How do I Make an Arguement for Unreasonable Write Offs for Child Support

[momto3]

How do I make an arguement for unreasonable write offs to convince a judge to gross up my ex's income for child support payments and proportionate share of s.7 expenses, for example, he writes off 100% of his vehicle, writes off home office expenses when he has an office, pays 60% of his commission to his office for "expenses" with his share being only 50% of his gross income. He is a realtor and writes off $12k plus for meals (from reading Canlii it appears that judges don't really look at this as a valid write off where child support is concerned)

[caring grandma]

i used to work for the government. i had people apply for daycare and some were self employed. they wanted subsidy and their taxes showed zero taxable income. i would think the judge would ask what i did. how much is your mortgage, utilities,food etc. do you have anything in arrears. if the answer is NO. then tally up the mortgage etc and believe you me they are not living on NOTHING just because they are paying no taxes!!!!

[NBDad]

How do I make an arguement for unreasonable write offs to convince a judge to gross up my ex's income for child support payments and proportionate share of s.7 expenses

Good: Look at the expenses and present reasonable arguments as to why they are excessive.

Better: Do the above + have a written affidavit from a certified accountant/etc on what a business of this nature would be legally able to claim for tax purposes.

Best: Have his business evaluated by a certified expert in terms of valuation as well as the expenses/etc he is writing off. Essentially you want both a valuation and a tax audit done to affirm his information.

However, from your other posts....the BEST has already been completed and you are trying to challenge it. You've already been told how to go about this. (and that you likely don't have much of a case)

he writes off 100% of his vehicle

Only valid if the vehicle is registered in the businesses name and is used 100% for business purposes. Careful with this one, as he can claim even when driving it for personal use, that it's a business advertisement opportunity.

Here is the big deal breaker on that part: does his vehicle have any reference to his business written on it?

writes off home office expenses when he has an office

Valid. He can write off any expense for the home office 100% as long as it's used for that purpose. Bit trickier if the expense is co-mingled with the home itself. ie. If he has a "home phone" that he also makes business calls on for instance, he can claim a percentage of it as an expense based on the amount of business calls he uses it for.

He can also write off a % of his utilities that are consumed based on the % of space the home office is in comparison to his home.

The math on those is...tricky at best. Hence why people spend years of their life to learn the nuances of the tax code.

pays 60% of his commission to his office for "expenses" with his share being only 50% of his gross income.

Possibly valid...you'd need a break down of the business costs to know for sure.

He is a realtor and writes off $12k plus for meals

I know the government allots for around $35-40 a day for executive employees for meals when on the road. How many days in a year does he work? Times that by 35-40...do his numbers fall in there? He's essentially claiming he ALWAYS eats out on work days. Breakfast, lunch and dinner. I've known several realtors...this IS pretty close to the mark. When they are working, they keep some pretty stupid hours sometimes.

It's a valid business write off IF he can prove it.

If you are hell bent on questioning this stuff, then ask for his receipts and documentation If he can produce them, then go through them and tally them up. It's a LOT of work, for little gain.

You will spends THOUSANDS of DOLLARS fighting over this...to gain a few HUNDRED extra in support.

Here's the official numbers.... assuming you are in Ontario and with 1 kid.

At 27000 he pays 219/month in CS
At 39000 he pays 348/month in CS

You want to spend 10K + for the sake of 129/month. With that in mind it'll be SIX AND A HALF YEARS before you recup that 10K. You are nickel and dime-ing the both of you into the poor house. The only ones winning here are the lawyers. The time, effort and money you will spend on this is FAR better spent on your child.

To summarize for you:

1. His numbers haven't changed pre or post separation. He has massive income variations over the years. His income actually varied MORE when you were together, than after you separated. This shows a verified pattern of income deviation AND coupled with the economy taking a huge dump right around the time you separated....he can easily defend himself against any claim of underemployment.

2. Most of what you listed are clear cut VALID business expenses. The meal write off makes me raise an eyebrow, but it's NOT entirely unreasonable. As long as he has the receipts to back this up (which he's required to have by law in case he is audited anyway) then his numbers are pretty close to an executive eating out on the company dime. His arteries probably hate him, but it's the nature of his business.

3. Since he has already had a valuation done at your request, you need a full forensic audit to challenge. You would bear the brunt of the cost. It's around $10,000+. Then you get to take YOUR expert and use them to fight HIS expert, with no guarantee of pulling this off. I'd peg it at LESS than 50%.

4. Even if you DO pull off challenging some of his expenses, the amount of money that you will spend on fighting this is not worth the amount you gain in return. 5-10 YEARS before it evens out.

My Advice: Take the 10K this is going to cost you to challenge, put in into an RESP for your child. Work out an agreement with him so the two of you contribute 100/month to it as a section 7 expense. In 10-12 years, instead of the extra 6000 you'd have from the Extra CS payments....your child will have accumulated somewhere around 20-25000 for their education.

[Berner_Faith]

Very good advice NBdad... momto3...take that advice...don't try to win a losing battle.

[billm]

Originally Posted by NBDad

...
Valid. He can write off any expense for the home office 100% as long as it's used for that purpose. Bit trickier if the expense is co-mingled with the home itself. ie. If he has a "home phone" that he also makes business calls on for instance, he can claim a percentage of it as an expense based on the amount of business calls he uses it for.

He can also write off a % of his utilities that are consumed based on the % of space the home office is in comparison to his home.

The math on those is...tricky at best. Hence why people spend years of their life to learn the nuances of the tax code.

Hey NBDad, are you sure about this? People often simply say that home office expenses are added back. I work out of my home office exclusively and am self employed. It is a dedicated space (small addition), and my ex (via her lawyer) wants to deny this 100%.

[NBDad]

It's a legitimate TAX write off. The Income Tax act is a far different bird than Family Law.

All I am saying is that it's a legit tax write off for business purposes.

My point still stands, if she wants to spend a few 1000 in fighting what will amount to a couple hundred a month in CS ASSUMING she's successful....it's not worth it. Far better to settle amicably, stop nickel and diming to death.

[Stemmy]

NBDad is generally correct that home expenses are a legitimate write off for tax purposes (although CRA is challenging some of these expenses due to the Income Tax Act language), however from what I have read these expenses are added back for child support calculations. Also, depreciation on real property is added back. I know that my ex is trying to have my income imputed as it has been low for a number of years both before and after separation but i'm arguing that it is partly her fault as she has caused me a great loss of client business and relationships because of the constant issues she is causing me. We will see where things go with it.

As for fighting the issues I have already agreed to pay child support over what I am earning but they want my income effectively doubled which I should be able to earn if she would just leave me alone and give me fair custody (shared 50/50) of our daughter.

[billm]

Originally Posted by Stemmy

...
As for fighting the issues I have already agreed to pay child support over what I am earning but they want my income effectively doubled which I should be able to earn if she would just leave me alone and give me fair custody (shared 50/50) of our daughter.

First, it's an insane concept for the government to force you to make more, or pretend you did for CS purposes. Hiding income is a different matter, but telling someone how to live their life?

Second, I'm wondering if you had 50/50 if that would effectively stop imputing income in your case - as forcing a higher income than you actually make causing higher offset CS to the other parent seems to definitely not be in the best interests of the child living with you half the time.