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Any have success getting offset child support changed ?

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  • Any have success getting offset child support changed ?

    I have filed a motion to change my separation agreement from offset child support where I paid the difference between our two salaries to a " I pay you and you pay me " proposal .

    This is the only language Revenue Canada will recognize.

    My ex has opposed this request.

    During my first settlement conference it seemed like the judge believed there was merit to my request but my ex still opposed .

    It seems like I will now have to take this to trial .

    Has anyone here had a similar situation and if so were you able to succeed in getting this motion through ?

  • #2
    Do you know why she is opposing?

    Comment


    • #3
      She said in front of the settlement conference judge that " she has consulted both a lawyer and an accountant and she is under no duress nor obligation to allow a change to the wording of the agreement ".


      She fears that CRA will somehow claw back money from her if she allows the change . ( even though we have 2 children under 16 that qualify for the eligible dependent credit )

      Comment


      • #4
        Originally posted by Sam Sung View Post
        She said in front of the settlement conference judge that " she has consulted both a lawyer and an accountant and she is under no duress nor obligation to allow a change to the wording of the agreement ".


        She fears that CRA will somehow claw back money from her if she allows the change . ( even though we have 2 children under 16 that qualify for the eligible dependent credit )


        Well, when you win in court over this simple thing, then she'll certainly be under obligation, AND have to pay all your legal costs. Keep track of them! Also make sure you document the offer to settle you made that she has rejected.

        Comment


        • #5
          This may be old news to some of you but I just ran across this article that may help people in the same situation as myself. It seems Harder v The Queen is the case to refer to when arguing your point .


          A recent Canadian Tax Court Case has important implications for parents with shared custody and the way child support is paid and collected. The decision in Harder v. The Queen changes the way parents with shared custody must deal with child support. It is likely that most parents with shared custody will have to change their child support arrangements and the Family Responsibility Office will have to change its procedures to prevent running into tax problems.
          How Shared Custody, Child Support and Taxes Used to Work

          The Supreme Courts set the rules for child support in shared custody in it decision in Contino v. Leonelli- Contino. At paragraph 49 of that decision, the Supreme Court said that the starting point for calculating child support in shared custody, which persists unless it results in an unfair sharing of the costs of raising the children, is that the parents calculate what each of them would owe under the Child Support Guidelines Tables and set those amounts off against each other. In the majority of shared parenting situations, consistent with the Supreme Court's decision, parents agreed to use set-off the child support amount such that the parent with the higher income made a child support payment that reflected the set off amount.
          Part of the basis of this set-off approach is that each parent gets some of the tax benefits associated with caring for the children in a shared-custody situation. The amount of child support under the tables takes into account the tax deductions/benefits available to parents for having children.
          The CRA's policy on tax credits and benefits for parents in shared custody situations states that when parents share custody of their children, they must rotate the benefits/credits for the children such that each parent gets the tax benefits for the children for six months of the year. That policy was last updated in July 2015.
          As a result of this policy, parents with shared parenting set off support against each other and each claimed half the tax benefits for the children for whom they had shared custody.
          The Significant Changes to Child Support to Avoid Tax Problems

          According to Justice Block in his tax court decision in Harder v. The Queen, the Courts, Family Arbitrators, Family Mediators, Family Lawyers and separated parents did not properly consider the Section 118(5) of the Income Tax Act in making the above described child support arrangements. That section of the Income Tax Act states that a person who has to pay support for a dependent cannot claim tax deductions or benefits with respect to that dependent. Children are dependents. So, that means that, notwithstanding the Canada Revenue Agency saying that benefits must be rotated in shared custody situations, a parent paying child support may not claim those benefits.
          Based on the Supreme Court's decision in Contino about setting off support in shared parenting, and the CRA's policy that benefits be rotated in shared parenting, it seemed logical to interpret the "set-off support" paid in shared custody situation as parents notionally paying each other, but simplifying the logistics of that by having the payments flow only one way – from the higher income parent to the lower income parent. This is how child support orders and agreements were written and how the FRO processed support.
          However, in Harder v. the Queen, Justice Block stated that interpretation was wrong under tax law. Where parents set-of child support amounts, this resulted in only one parent receiving support and one parent paying support. Under the wording of section 118(5) of the Income Tax Act, the parent paying support could not claim the benefits and credits in relation to the child or children for whom that parent was paying child support.
          According to the decision in Harder v. the Queen, the correct thing to do is for each shared custody parent to actually pay the full table child support amount to the other parent, so that the full table support is flowing both ways. The Family Responsibility Office should collect the full child support amount payable by each parent and pay it to the other parent, essentially having the support between the parents cross paths as doing a "set off" will have negative tax consequences for at least one of he parents.
          There are some obvious practical problems with the approach set out in Harder v. the Queen. For example, a lower income parent may not have the funds available to make the support payment until receiving the support from the higher income parent. That would cause one of the support payments to "bounce" and one parent to "over pay" by not getting the support back to which he or she is entitled. It will also dramatically increase the cost for the Family Responsibility Office, and the support collection agencies in other provinces, to enforce child support in shared parenting arrangements.
          However, as Justice Block points out, this complicated and tedious approach to child support in shared parenting is required by section 118(5) of the Income Tax Act and it is the way things must be done until Parliament changes the law.
          32 – How to Change a Support Order

