Child support - line 150 or not?

[LovingMom5]

How is child support calculated? From what I have read on the government websites about child support you use line 150 of the tax return to calculate it. I am being told that since my ex put money into an RRSP he can deduct that from line 150 to calculate the child support payments, and therefore pay less. It does not make sense to me that he can put money away for his retirement so he can pay less child support. What is right? Is it line 150 or not?

[billm]

Originally Posted by LovingMom5

How is child support calculated? From what I have read on the government websites about child support you use line 150 of the tax return to calculate it. I am being told that since my ex put money into an RRSP he can deduct that from line 150 to calculate the child support payments, and therefore pay less. It does not make sense to me that he can put money away for his retirement so he can pay less child support. What is right? Is it line 150 or not?

You are right, contributions to RRSP do not reduce CS liability (and rightly so) - the CS tables basically say "people who make this much should spend X dollars on their children", and they tables where created considering that they also do other things such as pay taxes, contribute to RRSP, go on vacations, etc. There is NO deduction for RRSP contributions. Who told you that? - if it was your ex's lawyer, then they are lying to you on behalf of your ex (as they often do)...

The only reason not to use line 150, is when it does not realistically reflect your income, such as for corporate owners, otherwise, its simply line 150.

[Desperate_Dad]

Hey Bill. Hopefully you are getting your child support in order.

Loving Mom5

Here is my comment about Line 150. The law on child support says to use Line 150. In my view, this is completely incorrect. Line 150 is the amount of income the government deems to be taxable. This does not reflect peoper income. Here is an example. Lets say two people want to buy a 20,000 car. One decides to borrow the money from a bank and the other decides to cash out RRSP's. The one who cashes out RRSP's will have 20,000 more on Line 150 than the one who borrowed from a bank. Yet the incomes have not changed at all. Lawyers and Judges do not have the intellectual capacity to understand this simple concept. I will be challenging this at my trial. The bottom line is income should be assessed by qualified financial accountants who can look at the T1 and determine proper income. I am such an accountant

[Mess]

Originally Posted by Desperate_Dad

Here is my comment about Line 150. The law on child support says to use Line 150...

This is completely incorrect, the law says no such thing.

In my view, this is completely incorrect.

Now you're getting there, but it isn't juust your view, the law says no such thing.

Line 150 is the amount of income the government deems to be taxable...

Line 150 is a convenient starting place for most people with simple finances and salaried jobs. In family court, if it is possible to simplify and agree, that is better than wasting an extra thousand on accountants. But line 150 can be challenged and often is.

The bottom line is income should be assessed by qualified financial accountants who can look at the T1 and determine proper income. I am such an accountant

Drumming up business for yourself?

Here are the Federal Child Support Guidelines. Don't just glance at the web page, read them carefully and then print out the worksheets and enter your numbers into the worksheets. Once you go through this simple step-by-step process you will discover that line 150 is not the only number looked at. Some deductions are allowed, especially if one is self-employed or have inconsistant bonuses, and RRSPs are not. And look look!! It's all there on the Federal Department of Justice website!! That should help back up your claims in court!!!!

[got2bkid]

In the federal child support guidelines there is a section called "Schedule III". It clearly outlines situations where line 150 does not reflect true income of the payor. It outlines situations where both income inclusions and deductions are allowed, to come closer to true income.

[CISTEAD]

My husband cashed out 30,000 in RESP's, when he was unemployed, to pay bills, CS, etc......it was NOT used to calculate CS when it went to court. Much to his Ex's dismay......it's pretty simple...Both his lawyer and the judge at the Case Conference had no trouble dealing with this, it was a non-issue. His Ex wife tried to protest during Case Conference, the judge made short work of that.

[LovingMom5]

Thanks for the info everyone. Some of you think that I said that my ex cashed out his RRSP which increased his income on line 150 but that is not what I said. He put money into an RRSP and therefore wants to use the line 150 amount less the amount that he put into the RRSP to calculate child support. Thanks for the link to the Federal Support Guidlines. I will go over it really carefully.

[dinkyface]

If paying CS before retirement (but not during), then RRSP contributions should not affect CS.

If paying CS after retirement (but not before), then regular RRSP withdrawals should affect CS.

HOWEVER - if paying CS before AND during retirement, then the situation arises where that 20K that was contributed was counted towards CS before retirement, but it SHOULD NOT be counted AGAIN towards CS when withdrawn (even though it shows up as taxable income). There is a case on CANLII describing that situation, and the judge recognises the need to avoid this 'double-dipping'.

The word 'retirement' above refers to any period where you are living off your RRSP savings i.e. making regular withdrawals to support your lifestyle.

The above is just an example to put into context the rule that RRSP contributions do not affect CS.

[Desperate_Dad]

This really annoyed me. I had a great reply posted here ESPECIALLY to Mess's comments but I clicked "Send" and it had timed out and I lost everything. Sigh I am too tired now to duplicate it.