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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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Old 02-05-2017, 12:47 PM
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Join Date: Aug 2009
Location: Mississauga
Posts: 162
Desperate_Dad is on a distinguished road
Default Divorcemate Fraud - Self Employed Incorporated

There are a myriad of errors in the Divorcemate Program but I thought I would mention one of them to show the public how bad this program actually is. Here is a paper that a lawyer Scott Booth wrote (year unknown)

http://www.jml.ca/wp-content/uploads...rrorsandun.pdf

I refer you to the bottom of page 12 where Scott Booth writes the following and I quote:

One troubling difference between the two software packages is the fact they appear to produce slightly different results using the same input data.
Schedule A to this paper contains printouts of the Advisory Guidelines data produced by Childview and Divorcemate using identical input. The monthly spousal support payments predicted by the two packages are different by approximately $200.00 per month. The fact scenario in the Schedule A example was dictated by the demo version of the ChildView program. A review of the results suggests that the difference may arise from the DIVORCEmate software calculating a refundable dividend tax credit which does not appear to be included in the ChildView data. The difference is not easy to identify and one can imagine that if two different software packages are in use in a jurisdiction this could be a source of confusion and frustration.

My comments

I guess it never occurred to this lawyer that when two different software packages produce different results then at least one of them is wrong.

So who is right?

It is important to understand the purpose of the dividend tax credit. It prevents double taxation. A corporate owner pays corporate tax of approximately 15% on their before tax profit. When a dividend is declared it is "grossed up". Dividends are paid out of after tax profits so the gross-up essentially brings the after tax profit back to the before tax profit. A dividend appears on the T1 tax return and is taxed at the full regular marginal rate. The dividend tax credit reduces this tax payable by the corporate tax already paid through the corporate T2 return. Therefore double taxation is prevented.

Now lets look at it from a spousal support point of view. You do not want to do it the same way as CRA. You want to calculate what income the self employed corporate owner has after all taxes are paid (personal and corporate) so to calculate that properly the dividend tax credit should not calculate. Divorcemate does calculate it making it seem like the corporate owners after tax income is higher than it really is.

In the example in the link above the dividend paid was 20,000 and it caused a $200 per month overpayment. Scott Booth seems to think this is insignificant. That's 2,400 per year and 24,000 over 10 years for a 20,000 dividend!!

But what if this corporate owner paid himself entirely in dividends of say 100,000? They would pay approximately 15,000 in corporate tax that wouldn't be accounted for in the split of income for spousal support purposes.

15,000 / 12 = 1,250 / 2 (to split the income between the payor and recipient) = 625 * 1.20 (I'm assuming a 20% difference in marginal tax rates between the payor and recipient) = 750 per month

I wonder if Scott Booth thinks that is a significant difference to overpay?

Over 10 years that would be 750 * 12 * 10 = 90,000

In case you think there is no way Divorcemate can still be making this error, I point you toward this link.

http://divorcemate.com/Content/Pdfs/...wsletter74.pdf

This is Divorcemate's Spring/Summer 2016 newsletter where they proudly tell us all under their May 2016 updates that they have implemented changes to tax rates and the dividend tax credit for non eligible dividends.

This implies they are still taking the dividend tax credit into account in their program.

So if you're a corporate owner and you pay yourself dividends, you are getting totally screwed by Divorcemate's incompetent criminals.

This is one of the many errors in the Divorcemate program I have known about since 2009. I think I found about 100 errors.

Why didn't I do anything? I tried via email but I was rebuffed by Mark Harris himself (Chairman of Divorcemate) who told me his program was correct and refused to talk to me anymore

And I have the email to prove it.

Here are key things to remember.

1. Divorcemate is NOT law.
2. Divorcemate is a known fraud
3. No one should accept a Divorcemate calculation as accurate.

The Bonkalo Report on Family Court Reform should be presented to the Ontario Legislature soon. You can feel free to copy and paste this message and send to your MPP to educate them on this Family Court horror.

To self employed payors who are likely overpaying massively.

Get back to court and get your payments reduced.

Signed

Your Friendly Neighbourhood Divorcemate Hating Accountant
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