How to calculate income for "extraordinary" expenses

[got2bkid]

Hello,

I have read on this board different opinions. Does the NCP get to deduct the CS he pays off his gross income, while the CP has to include the CS she recieves on her gross income, when determining the percentages to be paid for extraordinary expenses?

Personally, it wouldn't seem fair to me that the NCP pays CS on his gross, and then pays "extras" AGAIN on his gross without accounting for the fact that his true household income does not include the money already sent for CS.

Are there any guidelines to support one way over the other, or do the lawyers generally settle on how income is determined for ex-expenses?

Thanks.

[Maggie82]

When it comes to extra-ordinary expenses, you calculate your proportionate share using gross income (as it is stated in your Income Tax Return). You do not deduct or add CS. This is how you do it:

CP's Income + NCP's Income = Total Income
NCP's Income ÷ Total Income x 100 = Percentage of Payment

Once you have your Percentage of Payment (a.k.a Proportionate Share) figured out, you simply cover that percentage of the expense.

Of course, you will need to get your hands on your ex's Income Tax Return. But most (if not all) court orders have the provision stating that each party shall provide the other with true copies of their Income Tax Returns by a certain date (June or July).

Hope this clears things up!

[got2bkid]

Any other opinions?

Thanks Maggie - do you know if there is a section in the guidelines that clearly states this?

I believe I read on another post from "FL Needs to Change" ( I can't find the post now) that extra-ordinary expense percentages are calculated on household income after including or deducting the CS. "FL Needs to Change", if you read this, can you expand on why you said that?

Thank you.

[Maggie82]

You can find out about it here: The Federal Child Support Guidelines: Step-by-Step. And you're right, on what FL had said, you can calculate it that way too. However, in most cases, the courts just go with your Gross Income as depicted on your Income Tax Returns, because it's easier to work with, and it's hard to prove all the other expenses, etc.

[FL_Needs_To_Change]

MY experience is that they subtract the CS from the paying parent, and add it to the receiving parent. (Ditto with SS).
They also take into account any tax relief that may result for the receiving parent IE CTC. ANd any other benefits from employment, IE if they have a company car, or bonus's
This leaves the actual amount of money at the end of it all that is available for the child's extra expenses. The CS is added/subtracted because that money has already been removed form one parent to pay for the child in the other parent's home, so it is no longer available to calculate against for the section 7.
Then a ratio of one income to the other, the math stated above, and that is the proportionate amount for each parent to pay.

[westwood]

I'm not sure of the "exact laws" pertaining to this but it doesn't seem fair to subtract CS from paying parent and add to receiving parent to calculate total income. The CS paid is basically that parents share of expenses for the children, not 100% of the child's living expenses. The receiving parent also contributes financially to CS, but on a daily basis, not by cutting a check once a month.

I may be out to lunch on this but I don't believe my ex-wife's meagre CS payment covers all the children's expenses. I too contribute financially to their well being, I just don't write myself a check every month. I think adding the CS would be like a double hit on the receiving parents end, and likewise a nice break for the paying parent.

[FL_Needs_To_Change]

Subsection 7(1) requires the payment of an amount of child
support for the following four expenses: (1) child-care expenses; (2) medical and dental insurance premiums; (3) health-related expenses; and (4) expenses for post-secondary education.

Subsection 7(1) also requires the payment of an amount of child support for the following two expenses: (1) Extraordinary expenses for primary and secondary education and (2) Extraordinary
expenses for extracurricular activities.

Sharing of expense

(2) The guiding principle in determining the amount of an expense referred to in subsection (1) is that the expense is shared by the parents or spouses in proportion to their respective incomes after deducting from the expense, the contribution, if any, from the child. O. Reg. 391/97, s. 7 (2).

Subsidies, tax deductions, etc.

(3) Subject to subsection (4), in determining the amount of an expense referred to in subsection (1), the court must take into account any subsidies, benefits or income tax deductions or credits relating to the expense, and any eligibility to claim a subsidy, benefit or income tax deduction or credit relating to the expense. O. Reg. 159/07, s. 2.


The calculations are as follows (according to the Family Law Act).
Step (1)
A person's income - federal and provincial taxes payable on the person’s taxable income - deductions for premiums (IE:CPP or QP)

Step (2)
-Adjust the annual income of each person in each household by any amount relied on by the court as a factor that resulted in a determination of undue hardship, except any amount attributable to the support of a member of the household that is not incurred due to a disability or serious illness of that member.
-the amount that would otherwise be payable by the person in respect of a child to whom the order relates (IE Child Support paid)
-any amount of support that is paid by the person under a judgment, order or written separation agreement, except,
(A) an amount already deducted under subclause (i), and
(B) an amount paid by the person in respect of a child to whom the order referred to in subclause (ii) relates;
- adding the following amounts, calculated on an annual basis.
any amount that would otherwise be receivable by the person in respect of a child to whom the order relates (Child Support received).
any amount of child support that the person has received for any child under a judgment, order or written separation agreement.

Step (3)
Addthe amounts of adjusted annual income for all the persons in each household to determine the total household income for each household.

Step (4)
Determine the applicable low-income measures amount for each household.

Step (5)
Divide the household income amount (Step 3) by the low-income measures amount (Step 4) to get a household income ratio for each household.

Step (6)
Compare the household income ratios. The household that has the higher ratio has the higher standard of living.

[raerae]

I am going through this currently because we THOUGHT we could deduct CS and go off that income.. lawyer says nonono..

Line 150 on your income tax statement is the number they go off of for the payor. The recipient's income is line 150 less SS payments.

Good luck.

[DadFirst]

I don't quite get it (sorry am new here). Say I am making 80k and my wife's salary is 30k.
Say I am paying 600 a month for spousal support and 1159 a month in child support (for two kids). I am basically at a 50/50 split shared custody situation but have not asked to get her $444 subtracted from what I'm paying.

So making 80000 in salary, my taxable income is 80000 - 7200 (for SS) = 72800.
Her taxable income 3000 + 7200 (for SS) = 37200.

Do calculate the share of external expenses do I calculate my disposable income by doing the following?
I would pay roughly 16744 (according to this website Canadian Income Tax Calculator 2009) in income tax based on 72800 taxable income. This puts me at 56056.

She would pay roughly 5756 in income tax based on 37200 taxable income. Puts her at 31444.

Now, add those together. 56056 + 31444 = 87500.

Would my percentage be 64% and hers 36%? I intentionally didn't include CPP and EI, but I assume I would subtract those amounts in the same fashion as I did for income tax...

Either way this is a bit different than gross income which would be 72800 + 37200 = 110000. With my percentage being 66% and hers being 34%.

I think these numbers end up being a lot more different if there is a bigger difference in income.

[Charlie]

Spousal Support

According to the spousal support tables posted on here you shouldn't be paying any spousal support as your INDI incomes fall within the 40-46% guidlines.

[Mess]

Dadfirst, I don't understand your example at all. If you are at 50/50 with the kids, why on earth would you not be getting the offset? and if not worried about the offset, why quibble over spousal being decided by net or gross?

The CS is pretty firm according to Federal Tables. The SS is not, and according to my lawyer, SS would be determined AFTER CS payments are factored in. At 50/50 the CS should be in the 700+ range with the offset (this is close to our numbers) and SS should then bring the lower income towards 45% area, which might mean only about another $150 per month. There are a lot of variables but this is a ballpark to start off with.

Whether negotiated or mediated or determined by a judge, the scenario you give just wouldn't be likely to happen.

So if you are creating a special situation, there is no precedent to base advice on. We can't predict what it "should be" if the starting place isn't including the offset amount.