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-   -   Post-secondary, 1/3, 1/3, 1/3 calculations (http://www.ottawadivorce.com/forum/f20/post-secondary-1-3-1-3-1-3-calculations-19698/)

mcdreamy 01-27-2016 08:27 PM

Post-secondary, 1/3, 1/3, 1/3 calculations
 
Rockscan has been kind enough to invest some significant time of her own, to draft a thread setting out post-secondary discussions and calculations, and current caselaw, based on her partner's lawyer advice, with 1/3, 1/3, 1/3 calculations.

I hope to keep a Reference thread on post-secondary, with which we can add legitimate discussion and update caselaw, and direct our new members on post-secondary.

[Thank you Rockscan, I know as drafter of material that this took some significant time and thought on your part, the forum will benefit!!]

Please note, *this is NOT legal advice*.

Post-Secondary Education

Post-secondary expenses are outlined as expenses required for the pursuit of post-secondary education.

The guiding principle is that the net cost of the expense is shared between the parties proportionate to income after deducting from the expense a reasonable contribution from the child. Net cost is calculated having reduced the full expense by scholarships or bursaries and tax deductions similar to other section 7 expenses.

Guiding case law on the reasonable contribution is: Lewi v. Lewi. This case finds that children are responsible for a share of the expense and should not have to use all their savings/income to pay for education costs, they should not be saddled with debt to pay for school, and they should bear a larger responsibility if they choose to attend school away from home when a similar program of study is available closer to home.

In the bulk of cases, judges err on the side that children are responsible for 1/3 of the expense with the remaining 2/3 shared equally by both parents or proportionate to income. There are exceptions to this in cases of incomes higher than $150,000, previously agreed to conditions, and the educational requirements of the child.

Proof of the expense
Proof of the expense must be provided via a statement of account or receipt.
All post-secondary institutions in Canada provide a statement of account to the student via an online portal. This statement is printable in pdf format. Proof of the expense is a full print out of this statement with nothing hidden or removed. The statement must show WHAT WAS PAID not what was charged. The statement will include provincial grants applied to the account, residence fees, and tuition fees.
Book receipts may be provided either via receipt from the bookstore or a print out of a used book advertisement/written receipt from the previous student.
Receipts for food purchases, vehicle gas, rent etc. are to be provided.

Expenses
Eligible expenses are considered as follows: (* denotes conditional expense)
Tuition
Books
Equipment* (i.e. computer, printer, lab fees, scientific equipment, materials for specialty programs)
Residence/living expenses
Transportation*
Food*

Non-eligible expenses:
Application fees
Late fees
Damage fees
Interest for unpaid expenses
Furnishings/bedding/dishes/pots/pans
Appliances (fridges, hot plates, blenders)
Medical/personal care supplies
Cellphone

Non-eligible expenses are a gray area. Many of these items are required for the pursuit of post-secondary education but are also questionable.

Application fees are considered a child support expense as they are normally filed while the child is still living at home receiving full support. For students taking a “victory lap” year, the application expense doubles or triples in some provinces. The paying parent is not eligible as they are still paying full child support for a child age of majority and not in school.

Late fees, damages and interest on unpaid expenses are a question of responsibility placed on an adult child and the paying parent is not subject to these costs.

Furniture, bedding, housing supplies, medical care and personal care supplies are also considered non-eligible expenses as they can be disputed. Reasonable costs for these items may be considered an eligible expense. For instance, sheets or duvets for residence rooms are required but 800 thread count sheets and silk duvets are considered unreasonable. Fridges for diabetic supplies in a residence room are considered eligible but fridges for snacks and beer are not. For computer equipment, these expenses are only eligible if the equipment was purchased specifically for school.

If the child received a computer at least one year before attending school or it was a gift from another individual, this is not considered necessary and not eligible for split. Similar for a “reasonable” purchase, the recipient parent cannot go out and purchase a $3000 computer when a $1000 computer will suffice and is available.

