Annual calculation for Income for Child Support

[nofrills]

Hi again.
I'm back for some help. Thanks again for your help in the past.

My new issue is calculating annual income for Child support. I've been calculating my income based on the below website and worksheet. My income is comprised of employment income, investment income and capital gains. Also, I have interest charges/carrying charges for borrowed money to invest. This information is reported in my tax return, I have deductions (line 8 and line 10) and additions (Line 14).

My question is:

Am I correct in using the gov't website/worksheet in calculating my income child support purposes? My ex's lawyer is using my total income (line 150) without any of the deductions or additions, which is not complete in accordance to the website.


https://www.justice.gc.ca/eng/rp-pr/.../w1-f1.html#s1

Worksheet 1: Calculate your annual income

Total income before adjustments
Line 1 Total income (line 150)

Adjustments to total income (use annual amounts)
Deductions

Line 2 Taxable child support received
Line 3 Spousal support received from the other parent
Line 4 Universal Child Care Benefit (UCCB)
Line 5 Split-pension amount
Line 6 Employment expenses
Line 7 Social assistance received for other members of the household
Line 8 Excess portion of dividends from taxable Canadian corporations
Line 9 Actual business investment losses
Line 10 Carrying charges
Line 11 Prior-period earningsNA
Line 12 Partnership or sole proprietorship income
Line 13 Total deductions from income (add lines 2 through 12)

Additions

Line 14 Capital gains and capital losses
Line 15 Net self-employment income
Line 16 Capital cost allowance for property
Line 17 Employee stock options with a Canadian-controlled private corporation
Line 18 Total additions to income (add lines 14 to 17)
Annual income for child support purposes
Line 19 Annual income for child support purposes (line 1 minus line 13 plus line 18)

[rockscan]

Line 150 is right. Unless your investment income is one off and paid out due to job loss or taking it out for legal bills, its considered income.

[Berner_Faith]

I think it would depend on what the deductions were... if your investment income is say a rental property then your expenses should be allowed to be written off as it’s considered a business... keep in mind that not all deductions are allowed to be deducted for CS purposes


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[nofrills]

Thanks Rockscan.

Line 150 is the starting point. What about the deductions from line 2 to 12. For example, my interest expense from borrowing to invest? (Carrying charges)

[rockscan]

From what I have read, expenses for running a business or owning a rental property are not as easily deducted for child support as they are for income tax.

Borrowing money to invest it is not a legit deduction for child support purposes.

[iona6656]

OP- how much is the monthly or annual difference in CS?

I remember reading a thread on here which spoke to this issue- and one of the members - who's an accountant- did a really good job answering a question similar to yours.

I think he agreed that some deductions need to be taken into account- and he thought divorcemate was shit. And that to really calculate the true CS amount- you should go to an accountant with your last two years- T1s and T2s. And some other stuff.

I think it may be worth it for you and your ex to split the cost of a neutral third party accountant who specializes in divorce and separation proceedings.

[nofrills]

Hi again.
Here is what I found.

https://www.corkumfinancial.ca/deter...rt-guidelines/

and

https://www.justice.gc.ca/eng/rp-pr/...p/v2/v2_6.html

The adjustments to income are a part of section III.

Is this what is used in practice if your income varies year to year or if you have other sources of income like cap gains and dividend income.


And I found this about interest charges/carry charges related to investment income.

SECTION 8: CARRYING CHARGES
BACKGROUND
Carrying charges include interest, investment counsel fees, and other expenses incurred to generate income. For example, a spouse may borrow money to invest in stocks. The income earned from the stocks is included as investment income in total income. However, carrying charges and interest expenses are not deducted before determining total income. Therefore, when determining Guidelines income, section 8 lets spouses deduct from total income any carrying charges and interest expenses incurred to generate this investment income.

Carrying charges
8. Deduct the spouse's carrying charges and interest expenses that are paid by the spouse and that would be deductible under the Income Tax Act.


So, can anyone tell me these section III adjustments are used to calculate annual income on a yearly basis?

[rockscan]

If you think you have a case, go to trial and have a judge decide. But you have to ask yourself if its worth the legal fees to get there and costs should you lose.