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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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Old 05-12-2019, 10:05 AM
denbigh denbigh is offline
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Default self employed

I have read in some threads in the past that when self employed there are some expenses/income sources that you take into account when figuring out childsupport/section 7 which are not necessarily the same as the the income sources/expenses you use to file taxes. Is there a guide anoneknows of or any advice on what these differences are? I know that non taxable income still counts towards child support and it is grossed up, but that is an entirely different issues to self employment. This is a new self employment situation, contract work, and I am not sure how to go about figuring out what is allowabl expenses to remove for child support purposes, or what, if any expenses there might be, other than milage? Even that I am not sure. regular employment you cannot claim milage to get to work, your empoyer probably pays milage to and from different sites during the work day, but you dont claim to arrive at work or leave at the end of the day. can you claim milage to get to work when selfemployed?
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Old 05-12-2019, 10:19 AM
denbigh denbigh is offline
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i found part of my question on revneue canada, no even for self employed, getting to and from work is personal use and not an expense. i still cant find anything about which expenses are different for tax purposes vs child support purposes.
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Old 05-12-2019, 01:02 PM
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arabian arabian is offline
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It can be a grey area for sure.
First of all, you have to check out form T2125 and T777 and see if you qualify for any of those things. If you have a side-line business which is similar/same as your main employment you have to make you have your i's dotted and t's crossed so-to-speak.

You keep a general ledger of your business expenses for your business correct? It is simple if you keep a separate bank account, but not mandatory. Helpful to use an accounting software program.

You probably should read specific case law from CanLii as well. Typical expenses not allowed are vehicle, phone, entertainment/dining out. While CRA often allows these things, the family court circus generally does not unless you can specifically show how those expenses are general operating expenses for your business. Vehicle use has to have log book and for everything you need to be prepared to show receipts (good idea for audit purposes from CRA anyhow).

Many people can, and should, claim expenses from CRA for working out of home and can get really good tax breaks if they get employer to sign T2200 (I do this). However, this is a nice tax break but family court isn't likely to allow it and they MAY be added back to taxable income for purpose of determining support.

When you are an employee and use company vehicle for personal as well as work, your employer is obligated to complete appropriate information on T4 slips. The same goes for vehicle and vehicle-related expenses when you are self-employed. You are expected to keep log books so you can calculate how much the vehicle is used for personal vs. business.

Keep your expenses realistic and relative to the work you perform.

Is this a side business? Is this contract work relating to your full-time employment? Do you have a business number, GST/HST account/Workers Compensation etc.? Do you have a partner?
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