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Divorce & Family Law This forum is for discussing any of the legal issues involved in your divorce.

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Old 04-19-2009, 12:17 PM
sak sak is offline
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Default Child support and a verbal agreement

Background
In 1996, I had a court filed document stating that child support be paid in the amount of $150. In 1998, I had a custodial agreement signed by my ex, which also included a table of income and matching child support payments that would increase or decrease accodingly. We both claimed the 1800 on our tax returned, mine as income, his as a deduction. When the law was changed and allowed for the parent receiving the child support income to not have to claim the support as income, my ex and I agreed to no longer claim it our income taxes, and to not adjust the tables to match the government. Even when his income would have meant a greater amount he would have to pay according ot the government's tables. I was fine with receiving less, as he always made payments, and did plenty of things with our child. The thing is, we never filed anything new with the courts. The fact that neither of us claimed the support on our income tax return since 2000 supports the fact we did have a verbal agreement.
Question:
Is our verbal agreement binding? My ex now wants to start claiming child support on his income tax return. I do not want to start claiming it again. Besides, the support is much lower than the government's tables of recommended payment amounts. We have a verbal agreement, but would a judge rule in favour of my ex? The courts only have the original one that states he pays $150 a month. We did not want to incur legal fees and thought we could work it out amicably, now after nine years, he is changing his mind.
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Old 04-19-2009, 12:42 PM
thistoshallpass thistoshallpass is offline
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Default CS deductions?

There are two changes which have been made to child support laws in Canada
  1. The Income Tax laws have been changed so that child support payments made pursuant to a court order dated after May 1, 1997 or pursuant to a separation agreement signed after May 1, 1998 do not have to be declared as income on the income tax return of the person receiving the payment and cannot be deducted on the income tax return of the person making the payment.
  2. There are now child support guidelines setting out the amount of child support to be paid based on the income of the person making the payment and the number of children that are being supported.
PERSONS PAYING SUPPORT: The amounts set out in the tables are not tax deductible. Even though the amount in the table is lower than the amount that you are required to pay, it may actually end up being higher because it is not tax deductible. IF YOU CAN'T CLAIM A TAX DEDUCTION FOR THE PAYMENT, YOU MAY BE PAYING THE EQUIVALENT OF AS MUCH AS TWO TIMES THE AMOUNT SET OUT IN THE TABLE, DEPENDING ON YOUR INCOME.
PERSONS RECEIVING SUPPORT: THE AMOUNTS SET OUT IN THE TABLE MAY ACTUALLY TURN OUT TO BE THE EQUIVALENT OF A MUCH HIGHER AMOUNT BEING PAID UNDER AN OLD ORDER, DEPENDING ON YOUR INCOME.
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Old 04-19-2009, 01:14 PM
sak sak is offline
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The child support guidelines show that my ex should actually pay much more than what he is paying. And this much higher amount would not be tax deductable. Since our agreement is before the changes in the law, we worked it out ourselves and had a verbal agreement not to claim the support as income or as a tax deduction. We have been doing that since and including the year 2000. I never made him pay more according to the government's support guidelines as I could have. Instead he has been paying less. The problem now is that we did not file anything with the courts, and he wants to start claiming child support again. I think he even wants to adjust his income taxes for the last nine years to show that he has in fact been paying child support. I want to know if I have a leg to stand on. Will the courts not recognize that we worked things out without their help, and had a verbal agreement rather than filing something with the courts?
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Old 02-01-2011, 07:56 AM
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Kenny Kenny is offline
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I am currently in Family Court at this time. To answer the verbal (or oral) agreement part of your question, yes, the courts will recognize an oral agreement for support. My ex has outright refused to pay child support after we entered into an oral agreement. The two judges I have dealt with so far have accepted that agreement for the purposes of arrears.

Although not an expert on the tax implications of child support agreements prior to 1997, I do know that any new agreement will come under the new tax rules. You can't transfer the old tax rules to a new agreement.
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Old 02-01-2011, 10:45 AM
Mess Mess is offline
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Your issue is with tax law, not family law. Whether the family courts would honour a verbal agreement is irrelevant. Call the CRA help line and ask anonymously what your status is with a non-verbal agreement.
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Old 02-01-2011, 07:11 PM
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dadtotheend dadtotheend is offline
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This is a very simple answer.

CS for any agreement made after the rules came into effect in May 1997, or agreements that have been modified since the new rules were enacted will not be deductible to the payor or taxable to the recipient.

You modified your agreement in 1998 after the new rules came into effect. You don't even need to rely on the verbal agreement you made as the formal arrangement that was made in 1998 renders the CS non-taxable.

Now where would you like me to send my bill
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Old 02-02-2011, 10:46 PM
Alienfire Alienfire is offline
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The tax law states that you cannot claim child support at all. I went through this 3 years ago when my ex started paying. He tried to claim it as deduction but Revenue Canada caught it and sent back his tax forms. Revenue Canada, H & R Block and accountants will tell you that no matter what the two of you decided you can't claim nor can he use as deduction on his income tax.
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