Self employed income reporting

[rockscan]

Question for a friend...

Ex is a non-medical “doctor” who owns their own clinic in addition to rental property resulting in an income. The gross income of this person could be in the $90,000 to $120,000 range (if not higher) compared to my friends $50,000 income.

At the time of the agreement (16 years ago) incomes were somewhat similar and as such post secondary expenses were agreed to be split 50/50.

Fast forward to now. Friend filed the motion to change in response to school expenses (and a multitude of non section 7 expenses) filed with FRO for reimbursement. In the ex’s response, income is listed as very low to the point of it being half the income of my friend. This is directly due to CRA income amount including operating expenses.

How does my friend state that the opposing party’s income is not a correct representation in a case conference brief? No financial statement was filed or associated documents. It’s ok to split 50/50 but ex is claiming tens of thousands in expenses, wants ongoing cs and school expenses past the first degree and they have more assets and income than my friend.

[Berner_Faith]

Originally Posted by rockscan

Question for a friend...

Ex is a non-medical “doctor” who owns their own clinic in addition to rental property resulting in an income. The gross income of this person could be in the $90,000 to $120,000 range (if not higher) compared to my friends $50,000 income.

At the time of the agreement (16 years ago) incomes were somewhat similar and as such post secondary expenses were agreed to be split 50/50.

Fast forward to now. Friend filed the motion to change in response to school expenses (and a multitude of non section 7 expenses) filed with FRO for reimbursement. In the ex’s response, income is listed as very low to the point of it being half the income of my friend. This is directly due to CRA income amount including operating expenses.

How does my friend state that the opposing party’s income is not a correct representation in a case conference brief? No financial statement was filed or associated documents. It’s ok to split 50/50 but ex is claiming tens of thousands in expenses, wants ongoing cs and school expenses past the first degree and they have more assets and income than my friend.

Just for clarification purposes... the ex makes $90-120k but is claiming income of $25k according to CRA reports and your friend makes $50k?

It was agreed that post secondary would be split 50-50 but your friend thought ex should pay a higher portion given income but now that ex is saying they make half of your friend, said friend wants it to stay at 50/50 and ex is now pushing for an unfair split in their favour?

Just because expenses are allowed for CRA purposes doesn’t mean they are acceptable for CS purposes... friend should be asking for full tax return and all expense reports as well... a simple NOA would not be acceptable in this case. I am assuming friend doesn’t have a lawyer, but given the complexity this case could be a consult with a lawyer should be done at the very least


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[arabian]

When the other side has to pony up with corroborating evidence (bank statements) of income and expenses, then that is when the offers start to fly. Tell your friend to stay firm and demand documentation... yes going back several years. There is nothing sweeter than having an ex lie on submissions. Then when they come to court in the future nobody believes them.

[rockscan]

I think the incomes were the same when they split but since then (16 years) ex has made more. Friend was ok with 50/50 but ex wants all the RESP funds that they both paid into (friend paid 4x more) and friend is afraid judge will see the low income and feel bad.

[Berner_Faith]

Originally Posted by rockscan

I think the incomes were the same when they split but since then (16 years) ex has made more. Friend was ok with 50/50 but ex wants all the RESP funds that they both paid into (friend paid 4x more) and friend is afraid judge will see the low income and feel bad.

I don’t think friend has to worry about that... friend needs to push for full disclosure... that’s a huge difference in income and writing off of expenses... as stated just because they are allowed for CRA doesn’t mean they are allowed for CS purposes


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[tilt]

If you look at case law, time and time again Judges point out that self-declared income from self-employment is completely made up and never accepted at face value. Judges Order that the Corporations books be opened to see the true financial picture. Your friend needs to push for full financial disclosure before signing any documents. I agree the other side will most likely make an Offer that includes an increase, push for the documentation before signing - including getting an Order if necessary (easy to do - send the other party a Form 20 with specific reasonable requests regarding the business’s books and the ex’s personal finance including that they file an updated 13.1 and if they don’t respond within 20 days then file a 14B with the Court for a written Order). Only fools sign their rights away when they already know the other side is not behaving fairly.

[rockscan]

Than would it be safe to put in the case conference brief:

When the agreement was signed, the Respondent’s income was $xx,xxx which resulted in an equal split of section 7 expenses. Since that time, the respondent has opened a clinic and owns a rental property. The gross income provided is approximately $xxx,xxx. Based on my current income of $xx,xxx, my proportionate share is 33%.

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My friend has no problem keeping the split at 50/50. They just want to make sure that the whole calculation is fair. There is an RESP that my friend paid the most into and the ex has been adding expenses that are not school related.

[StillPaying]

The case conference briefs are quickly read by the DRO or judge to see the issues and then are thrown away after the case conference. For sure you can add that in the brief but it's more important for that to be in your friend's application. May want to focus on disclosure at the cc and ensure it doesn't get adjourned.

[tunnelight]

I wouldn't even get to the nitty witty in your brief.

Persuant to the order of Justice Kilmore, dated Movember 25, The applicant and I agreed to share section 7 expenses given our equal incomes.

The applicant has since opened a clinic and has suggested his/her income has been greatly reduced due to businesses expenses.

The applicant has made this decision voluntarily which results in a lower income.

I also believe that the applicant may be inflating expenses to reduce overall income.

Then when you appear before a judge, you state these points and ask for income to be imputed as the applicant is voluntarily underemployed.

Should ask the other side for tax returns for last 3 years before going to court. If they refuse, bring it up to the judge and ask for that disclosure.

[imadad]

Originally Posted by tunnelight

I wouldn't even get to the nitty witty in your brief.

Persuant to the order of Justice Kilmore, dated Movember 25, The applicant and I agreed to share section 7 expenses given our equal incomes.

The applicant has since opened a clinic and has suggested his/her income has been greatly reduced due to businesses expenses.

The applicant has made this decision voluntarily which results in a lower income.

I also believe that the applicant may be inflating expenses to reduce overall income.

Then when you appear before a judge, you state these points and ask for income to be imputed as the applicant is voluntarily underemployed.

Should ask the other side for tax returns for last 3 years before going to court. If they refuse, bring it up to the judge and ask for that disclosure.

Sorry to bring up an old thread but I am the Applicant in this case and i am just about to file my conference brief and am not sure how to go about bringing up this issue.

I was given the last 3 years of tax returns with an outline of the expenses incurred but they just seem very unreasonable.

For instance on her financial statement she lists her total annual income as $62000 and her total annual expenses as $102000. i mean really, you want the judge to believe you lost $40000 last year ?

Now she does also have additional sources of income listed as rental income but the gross is $42000 meanwhile the net is $409.

I know you get to write off a lot of expenses when you rent out part of your home but some of the expenses seem very excessive.

She owns 2 properties, one is used for her business only and rents out the basement. The second is the home she lives in with our son and also rents out the basement.

For her home she would have us believe that she lost almost $16000 last year because she was renting out the basement ! And that $16000 loss negates any rental income she received from the business property.

And of course she must have a small office in her home that she uses for work as she wrote off another $11000 for business use of home !

The biggest thing that caught my eye was how much she has listed for expenses on her home that she lives in. She has total expenses of $49000 listed for last year with the biggest portion coming from interest $31000. And the year before she had $34000 listed for expenses with $23000 of that from interest.

Now i get that housing prices are high here but how does your interest go up by $8000 and your total expenses go up by $15000 ? Certainly doubt it was from the mortgage and i dont think i saw any major construction/renovation going on at that place.

meanwhile she is taking overseas trips to Italy and England.

Anyway sorry for the mini rant, just very frustrating but hopefully the judge wont get swayed by her creative accounting !