Desperate_Dad
Member
Disclaimer - The Divorcemate explanations presented in this post are over a year old and they might have changed some of them. However I have no reason to believe they have gained a significant amount of intelligence in one year.
This is what Divorcemate does not want you to see. These are actual explanations to lawyers of how to input information on Divorcemate in the help screen of the program itself.
Employment income
If the party is employed (ie. receives a T4 slip), input the appropriate gross annual income prior to deductions, including any taxable benefit amounts that are or will be subject to income tax (T1, Line 101; T4 slip, Box 14).
(Note that income of corporate owners who don't pay EI, but pay double CPP, should be input under "Self- employment income (net)" to ensure proper treatment of this income by the software.)
According to the CSG, annual income is determined using Line 150 ("Total income") of the T1 General form, adjusted in accordance with Schedule III and ss. 17, 18 and 19 of the CSG. This is commonly referred to as "Guidelines Income".
The most current information is to be used (CSG, s.2(3)). However, a court will use last year’s income to determine income for CSG purposes under CSG, s. 16, in the absence of any evidence that things have changed significantly, at least on an interim motion. See: Bortolotto v. Bortolotto, 2002 CarswellOnt 1717 (Ont. Master). See also: Suto v. Suto, 2002 CarswellBC 1905 (B.C.S.C.) and Mooney v. Mooney, 2002 CarswellBC 1933 (B.C.S.C.).
Note that the SSAG use the same definition of annual income as under the CSG, with some exceptions.
CSG, Guidelines Income Cap:
When a child support payor's Guidelines Income is over $150,000 (CSG, s.4), if the court considers the table amount of child support based on the full Guidelines Income to be inappropriate, the court may apply the table amount of child support for the first $150,000 of income, and use its discretion to determine the appropriate amount of additional child support based on the balance of the income, plus special/extraordinary expenses, if any.
SSAG, Guidelines Income Ceilings, Floors and Exceptions:
For the SSAG, when a spousal support payor's Guidelines Income is over $350,000, the formulas should no longer be automatically applied to divide income beyond that threshold. Instead, the court will have to exercise discretion in fixing the amount of spousal support. Similarly, when a spousal support payor's Guidelines Income is under $20,000, no spousal support is payable unless an exception is made (ie. payor spouse has significantly reduced expenses). Where a spousal support payor's income is between $20,000-$30,000, there is also the possibility of an exception to the formulas to eliminate a "cliff effect" of the floor of $20,000. In these cases, it might be necessary to depart from the lower end of the range, depending on the payor’s circumstances and his/her ability to pay.
TIP: There is a built-in conversion feature that will automatically convert weekly, bi-weekly, and monthly amounts into annual figures. For example, input 1000w for weekly income of $1,000, press enter and the software automatically multiplies the number by 52, and results in $52,000; For bi-weekly income of $1,000: input 1000b (results in $1,000 x 26 = $26,000). For monthly income of $1,000, input 1000m (results in $1,000 x 12 = $12,000).
My comments
Lets talk about the most blatant error first. It is true corporate owners pay no EI and double CPP. However Divorcemate's solution will result in a deduction of 3X CPP. Why? Inputting under self employed net is for self employed that are unincorporated. Unincorporated individuals do not pay themselves a salary therefore they do not pay CPP on a salary because there isn't one - they draw income out of retained earnings. So it calculates 2X CPP correctly. However corporate owners pay themselves a salary which is shown on a T4 slip and 1X CPP is deducted. The other 1X CPP is the company portion shown as an expense on their income statement. So if you move the salary a corporate owner pays himself to self employed net income, it has the effect of calculating 2X CPP on their corporate salary + 1X through their income statement = 3X CPP.
Sections 17, 18 and 19 deal with the following adjustments to line 150
Section 17 Pattern of Income & Non recurring business losses
Section 18 Adding in Corporate Pre-Tax Income +Income Splitting
Section 19 Imputing Income
These are complex financial issues that Divorcemate and the Child Support Guidelines have no clue how to address. In later posts, I will address all of these issues and their proper treatment.
