benefits
(11) Box 70 Municipal Officers Expense Allowance
(12) Box 71 Status Indian Employee
(1) Employee Base Pay
If an employee is on a semi-monthly or monthly payroll then base pay will be accurately reflected in Box 14.
This is not the case for an employee on a bi-weekly or a weekly payroll. Most employers now use the calculation / 365 * 14 for bi-weekly and / 365 * 7 for weekly. This is to account for the occasional 27 and 53 pay period years. So for the 26 pay period and 52 pay period years, income will be understated in Box 14and for the 27 pay period and 53 pay period years, income will be overstated in Box 14.
(2) Employee Bonus
Employees have the ability to defer (this means the bonus was earned in one tax year but paid in another) Deferred bonuses must be paid in the next tax year after deferral. An assessment needs to be made whether Box 14 includes two bonuses, one bonus or no bonus and an app[ropriate adjustment be made.
In addition, bonuses can fluctuate wildly from year to year. I am of the view that the "target bonus" should be used rather than the actual bonus paid. Absence of a target bonus I would support an average of the past 3-5 years bonuses to get a reasonable figure.
#3 - #11 with the exception of #9
I am ok with these being income inclusions and they should reflect the proper annual amount. Most common is #10 Box 40 Taxable Allowances & Benefits
#9 Box 38 Security Options Benefits (a.k.a. Stock Options
First of all, you need an explanation of a stock option. A stock option means an employee has an option to purchase a stock at a set price. When an employee exercises a stock option it means they are purchasing it at a set price and immediately selling it at the higher price.
I don't support this being included in income as it certainly does not reflect income for that particular year and its basically impossible to determine how many years it reflects. My best suggestion is that if stock options are an issue, there should be some agreement about how they are to be shared and should be excluded for child and spousal support purposes.
#12 Box 71 Status Indian Employee
I'll deal with this later in the section non taxable income.
Bottom Line - Box 14 of the T4 may or may not reflect an individuals income for year.
Employment Income for a Corporate Owner
The Spousal Support Guidelines are absolutely abysmal in dealing with corporate owners. First of all, corporate owners are exempt from EI but pay double CPP so the spousal support calculator won't take the right EI and CPP deductions.
Secondly corporate owners have a deferral option similar to an employee bonus. What needs to be assessed is Schedule 125 of the Corporate T2 (Income Statement) to see what owner salary was expensed.
Another issue is that frequently corporate year ends are not calendar year ends (ie December 31) so in that case the T1 salary might be totally irrelevant as it is based on what was paid in a calendar year whereas the corporate expensed salary is based on the non calendar year.
The guidelines say income should be based on Line 150 with adjusments in Sections 17, 18 and 19. Is anyone getting an idea yet that Line 150 is completely irrelevant in determining annual income for an individual? This will become even clearer in future posts I will make.
I have no comment on their calculations when an income is over 150,000 or 350,000 or under 20,000 however I assume by discretion they mean guessing which means they will probably do the wrong thing.
Well that was just the first line of the Spousal Support Calculator.
Unbelievable, eh?
Introduction
I am a 46 year old financial consultant who is appalled by the massive incompetence, stupidity and inferiority of the Family Court System in general and lawyers and judges in particular.
When I first went to Family Court, I remember I thought it strange that there were police officers at the door. I thought - am I entering prison? I wondered why they were there.
I certainly understand now why they are there! I won't go into my situation in detail but suffice to say she stole everything, lives in a mortgage free house, soaks me for spousal/child support for over 2,000 per month. So with no money except for my RRSP's which I had saved prior to our relationship and a pay that is lower than my rent, I have fought on looking for a shred of justice. So far I have not found any.
I figure there are two alternatives:
(1) Beat the crap out of every Family Court Lawyer and Judge or
(2) Educate Lawyers and Judges because they obviously know absolutely nothing
I figure #1 has been tried already hence the police at the door. Unfortunately what it accomplished was getting police in there to protect stupid lawyers and judges and the incompetence continues.
So I have decided to educate these morons.
