Income Section - Taxable CDN Dividends (All)

Here is what the Spousal Support Calculator says...

Input the taxable amount of dividends (both eligible and other than (ie. non) eligible) that the party received from taxable Canadian corporations (T1, Line 120).

IMPORTANT: You must also input any non eligible dividends under:
"Taxable CDN dividends (non eligible)".

NOTE: To input the actual (rather than taxable) amount of dividends, go to "Actual CDN dividends (eligible)" and/or "Actual CDN dividends (non eligible)", as applicable.

There are two types of dividends that a party may have received from taxable Canadian corporations:
eligible (T5 slip, Box 25; T4PS slip, Box 31; T3 slip, Box 50; T5013 or T5013A slip, Box 52-1); and/or
other than (ie. non) eligible (T5 slip, Box 11; T4PS slip, Box 25; T3 slip, Box 32; T5013 or T5013A slip, Box 51-1).
To determine the type of dividend received, the party should contact the payor of the dividends.

If no information slip is received, to calculate the taxable amount of these dividends:
multiply the actual amount of eligible dividends by 144%;
multiply the actual amount of other than (ie. non) eligible dividends by 125%.

Note that the software will automatically calculate the dividend tax credit. As well, the software will automatically back out the grossed-up amount of the taxable dividends from the party's annual income in the determination of the party's Guidelines Income and child and/or spousal support.

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.

My Rebuttal:

Ok now we are getting into some juicy stuff.

What I can tell you is that if you are a corporate owner, you are basically screwed if you expect any lawyer or judge to calculate this correctly.

First of all, you need some definitions:

Eligible Dividends - This means dividends that are eligible for the small business deduction of 400,000 of income. These dividends are grossed up by 25%. The reason there is a grossup and a dividend tax credit is to account for the progressive nature of our tax code. (ie the higher your income, the higher rate of tax you pay on that extra income)

To be continued...