Here is just a sample of other financial issues that are not even mentioned in Section 17,18,19 and how it is easy it is to calculate income incorrectly.
1. Deferred Income - Both employees and Corporate owners can do this. It means income is earned in a different year than it is paid. Even averaging income over three years may not account for this properly
2. Stock Options - Divorcemate has a stock option section where I will discuss this further. Suffice to say they have no idea what a stock option is never mind how to account for it in child support.
3. Restricted Stock - This is a fairly recent phenomenon and it is extremely complex. Line 101 may include restricted stock that was earned years ago and doesn't reflect the current financial situation at all. I will discuss further when I reach Divorcemate's stock option explanation.
4. 27 pay years or 53 pay years - Most companies use an annual salary / 365 * 7 (for weekly) or * 14 (for biweekly) calculation. Thius can result in an employee receiving income that exceeds his/her current salary by one pay period. For example, an employee could be paid on December 17 one year and then December 31 the next year. This is income earned for 1 year and one pay period (December 18 - December 31 the following year.
5. Taxable benefits should sometimes be removed and sometimes stay in income depending on the situation. For example, a life insurance taxable benefit should be removed. The spouse is likely the beneficiary of the company life insurance so this is a benefit to the spouse. Note that there is a deduction for the life insurance taxable benefit in the program but it is usually not entered by lawyers and I doubt they could find it on a T4 anyway. However an automobile standy charge taxable benefit should stay. The taxable benefit is calculated on the personal use that an employee has of the employer's car.
This isn't an all inclusive list but should give you an idea that line 101 may not reflect proper income. It needs to be assessed by a professional accountant. I am one - there are others like me. Lawyers and Divorcemate are NOT a financial professionals.....but they pretend they are.
No one comes to my place of employment and tries to beat the crap out of me when I calculate income.
But lawyers can't say the same thing...
Please feel free to comment to Divorcemate directly about any issue that I write about. Here is the link to their contact list
http://www.divorcemate.com/contact.aspx
If enough people email them, maybe they will get the message. By the way they know me and can't stand me because I am exposing them as the incompetents and that they are.
This is what Divorcemate does not want you to see. These are actual explanations to lawyers of how to input information on Divorcemate in the help screen of the program itself.
Employment income
If the party is employed (ie. receives a T4 slip), input the appropriate gross annual income prior to deductions, including any taxable benefit amounts that are or will be subject to income tax (T1, Line 101; T4 slip, Box 14).
(Note that income of corporate owners who don't pay EI, but pay double CPP, should be input under "Self- employment income (net)" to ensure proper treatment of this income by the software.)
According to the CSG, annual income is determined using Line 150 ("Total income") of the T1 General form, adjusted in accordance with Schedule III and ss. 17, 18 and 19 of the CSG. This is commonly referred to as "Guidelines Income".
The most current information is to be used (CSG, s.2(3)). However, a court will use last year’s income to determine income for CSG purposes under CSG, s. 16, in the absence of any evidence that things have changed significantly, at least on an interim motion. See: Bortolotto v. Bortolotto, 2002 CarswellOnt 1717 (Ont. Master). See also: Suto v. Suto, 2002 CarswellBC 1905 (B.C.S.C.) and Mooney v. Mooney, 2002 CarswellBC 1933 (B.C.S.C.).
Note that the SSAG use the same definition of annual income as under the CSG, with some exceptions.
CSG, Guidelines Income Cap:
When a child support payor's Guidelines Income is over $150,000 (CSG, s.4), if the court considers the table amount of child support based on the full Guidelines Income to be inappropriate, the court may apply the table amount of child support for the first $150,000 of income, and use its discretion to determine the appropriate amount of additional child support based on the balance of the income, plus special/extraordinary expenses, if any.
