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Calculating income for CS purposes

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  • Calculating income for CS purposes

    My husband gets a vehicle allowance of $1200 to $1300/month (depending on price of gas). He is a site supervisor for a housing company and had to buy a new vehicle and puts on a lot of mileage every day. We own the vehicle, but it has the company Logo on the sides of the truck. Between the car payments, gas and upkeep, the monthly allowance just covers expenses on the truck.

    The monthly allowance is taxable to my husband, therefore it shows up on line 150 of his income tax. But he gets to deduct the expenses, which show up on line 236 (I think). We were understood that because of this, he can pay on line 260 (taxable income). The ex agreed to this (they exchange tax returns every year and he pays according to income). Today we got a letter in the mail. She has changed her mind. She now thinks she is entitled to CS based on line 150.

    In short that adds more than 15,000 to my husbands income. It makes no sense, she doesn't pay for the car payment, gas or upkeep of the vehicle, so why does she think (and her lawyer think) they are entitled to the money allowed my husband to cover this? They also want to re-do extras based on this income so we'd be paying 96% or some other ridiculous number. She never pays her piddly share anyway.

    We also understood that when the vehicle is sold, the amount recieved for the vehicle is then added to his income, and that is when she gets her "share" of the vehicle.

    I have been sick to my stomach all day. What are the chances of them actually winning this case? If they win, I really fear for our family and our 2 kids. We are already over the limit of what we can pay, and already pay for so many "extras" that is is almost 1/2 his net income. I just want to cry. When will this end?

  • #2
    More info:

    This is why we thought we could deduct his employment expenses, they go on line 229.

    This is from the federal guidelines:
    Adjustments to total income
    Deductions from income (use annual amounts)

    line 4 – total expenses related to earning income

    Find lines 212 and 229 of the federal income tax return, which are for expenses related to earning income. Copy the total of these expenses to line 4.

    Does anyone know what her chance are of making us pay on line 150? I can't take this stress anymore.


    • #3
      As I understand it the support should be calculated from line 150..Total income. In my experience line 260...taxable income, does not reflect the true amount of earnings.
      If you are required to produce your Revenue Canada Notice of Assessment to a Judge at a support hearing they always take the total income at line 150 to calculate the table amount of support.

      I know this may not seem very fair in your case but take this example: A person get's seriously injured at work and is claiming WSIB for an extended period of time e.g. 2 yrs.
      As WSIB is non-taxable this would result in a figure of $0.00 at line 260, would the recipient not have to pay any support?

      I'm sure you would agree that this would not be the case.


      • #4
        Copper, just wondering how you know that they always go by line 150?

        You also said "I know this may not seem very fair in your case...". You are right. It is NOT fair in our case. Won't the judge take the time to understand that these are expenses my husband has to have in order to EARN the income he gets and pays CS on. I would really hope the judge could look at each case on a seperate and common sense basis and not ruin our lives because they "always go by line 150".

        I sure hope judges are not that blind and incompetent and can seperate when expenses really should be excluded, but my fear is that Copper is correct.

        Any other opinions or experience? I am just praying this isn't the way it always goes.......


        • #5
          Having looked closer into this I suggest you take a look at this link as it may be pertinent to your case. Worksheet 1: Calculating your annual income: The Federal Child Support Guidelines: Step-by-Step

          Hopefully you can get something resolved and let us know how you got on.

          Good luck


          • #6
            I'm a tax accountant. You should be allowed the employment expense deduction against the line 150 income. Those expenses were required to be incurred in order to generate the line 150 amount. It's reasonable and that's important.


            • #7
              We are in the same situation, the difference between line 150 and 260 (I think) is more than $15,000, and that doesn't include any 'optional' contributions such as RRSP's that is just what the employment deductions my husband has to make. We got the advice of our mediator and he said that because my husband has more than just the child support is ordered for, that a judge MAY consider the after deduction amount. I know this doesn't give any solid answer to your question, but I do hope everything works out.


              • #8

                This is our first year with this problem, as he has only been in this new job (with truck allowance) for one year. Have you had this problem previous years and if so, what line did you pay on?

                I think dadtotheend is right - the expense is 100% reasonable.


                • #9
                  We paid on the whole amount (pre tax income), as the amount at the time was reasonable. This year however, with the amount VASTLY different (I am talking a $400 increase (my husband now has a student loan that contributed to this increase by the way above and beyond paying off his court fees) when the kid already had more than everything in the world at his disposal) we are trying to work a reasonable amount through mediation. (However, with the increased amount, the ex doesn't have to work at all, so why be reasonable on her end?) We are fighting an uphill battle, and I completely understand your frustration. I wish there was another way we could all get along. Good luck to you.


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