I recall when opposing counsel came up with some ridiculous number for spousal support at the case conference and the judge just accepts it despite the fact I argued correctly that it was completely wrong.
Then at the motion, the judge again rules in their favour and here I am paying a ridiculous amount of support.
It was at this time that I had enough. I contacted DivorceMate and purchased (yes purchased) a copy of their program. As an individual that assesses approximately 2,000 tax returns per year, you can safely say I am somewhat of an expert in this area. I needed this program to analyze and discover how they were getting such a wrong figure for spousal support.
But wait the story gets even better. I was told that I was not allowed to purchase the program as it was too sophisticated and they could not support non-lawyers questions.
After fighting back and forth over the email, I gave up in total frustration. I asked a lawyer friend of mine (who is actually VERY intelligent and obviously not involved in Family Law) to purchase it and I am grateful that he agreed to do so.
What I discovered was appalling. Talk about living in the dark ages. If I assessed income like this in my job, I would be fired on the spot.
There are two basic problems which I identified. The program has numerous errors in it and where it is working properly lawyers are too unsophisticated to use it properly.
You can only imagine the disaster these lawyers have caused in thousands of peoples lives.
Recently they have released the new version called Tools 2K10. They seem to be so proud that they spent two years creating their masterpiece.
Congratulations...It's wrong.
So here I go - I plan on doing one blog per day going through this program line by line. Where it is working properly, I will say so and explain why. Where it is not working properly, I'll explain what is wrong and what needs to be done to fix it.
Please feel free to comment on my blogs, ask questions, criticize me, compliment me, correct me if you think I am wrong (I don't plan to be but I am human) and anything else. The feedback would be much appreciated.
Lets go!!
When I first went to Family Court, I remember I thought it strange that there were police officers at the door. I thought - am I entering prison? I wondered why they were there.
I certainly understand now why they are there! I won't go into my situation in detail but suffice to say she stole everything, lives in a mortgage free house, soaks me for spousal/child support for over 2,000 per month. So with no money except for my RRSP's which I had saved prior to our relationship and a pay that is lower than my rent, I have fought on looking for a shred of justice. So far I have not found any.
I figure there are two alternatives:
(1) Beat the crap out of every Family Court Lawyer and Judge or
(2) Educate Lawyers and Judges because they obviously know absolutely nothing
I figure #1 has been tried already hence the police at the door. Unfortunately what it accomplished was getting police in there to protect stupid lawyers and judges and the incompetence continues.
So I have decided to educate these morons.
I recall when opposing counsel came up with some ridiculous number for spousal support at the case conference and the judge just accepts it despite the fact I argued correctly that it was completely wrong.
Then at the motion, the judge again rules in their favour and here I am paying a ridiculous amount of support.
It was at this time that I had enough. I contacted DivorceMate and purchased (yes purchased) a copy of their program. As an individual that assesses approximately 2,000 tax returns per year, you can safely say I am somewhat of an expert in this area. I needed this program to analyze and discover how they were getting such a wrong figure for spousal support.
But wait the story gets even better. I was told that I was not allowed to purchase the program as it was too sophisticated and they could not support non-lawyers questions.
After fighting back and forth over the email, I gave up in total frustration. I asked a lawyer friend of mine (who is actually VERY intelligent and obviously not involved in Family Law) to purchase it and I am grateful that he agreed to do so.
What I discovered was appalling. Talk about living in the dark ages. If I assessed income like this in my job, I would be fired on the spot.
There are two basic problems which I identified. The program has numerous errors in it and where it is working properly lawyers are too unsophisticated to use it properly.
You can only imagine the disaster these lawyers have caused in thousands of peoples lives.
Recently they have released the new version called Tools 2K10. They seem to be so proud that they spent two years creating their masterpiece.
Congratulations...It's wrong.
So here I go - I plan on doing one blog per day going through this program line by line. Where it is working properly, I will say so and explain why. Where it is not working properly, I'll explain what is wrong and what needs to be done to fix it.
Please feel free to comment on my blogs, ask questions, criticize me, compliment me, correct me if you think I am wrong (I don't plan to be but I am human) and anything else. The feedback would be much appreciated.
Lets go!!
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