SSAG, Guidelines Income Ceilings, Floors and Exceptions:
For the SSAG, when a spousal support payor's Guidelines Income is over $350,000, the formulas should no longer be automatically applied to divide income beyond that threshold. Instead, the court will have to exercise discretion in fixing the amount of spousal support. Similarly, when a spousal support payor's Guidelines Income is under $20,000, no spousal support is payable unless an exception is made (ie. payor spouse has significantly reduced expenses). Where a spousal support payor's income is between $20,000-$30,000, there is also the possibility of an exception to the formulas to eliminate a "cliff effect" of the floor of $20,000. In these cases, it might be necessary to depart from the lower end of the range, depending on the payor’s circumstances and his/her ability to pay.
TIP: There is a built-in conversion feature that will automatically convert weekly, bi-weekly, and monthly amounts into annual figures. For example, input 1000w for weekly income of $1,000, press enter and the software automatically multiplies the number by 52, and results in $52,000; For bi-weekly income of $1,000: input 1000b (results in $1,000 x 26 = $26,000). For monthly income of $1,000, input 1000m (results in $1,000 x 12 = $12,000).
My comments
Lets talk about the most blatant error first. It is true corporate owners pay no EI and double CPP. However Divorcemate's solution will result in a deduction of 3X CPP. Why? Inputting under self employed net is for self employed that are unincorporated. Unincorporated individuals do not pay themselves a salary therefore they do not pay CPP on a salary because there isn't one - they draw income out of retained earnings. So it calculates 2X CPP correctly. However corporate owners pay themselves a salary which is shown on a T4 slip and 1X CPP is deducted. The other 1X CPP is the company portion shown as an expense on their income statement. So if you move the salary a corporate owner pays himself to self employed net income, it has the effect of calculating 2X CPP on their corporate salary + 1X through their income statement = 3X CPP.
Sections 17, 18 and 19 deal with the following adjustments to line 150
Section 17 Pattern of Income & Non recurring business losses
Section 18 Adding in Corporate Pre-Tax Income +Income Splitting
Section 19 Imputing Income
These are complex financial issues that Divorcemate and the Child Support Guidelines have no clue how to address. In later posts, I will address all of these issues and their proper treatment.
Here is just a sample of other financial issues that are not even mentioned in Section 17,18,19 and how it is easy it is to calculate income incorrectly.
1. Deferred Income - Both employees and Corporate owners can do this. It means income is earned in a different year than it is paid. Even averaging income over three years may not account for this properly
2. Stock Options - Divorcemate has a stock option section where I will discuss this further. Suffice to say they have no idea what a stock option is never mind how to account for it in child support.
3. Restricted Stock - This is a fairly recent phenomenon and it is extremely complex. Line 101 may include restricted stock that was earned years ago and doesn't reflect the current financial situation at all. I will discuss further when I reach Divorcemate's stock option explanation.
4. 27 pay years or 53 pay years - Most companies use an annual salary / 365 * 7 (for weekly) or * 14 (for biweekly) calculation. Thius can result in an employee receiving income that exceeds his/her current salary by one pay period. For example, an employee could be paid on December 17 one year and then December 31 the next year. This is income earned for 1 year and one pay period (December 18 - December 31 the following year.
5. Taxable benefits should sometimes be removed and sometimes stay in income depending on the situation. For example, a life insurance taxable benefit should be removed. The spouse is likely the beneficiary of the company life insurance so this is a benefit to the spouse. Note that there is a deduction for the life insurance taxable benefit in the program but it is usually not entered by lawyers and I doubt they could find it on a T4 anyway. However an automobile standy charge taxable benefit should stay. The taxable benefit is calculated on the personal use that an employee has of the employer's car.
This isn't an all inclusive list but should give you an idea that line 101 may not reflect proper income. It needs to be assessed by a professional accountant. I am one - there are others like me. Lawyers and Divorcemate are NOT a financial professionals.....but they pretend they are.
No one comes to my place of employment and tries to beat the crap out of me when I calculate income.
But lawyers can't say the same thing...
Please feel free to comment to Divorcemate directly about any issue that I write about. Here is the link to their contact list
http://www.divorcemate.com/contact.aspx
If enough people email them, maybe they will get the message. By the way they know me and can't stand me because I am exposing them as the incompetents and that they are.