Daycare Expenses 50/50 rather than proportional

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Futureisbright

New member
We are finalizing SA and her lawyer put in proportional daycare costs though I’d told her it needs to be 50/50 as I’d already created an arrangement with my work that enabled me to avoid need for after-school care during my weeks.
Since getting every 2nd week care is impractical and my solution at work wasn’t very sustainable I figured 50/50 was fair.
My STBX wants to go back to school thus leaving her with no income (she’s agreed to 25k imputed for calculating CS).
Looking for feedback on best strategy to get her lawyer to agree to:
1) proportional up to max 70/30 split whether childcare is to allow for work or for Souly for schooling between March 2018 and October 2019
2) proportional when childcare is to enable employment; 50/50 if it is to enable schooling between March 2018 and October 2019
- SA currently contains std wording “care for the purposes of allowing him/her to work”
 
I’m sure it’s always meant to be proportional. I guess another way of phrasing my question would be: has anyone had success putting a different ratio in their SA?
 
If its 50/50, who gets the tax benefit? If the lawyer is pushing for proportional then figure out your share after she takes the tax benefit. More than likely that cost will be around the 50/50 or you could simply say proportional cost of day care during her time with the kids. That way you arent getting daycare on your time but you still meet the s7 requirement of daycare for her to prepare for employment.
 
Thanks Rockscan I think that’s a good solution: Proportional but I get 100% if tax benefit. I’m sure she’ll agree to that and this would come off a 43% marginal rate so will be significant deduction.
 
Be careful though. More than likely she will get the tax benefit (which would be better due to her lower income) but that still lowers the cost.

Normally s7 expenses are calculated as the proportionate share of the net cost. So if daycare was $1000, the tax benefit was $200, you would split $800 proportionate to income. If you were simply splitting 50/50 then you would each have a $500 bill.

Also, make sure if you dont need daycare you arent paying for it. Some daycares require you to pay full price or a higher price for part time. Read the fine print in the contract before agreeing.

Also see if she gets a daycare subsidy based on her income/returning to school. That would come off the price you pay too.
 
Okay,
So I guess the question is:
Can I claim 100% of childcare cost (so long as she doesn’t put it on her return)
or does it need to be claimed 50/50 based on assumption that we use it 50/50
or does it need to be claimed based on how paid (e.g. proportional 80/20)?
 
Im not an expert but I believe that only one of you can claim the tax deduction and that person is the custodial parent in most cases. I think for 50/50 off set, some agreements state you switch off the tax deductions every other year.

Are you in a situation where only one of you claims the child? If yes then the person who claims the child takes the amount of the tax deduction off the cost and then you split proportionate to income.

Based on some of the difficulties expressed on here by others, getting CRA to understand the split is next to impossible. You may want to just keep it easy and have one person make the claim every year.
 
I have trouble with paying proportional after calculating tax deductions as that would allow her to gain from me being in a high tax bracket and still allows her to gain by having highest offset possible thus not creating any inclination to get a dang job.
I hope I can pay proportional and then take all deductions after the fact and keep as my own. I hope to get precisely that put into separation agreement.
She hasn’t even read it, she just told me to go ahead and mark up with whatever I want and she’ll sign when I’m happy. I just need to get her lawyer to feel the same way :)
Maybe in SA I can word it as: any child for which ongoing regular child care expenses are being paid will have 100% of child care tax deductions claimed by (me).
Once each child is of the age that ongoing child care is not required they alternate years as to which spouse can claim as a deduction.

Right now is when we have highest child care costs (4,5,7) and right now she has zero income (returning to school) and I have 100k income.
 
Would your ex not qualify for subsidized daycare given that she is going back to school and does not have an income?
 
Potentially, though she’s also not inclined to put in the effort to get that (currently signed up for full cost).
I was also considering that we could split 50/50 of full cost and any subsidy she would get could come 100% off of her share.
Perhaps I’m over-complicating things but I don’t mind a complicated solution if it’s a good one.
 
When is she going back to school, this fall? Then why do you need daycare if all 3 kids are in school and she will be home in the summer?

3 kids under 7, this summer if she is in school full-time, you may be better off hiring a Nanny.
 
CRA is a different beast that you need to think about. If she is claiming the kids as eligible dependents then she claims the tax deductions.

You would be better served to have a clause in there are her income imputation being increased each year.

I get what you are trying to do but it won’t work. She could come back with a motion to change to get the calculation done according to the guidelines.
 
Thanks Kate,
I hope she gets some subsidizing but she’s not in a rush to pursue as she sees the CS and SS as enough to cover and applying for subsidies is too much effort.
Yes, certainly pursuing nanny for summer - did same last year very effectively.
She’s starting school in March so need post-school care straightaway (and daycare for youngest since he was with her Mom but she now says she won’t watch him for her to back to school (was previously working part time and Grandma had little guy).
Rockscan, thanks for thinking this through. I agree - likely everything’s been tried and no I don’t want to create any sorta CRA mess as that just gets more complicated.
I will however have kids 60%+ while she’s in school so maybe I can say that I take all dependant claim and deductions until she starts working. That would be less likely to flag concerns via CRA?
 
She would need to apply ASAP, as there would be a wait list, its my understanding that only a few spots are available for subsidies. Also look for grants and scholarships there is lots out there, but I find people dont look because like you said it takes some effort.
 
I think you may have missed the deadline, but if you hire a summer student, the Government will pay half their wages. Look at ECE programs at your local college or university for students when looking for a Nanny.
 
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