Health costs—most post-secondary fees include a health fee that can be opted out of. These fees end up in the range of $150-300 depending on the institution. As most separation agreements dictate that children be placed on health insurance, if the child is eligible for health insurance via their parents, they should opt out of this additional fee. It is not considered an eligible expense for split.

Living at home: For a child pursuing post-secondary education living at home
Full table child support is payable while they are in school.
Tuition, books, equipment are all eligible expenses.
Transportation costs to get to school are eligible expenses. These include: car insurance, gas, maintenance on the vehicle, parking expenses. However, if the child is provided full public transit in tuition fees, it is expected that the child will use this option if it is available. For instance, an urban student close to public transit will be required to make use of the passes and not incur unnecessary transportation costs. A rural student not within public transit access must use their own transportation. Should there be a safety issue and the urban student requires a car to travel to and from school (i.e. night classes), this would be considered an eligible expense.

Transportation cost calculation: sum of gas for eligible months of school, parking fees for the year, average annual maintenance costs for the months the car was used, insurance cost for the months of school.

Away from home: For a child pursuing post-secondary education away from home
Full table support is payable the four months they are at home during the summer. If the child chooses to stay for summer courses, living expenses are paid for according to the S7 split.
Tuition, books, equipment are all eligible expenses.
Residence fees are eligible expenses. Additional costs for food or appliances in the residence room are not eligible. Should the parents agree on an increase in the food allowance or there is an allergy, this extra cost is eligible for split.
Living expenses for off campus residence are eligible expenses. These include: rent, internet fees, rental insurance, food, and personal care costs (i.e. soap, shampoo).

Transportation costs
to travel to and from school are eligible as per the student living at home. Transportation costs to travel from school to home are arguable as necessary to get to and from school at the beginning and end of the school year.
Reasonable costs to travel home may be considered. (Unreasonable travel costs include a monthly trip home or excess costs to travel home outside of regular breaks unless the child is spending shared time with both parents. For instance, the cost for a child to return home once a month to visit one parent only is not an eligible expense. A child that goes home once a month and spends equal time with both parents may be considered eligible.)

Bursaries, grants and scholarships
It is expected that the child will apply for all eligible grants, bursaries and scholarships. Several provinces in Canada offer discounts on tuition for students from lower income brackets or single parent families. Canada offers “loan forgiveness” or grants on their student loans.

Reduction of tuition is eligible for the full cost of the split. Grants awarded to the student via a student loan program are considered in their eligible portion. For instance, in Ontario, up to 30% off tuition is offered when the student applies to the Ontario Student Assistance Program. This portion (up to 30%) is subtracted from the total cost of tuition. Depending on the financial situation, a student may receive up to $10,000 in federal and provincial grants. This money is considered the child’s portion of the expense. Therefore, if the split works out that the child is responsible for $7000 of the total cost of post-secondary and their grants work out to be $5000. The $5000 grant is applied to their share of the cost with the remaining $2000 paid either by student loan or employment income.

**An important note for this is that case law has shown that judges do not agree that a student should incur a heavy debt load to attend post-secondary school. Nor should they be required to use their entire employment income for school. However, that does not mean that a child doesn’t have to work or earn income. Nor does it mean a child should not apply for student assistance. As most student assistance programs now consider children of divorce under one parent’s income, their eligibility for loan forgiveness, grants, subsidies and tuition reduction is increased and is used for their portion of the expense.ccc

mcdreamy 01-27-2016 08:28 PM

RESPs

RESPs are broken down as follows:

RESP opened by grandparent, aunts, uncles, friends, relatives of the student are eligible as the student’s portion of the expense.

RESP opened by parents DURING marriage are eligible for the parents’ portion of the expense or may be transferred to the student.

RESP opened by parents FOLLOWING DIVORCE are eligible for that parents’ portion of the expense. For instance, mom opens RESP six months after divorce is finalized. This money is used for her share of the child’s expenses.

Grant money within the RESP that is provided by the government is withdrawn according to the eligibility above. It is not automatically transferred to the student.

