Ex runs home daycare (net income calc for support?)

[cashcow4ex]

Good morning,

Synopsis:
Divorced in 2009. 2 children who live with their mother. Been paying table child support since. Currently paying close to $1800 a month.

One of my children has decided they want to live with me. All the changes are pretty much agreed upon with the exception of her income to calculate the offsets for support. My ex runs a home daycare and is stating that she will be using her net income after all deductions for support calculation. Based on this it would take her income from about $55,000 to about $20,000.

I am willing to except deductions which are for the daycare such as food and craft supplies (she doesn't have or keep any receipts) but I don't think she should be allowed to deduct mortgage, utilities, car expenses (5 kids plus her and she drives a compact car) and everything else that a home business can deduct.

I have looked on the CRA website and can not find clear guidelines to refer her to for calculating income when self employed. Also, what should I be asking her for as far as tax documents go so I can get started on calculations at my end?

Any help is appreciated.

[rockscan]

You could try a search of canlii for cases of self employment and deductions. Do these expenses come out of her line 150? If they dont then she should be using her line 150. Its no different than some of the cases of truckers making 200g per year and claiming their income of 20 g because of expenses.

[cashcow4ex]

I will request her NOA and see what her line 150 says. My line 150 has my total income even though I have lots of business expenses so I can only assume hers would too.

I am heading over to peak at that website you suggested now.

[mafia007]

I will request her NOA and see what her line 150 says. My line 150 has my total income even though I have lots of business expenses so I can only assume hers would too.

I am heading over to peak at that website you suggested now.

When you are self employed, you cannot use line 150. An analysis must be made to add income and/or to remove expenses that would not be allowed as they are not really considered expenses... such as depreciation, there is no cash out in this matter.

My ex spouse run a daycare as well and I had to impute her a revenue as she was stating making only less than 20K as per line 150 but claiming a gross of over 40K. At time of separation, she always made a gross of over 40K so there was no problem for me to impute her a salary at 32K a year. This was reasonable as she accepted before we went to trial. I am still paying 70% and + for special expenses so her contribution is fair.

Here is a good case on CanLii to impute a revenue for operating a daycare: Philippe v. Bertrand, 2015 ONSC 235 Link: http://canlii.ca/t/gfxvv

Of course you need to do your maths. Make sure you ask for full financial disclosure by requesting the following;
1- Notice of Assessment NOA
2- Income Tax Return T1 General
3- Income Statement for operating a business form T2125

Also, make sure you know what is her education, her expertise field, qualification/experience and where she worked before. Try to find similar job in the area and the expected salary. It's better to show the judge all the options so he can make a decision.

[arabian]

Thank you Mafia007. A business is a business. If one party objects to Line 150 being used then, if properly motioned, court determines whether or not there are business expenses which should or should not be be added back to determine income (for purpose of paying support). Sometimes business expenses are added back and other times they are not.

[trinton]

and many times daycares take cash.. and never claim it to avoid paying tax, meanwhile claiming their morning coffee as a business expense.

go by her revenue. after all, child support is based on before tax revenue.

[cashcow4ex]

That is sort of my thought process too. I am fully prepared to except all costs directly attributed to the daycare however she is not willing to look at any of her expenses stating she is going to calculate her support on her net income.

Why should she get to deduct housing costs, vehicle costs, cell phone costs when those same costs are a fact of life for everybody. If she didn't have the daycare would she be living on the streets and without a vehicle or cell phone...not a chance! I have to maintain a home office, a vehicle and a cellphone to accomplish my job yet those claimed expenses get tossed out the window straight away.

To add a little perspective, this is the same women that requested $150.00 a month for dog support on top of the spousal support and child support she was looking for. She also tried to claim her boyfriends winter tires as a section 7 expense because the kids would from time to time ride in his car. She also was seeking half of what my companies compensation would be to me if I had gotten fired on the date of separation claiming that was an asset incurred during the marriage and that she was entitled to half of it.

[arabian]

During divorce binding arbitration my ex tried to claim all sorts of things but was shot down by the judge. Instead, business operating expenses were carefully established based on years and years of financial documentation. Judge was quite firm that what was claimed at tax time was not a relevant indicator, for self-employed individuals, for determining income for purpose of support. I recall ex's lawyer having to take ex aside and straighten him out. I also recall being quite surprised myself as I thought a payment for a semi-tractor/trailer would be an allowable business expense but it was not as ex was sole-proprietor and the equipment was determined to be his asset (also ex was unable to provide a finance/lease document as he already owned equipment outright and only provided a hand-written note from his sister stating she had lent him the money to borrow the unit). Judge looked closely at non-arms' length business transactions involving his g/f and family.

I should add that, to my knowledge, ex has never been audited by CRA.

[cashcow4ex]

That sounds a little promising. I just hope she actually comes to her senses and realizes that her salary base point is basically line 150 and all business expenses are determined after that point.

I wonder, if she refuses to budge could I make a claim to have my court costs covered by her?

[trinton]

this is the same women that requested $150.00 a month for dog support on top of the spousal support and child support she was looking for.

I found her.

[cashcow4ex]

I found her.

LOL...too true. The most narcissistic person you could possibly meet.

[cashcow4ex]

I have an update,

My ex who still thinks her child support payment should be based off her net income, yet who hasn't spoken to a lawyer or done any research has decided she will in the meantime start writing cheques to me in the amount for child support that the calculator says she owes based on her net income.

I mentioned that I would prefer just to keep paying her full child support for both children until the ruling or mediation is done. She could then write me a cheque for what she owes from when the time my son moved in with me.

Any advice on whether I should cash these cheques or just wait until we know what she truly owes would be appreciated! I don't want to set any kind of status quo's or anything like that.

[Tayken]

LOL...too true. The most narcissistic person you could possibly meet.

As I recall this is the same person who demanded that you pay for a service at her property to pick up the dog poop.

[cashcow4ex]

As I recall this is the same person who demanded that you pay for a service at her property to pick up the dog poop.

The one and only!

[Tayken]

I have an update,

My ex who still thinks her child support payment should be based off her net income, yet who hasn't spoken to a lawyer or done any research has decided she will in the meantime start writing cheques to me in the amount for child support that the calculator says she owes based on her net income.

I mentioned that I would prefer just to keep paying her full child support for both children until the ruling or mediation is done. She could then write me a cheque for what she owes from when the time my son moved in with me.

Any advice on whether I should cash these cheques or just wait until we know what she truly owes would be appreciated! I don't want to set any kind of status quo's or anything like that.

1. Child support is easy to calculate online (MySupportCalculator.ca)

2. She is indeed obligated to pay you support for the child residing the majority of time with you.

3. Line 150 is what you generally base the payment on.

4. You are still obligated to pay her child support for the child residing with her.

5. If you are the higher income earner you can use the calculator (provided in #1) to calculate what you should be paying less the difference she should be paying you.

6. You can cash the checks. They are an acknowledgment that she owes child support. So, the status quo that has been established through her conduct is that you are the majority access parent to this child. (Bad move on her part!)

7. If you have her T4 or NoA for the past year then you can do #5 if you are the higher income earner and simply not cash her checks. Her contribution to CS is recognized in the reduction in total CS she gets. She just gets it for the child that resides with her.

If you are not arguing about whom the majority access parent is for each child, it really is a simple number to calculate and quite standard stuff.

Good Luck!
Tayken