Section 7 gross vs. real income proportions

[fishy15]

I have a question about determining Section 7 expense income proportions.

I understand that the proportions are based on line 15000 which is gross income. However, when adjusting income for deductions (i.e. taxes, EI, CPP, and support payments) and adding the CCB, income tax refund, and support that is received by the receiving parent, the income proportions change drastically.

Why is Section 7 proportions based on gross income, shouldn’t it be based on the adjusted income which is the actual income available to meet the households’ needs?

I hadn’t thought of this before but doing the calculation now is an eye opener.

[rockscan]

Does the other parent not work? Is their ccb really that high?

It isn't that big of a difference when you consider that the other parent has the child more and all of their costs are supposed to be covered by support. It may be out of whack due to inflation but in the grand scheme of things because the recipient has the child more, their expenses are higher.

[Challenger]

I’ve seen something similar in few cases. Personally I would call it as inaccuracy of the DM software - they should automatically consider all benefits, and have their calculations and reports more transparent. Alternatively, I don’t see why government can’t publish formula and even make free for all calculator, could even be available via CRA as they have all your numbers and benefits.

Until this happens, the only route you have is to argue in court that DM isn’t a bible, not the law, but a third party commercial software, and only starting point in the discussion, but keep in mind it is an uphill battle.

[rockscan]

I’ve seen something similar in few cases. Personally I would call it as inaccuracy of the DM software - they should automatically consider all benefits, and have their calculations and reports more transparent. Alternatively, I don’t see why government can’t publish formula and even make free for all calculator, could even be available via CRA as they have all your numbers and benefits.

Until this happens, the only route you have is to argue in court that DM isn’t a bible, not the law, but a third party commercial software, and only starting point in the discussion, but keep in mind it is an uphill battle.

That may be for arguing benefits but OP is saying the other parent has more money after they get support and ccb etc. problem is, the other parent also has the kids more time meaning more expenses.

[Challenger]

That may be for arguing benefits but OP is saying the other parent has more money after they get support and ccb etc. problem is, the other parent also has the kids more time meaning more expenses.

OP is correct. For example, he is earning 300k, she got 0, they just separated, child is 3 years old.
He makes back after tax $176,918 or 14,713 a month.

She would get from him mid range spousal support 7,851 and CS 2,379.

The SS is taxable on her, and deductible for him, so adjusted to that he will receive NET of 131,781 a year or 10,981.75 a month, after which he should pay CS, so his new NET after CS is $8,602

Her net would be 69,709 or 5,809 a month plus CS is
$8,188, I am not sure if she should be paying CPP /EI or not on her SS income, as I am not an accountant, but I did include 4,757 for her.

Regardless, her net income seems to be lower than his by $400 a month, or even less, as likely she doesn’t have to pay EI on SS, not sure about CPP.

Now, they applied for child benefits. Paying parent would get 0, as CRA considers prior year, but she will get the maximum allowed, as her prior year income was 0. On the second year it would likely reduce, as CRA would see her income at 94,212 but I could see how this could be seen as unfair deal to paying parent, who works and takes care of child, yet gets less money in the end. Moreover, working parent would also pay more section 7, despite of actual NDI would be lower.

[rockscan]

OP is correct. For example, he is earning 300k, she got 0, they just separated, child is 3 years old.
He makes back after tax $176,918 or 14,713 a month.

She would get from him mid range spousal support 7,851 and CS 2,379.

The SS is taxable on her, and deductible for him, so adjusted to that he will receive NET of 131,781 a year or 10,981.75 a month, after which he should pay CS, so his new NET after CS is $8,602

Her net would be 69,709 or 5,809 a month plus CS is
$8,188, I am not sure if she should be paying CPP /EI or not on her SS income, as I am not an accountant, but I did include 4,757 for her.

Regardless, her net income seems to be lower than his by $400 a month, or even less, as likely she doesn’t have to pay EI on SS, not sure about CPP.

Now, they applied for child benefits. Paying parent would get 0, as CRA considers prior year, but she will get the maximum allowed, as her prior year income was 0. On the second year it would likely reduce, as CRA would see her income at 94,212 but I could see how this could be seen as unfair deal to paying parent, who works and takes care of child, yet gets less money in the end. Moreover, working parent would also pay more section 7, despite of actual NDI would be lower.

You're reading too much into it and I think putting too much money and support forward. OP must be paying full table. Ex would be eligible for CCB. Depending on their income, they would get GST.

Yes it is pretty unfair to consider gross income when you have tax and ei and cpp coming off the top but that's an argument for the government. The opposing side could argue that food and utility costs have gone up and they have kids at home more than 60% of the time while OP does not.

[Challenger]

Yes it is pretty unfair to consider gross income when you have tax and ei and cpp coming off the top but that's an argument for the government.

This is exactly my point, but how to realistically bring it to government? Judges in Ontario as well as lawyers very often blindly accept Divorce Mate, despite DM isn’t the law, nor the tool created by government, nor it is an accurate tool.

[rockscan]

I don't think DM itself is bad. Child support tables are set and DM only calculates the tax benefits or net cost of an expense. The DM calculations I saw laid out everything in accordance with the tables and was only used to determine my husband's share of post secondary expenses. How it works for spousal I don't know.

You involve government to change the legislation around the tables. We are seeing a change with custody and parenting time but more needs to be done with respect to false accusations and expecting a stay at home spouse to go back to work. There are a lot of issues surrounding those items but that requires changes to laws and legislation. I always find it comical that criminals have their charter rights denied by having consecutive terms applied or not having a trial in a reasonable time but innocent people are accused of abuse falsely and have zero rights. I would love to see a case go to the supreme court or even the human rights tribunal about their rights being denied due to a false accusation.

[Challenger]

I don't think DM itself is bad. Child support tables are set and DM only calculates the tax benefits or net cost of an expense. The DM calculations I saw laid out everything in accordance with the tables and was only used to determine my husband's share of post secondary expenses. How it works for spousal I don't know.

You involve government to change the legislation around the tables. We are seeing a change with custody and parenting time but more needs to be done with respect to false accusations and expecting a stay at home spouse to go back to work. There are a lot of issues surrounding those items but that requires changes to laws and legislation. I always find it comical that criminals have their charter rights denied by having consecutive terms applied or not having a trial in a reasonable time but innocent people are accused of abuse falsely and have zero rights. I would love to see a case go to the supreme court or even the human rights tribunal about their rights being denied due to a false accusation.

The Table Amounts in DM matching up to a cent with government calculator - I have no issues with that. Dear government, just make an extra step and have the calculator for spousal and NDI percentage for section 7, so that people don’t have to go to court for it.