Net cost
The net cost of the expense is considered after all tax deductions have been applied. Tuition is an eligible expense under the Canada Revenue Agency.
Moving expenses are eligible expenses under the Canada Revenue Agency.

Tuition is calculated according to the tax reduction. For instance, if tuition costs are $7000 and the tax benefit awarded for it is $2000, the net cost of tuition calculated in the split is $5000.

How to calculate the costs
Calculate the sum of the following:
• Tuition—either via a lawyer calculation or by completing a “dummy” tax form for the recipient parent. (Full cost of tuition less provincial grant less tax benefit).
• Books
• Residence/living expense fees (for a child living away from home)
• Equipment
• Transportation
• Food
• Additional eligible expenses not listed but considered eligible

Total cost of education divided by 3

1/3 of the cost is attributed to the child and paid via employment income, bursaries, federal grants, gifts from others, RESP from family members other than parents.

2/3 of the cost split proportionate to parent’s income similar to S7.

Example:
Total cost of education expenses--$15,000
1/3 cost attributed to child--$5000
$10,000 to be split proportionate to income—father’s share = 65% $10,000 x .65 = $6500

momwithteendaughter 02-02-2016 10:25 PM

Thank you Mcdreamy and Rockscan. This thread is extremely helpful.

nfc4ever 02-12-2016 04:15 AM

what would happen in the above example if the child were to receive grants in excess of their share of the education? i.e. if they were to get the full 10,000 in grant money? Would it accordingly reduce each parent's obligation as well.

rockscan 02-12-2016 07:40 AM

It depends on the total cost but in most cases grants that high are not awarded to students who have costs in that amount or less.

OSAP calculates based on school, where the child lives, how much money they make in the 16 weeks before school and their parents income.

It also depends on your agreement and costs. If your agreement says less all grant money then yes it should come off the top.

At least that was what my partners lawyer said.

You would have to get a copy of the grant statement though. And that might be difficult.

SuzieSunshine 02-12-2016 03:17 PM

Awesome information! Do you have the case law references that justify the 1/3 1/3 1/3 theory? I can only find case law that references S7 split between the parents and the kids are responsible for nothing.

rockscan 02-12-2016 08:21 PM

If you do a search on canlii ALL the cases have the kid paying a portion.

momof2teenboys 04-13-2016 08:55 AM

Very helpful!

We're just starting down this new road so I'm reading through everything.

Question - Student has chosen a school within reasonable commuting distance from home. Of course, the student would prefer to live in residence through school year and has applied but the cost is quite high. Student is working and will contribute to all expenses but will not be working through the school year. Are the parents required to pay for residence when home is within an hour by public transit?
Both parents lived at home while attending university. Both parents paid their own way through school and worked through the school year. Commuting was cheaper than living near the school. So while it would have been nice to afford it....

rockscan 04-13-2016 09:51 AM

Thats a tricky one. For the most part, if a child decides to incur the cost of residence when living at home is available then they would be on the hook for more of the expense. But cs may be more expensive than residence. You may want to compare cs totals against the cost of residence and determine which is more financially positive. In my partners case, his cs is actually higher than his share of residence. However, his kid has chosen now to live off campus which means the costs will be increased.

If it was me paying cs and my kid decided to do this I would argue that Im not paying transportation costs but will pay my share of residence but on the basic plan. Any additional costs would be on kid since they made this choice.

Your cs payor may decide to continue to pay cs directly to you and only pay their portion of school expenses (tuition, books, fees). You and kid would be on the hook for residence.

Tayken 04-13-2016 10:00 AM

Quote:

Originally Posted by mcdreamy (Post 204246)
RESP opened by grandparent, aunts, uncles, friends, relatives of the student are eligible as the studentís portion of the expense.

Do you have any supporting case law to this point? RESP contributions made by anyone is their property generally. They can withdraw their money at any time. They would have to pay taxes on the interest earned if it didn't go to one of the named beneficiaries for educational purposes. I don't think the court could order any sort of direction on an RESP account owned by a non-parent and how that money is accounted for. They are a third party to the matter.

I may be wrong though.

Good Luck!
Tayken


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