          Justice Block's decision in Harder v. the Queen means that most parents with shared custody will have to change what they are doing for child support. It may also mean that they have to change their child support order or separation agreement to reflect how the Income Tax Act requires child support be paid so that both parents can get the tax benefits related to raising the children. The Ontario Family Law Podcast and this video give some general advice about how to change a support order or agreement. However, the rules for separation agreements require that separated parents and spouses consult with a family lawyer, and they will probably want speak to a lawyer who understands both family law and tax law to make sure the agreement or court order does what they expect.
          Obviously, parents who have just separated and who are planning on sharing custody of their children will want to make sure that their child support order or separation agreement complies with the requirements to maximize the tax relief for them. Again, they should contact an excellent family lawyer to make sure that happens.To learn even more about child support, get a copy of this easy to understand book on the basics of Ontario Family Law as a paperback, or download it immediately as a $9.99 e-book for Kindle, Kobo, or iPad/iPhone/Mac. You may also want to listen to this podcast or watch this video. You can also use the search on the right to find lots more articles about marriage and divorce.
          Guide to Basics of Ontario Family Law
          Ontario family law podcast
          Obviously, there can be a lot of money involved in child support cases and only could really help a child with his or her needs (or not). You need to get the help of a lawyer immediately to avoid financial hardship.
          The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

          Comment


          • #6
            If you intend to steal content written by somebody else, it is traditional to provide a link to the original source.

            Comment


            • #7
              Oh boy. This issue is near and dear to my heart. My ex was also contesting my proposal to have the wording create two obligations to pay. Her lawyer was using those same arguments - a potential cash flow problem if I didn't pay my larger share (I'm the net payer), and there's an inconvenient collection issue if FRO is ever involved (I pay her directly - we've both agreed not to involve FRO at this point)

              There are a number of things you could discuss, or try to compromise on. Ultimately, this credit is available for the benefit of the children. Both parents should be able use, or take advantage of, the credit so the children benefit the most. I would make this clear. You could go further and suggest the money from the credit is specifically set aside in a RESP, or something directly beneficial for the children.

              Alternatively, you could accept the wording as is, but ask for a break elsewhere in the agreement. Perhaps some adjustment to other costs you must pay to your spouse, or other incidentals? Think of some other area that you could benefit from, that she may find more amenable.

              At some point someone may ask if it's material. Remember, once you have a spouse, or the dependent begins to earn income, the credit becomes less valuable and will no longer be of any benefit.

              Comment


              • #8
                Sorry , in no way am I passing this off as my work . The writer of the article is John Schuman . I found it on MONDAQ. if you search Harder v the Queen you can pull up the article . I am not very computer savy or I would provide the link . I think it is protected somehow .

                Comment


                • #9
                  ..........

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                  • #10
                    Does anyone know of any Canli cases that I can use to support my Motion to Change from offset child support to " I pay you / you pay me " child support ?

                    I have searched already but maybe the words I am using in the search engine don't quite fit the bill .

                    any suggestions are appreciated

                    Comment


                    • #11
                      I have not, but if you do could you post the case law? I've been looking for that for a while. The "problem" is that most people would do it voluntarily, since it is obviously the right thing to do, so it won't make it to trial.

                      Comment

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