is CS normally based on last year's NOA, or this year's T4?

[mcdreamy]

That could be a silly question.
But the income changes between these last 2 years.
TIA,

 

[DunnMom]

From my experience the answer could be BOTH.

If you are just starting out in the Sep/Divorce hell hole, they take your last 3 yrs NOA ... the reason being is lets say you separated in Mar 2012 and got fired or quit your job. Your 2011, 2010 & 2009 NOA's all suggest you earn $80,000 (give or take a couple grand) ... suddenly you are in court in Jan 2013 and you say "hey judge, look I only make $25,000 in 2012" ... (see where I'm going with this?).

Now if you have been separated for a while and paying based on your previous years income for years on end and you got laid off in 2012 which made your yearly income DECREASE but you can show that you have been actively looking (or perhaps have already found another job earning roughly the same) then you'll be fine. Your CS obligation should drop in 2013 based on your 2012 NOA and then when 2014 rolls around and your income from 2013 is back to your earning capability then it will all wash out in the end.

 

[Mess]

My ex and I get a minor COL increase every year and it is predictable and we just go by last year's NOA.

If one of us had a big jump in income, this would be pertinent, something to be disclosed. Between the two of us, we would likely say "Let's deal with it next May." But by the courts, it should go with the amount you know is currently true.

If you were in a motion hearing right now, you would do a financial disclosure, you would provide proof of CURRENT income, and that is what it would be based on.

 

[mcdreamy]

We've never exchanged financials, until recently.
As of even date, CS will be paid pursuant to the tables.
I presumed that would be based on our most recent NOA's exchanged, but have received the ex' calculation based on T4's (which to me, I thought inaccurate - either of us could have other sources of income,T5's, etc. that would be most accurately set out in our NOA's, no?)

 

[OrleansLawyer]

Child support is payable based upon the most accurate and recent information.

Most people are comfortable using the last year's notice of assessment so that is the gold standard.

 

[dad2bandm]

I presumed that would be based on our most recent NOA's exchanged, but have received the ex' calculation based on T4's (which to me, I thought inaccurate - either of us could have other sources of income,T5's, etc. that would be most accurately set out in our NOA's, no?)

You guys, should probably look at both, to compare them. The most accurate picture would be for you both to exchange both tax returns, and NOA's each year. That can easily, and most likely will, be put into an order.

 

[Ace]

In my experience the courts do order that the income tax forms/NOA are exchanged in may or June. Trouble is that my x (who recieves CS) is unwilling to comply. She was ordered in Settlement conf to comply. Only 24 hrs later I recieved her hastily completed Financial Statement. It was so poorly done it was useless. The court asked her again to comply but it was only marginally better. Example, her annual expenses (cost to live in the mat home) was $63000 but there was no corresponding debt. She lives in a $450,000 home, claims she makes ~10,000 or 15,000 per year, spends $63,000 annually but has no debt.
Some people decide to make a mockery out of courts and the people around them. There are simply so many layers of lies and misinformation that it is near impossible to sort the jelly beans from the sheep shit.
The courts tend to turn a blind eye to the custodial parent when they behave badly and seem uncomfortable with penalizing as it may affect the welfare of the kids. She knows this and she has become fearless because she has her "trump card". She is mom!
Happy mothers day to all the reasonable peacekeeping moms out there.

 

[Tayken]

That could be a silly question.
But the income changes between these last 2 years.
TIA,

Use the T4s as you may have not gotten your NOAs yet from the government. Then exchange the NOAs when they come in. If the number is different than Line 14 of the T4s then adjust. If they are the same, then you know that the other party is trustworthy and has no other source of income.

If there is investment income for which a T5 is issued then you would have known this on equalization of the net family property and that money has already been distributed.

Generally, most people only have employment income and Line 14 of their T4 from their employer (or a letter form their employer outlining income) will match what is claimed on Line 150 of their taxes.

It is a matter of trust between the two parties reaching the agreement to adjusting child support.

The employer is required on the T4 to outline all income form employment. Investment income can be tricky.

What would the other party have a T5 for in the first place that you wouldn't know about that would be considered in the calculation of child support? (That is the question you need to ask yourself.)

Good Luck!
Tayken

 

[Tayken]

We've never exchanged financials, until recently.
As of even date, CS will be paid pursuant to the tables.
I presumed that would be based on our most recent NOA's exchanged, but have received the ex' calculation based on T4's (which to me, I thought inaccurate - either of us could have other sources of income,T5's, etc. that would be most accurately set out in our NOA's, no?)

It actually isn't "inaccurate". You could always ask the other party for a copy of the first page of their income tax filing. The NOA may not have been sent by Revenue Canada.

Generally Line 14 of the T4 and Line 150 of an NOA match for the vast majority of people. There are those that are self employed or have huge investments but, that is more rare.

Again, trust is the key thing here. If neither of you is earning income other than what is paid to you by your employer then why are NOA's necessary? Line 14 and Line 150 match generally.

Just simply ask for the evidence and proof of Line 150 income claimed and for it to be provided when delivered or what was filed for income tax.

The vast majority of people don't hide their income when it comes to calculating child support. Not to say there are people that do this. Just saying that in matters like this many people exchange their T4.

Rule 21 of the Child Support Guide Lines is often what is stated in settlement agreements etc and not "Notice of Assessments". The default templates I have seen from a number of legal services providers states Section 21 and not NOAs...

21.(1).(c) reads:

(c) where the spouse is an employee, the most recent statement of earnings indicating the total earnings paid in the year to date, including overtime or, where such a statement is not provided by the employer, a letter from the spouse’s employer setting out that information including the spouse’s rate of annual salary or remuneration;

A T4 satisfies Section 21.(1).(c) and so does a letter from the person's employer.

Employers are obligated to put all money's paid to their employee on the T4. Even their pension payments, RRSP contributions, car allowances, etc... So you have everything you need to identify the gross income for which child support would be calculated on.

Why fight over a document. It would be unwise to go on a change in circumstance to update child support when provided the evidence in compliance with section 21.(1).(c) by the other party. You would face paying costs if the numbers match to line 150 and were being unreasonable in your request.

A side note: If someone is paid an RRSP contribution, paid child support based on that contribution and later withdraws the RRSP they already accounted for in their previous child support calculations you cannot double-down on them. There is case law regarding this that is well known to all the justices. They won't double down on the withdraw of the RRSP that has already been accounted for in a previous year's child support.

This is why child support is paid on a go-forward basis.

Good Luck!
Tayken

 

[OrleansLawyer]

This is why child support is paid on a go-forward basis.

To expound further on the above:

Child support is to be paid based upon the current income of the payor. It is for this reason that a loss of employment should result in a substantial decrease in child support - nothing in, nothing out.

People often choose to use the tax documents from the previous year since they are a clear indication of what last year's income was. Should this year's income differ, that will be accounted for in the next year, and so on moving forwards.

At law, the "most accurate" way to assess child support would be a monthly determination of income followed by the corresponding child support payment. However, as this would lead to uncertainty for all parties and require an unreasonable amount of work to determine the monthly amount, this is not ever done in (sensible) practice.

If there are issues with the T4 or NOA that are not of substantial impact, one way to address the issues is to go through the income tax return when it is received the following year, calculate what child support ought to have been the previous year and see a payment flow from one party to the other if there was an overpayment or underpayment.

 

[billm]

Child support is payable based upon the most accurate and recent information.

Most people are comfortable using the last year's notice of assessment so that is the gold standard.

This is the way it should be, however unscrupulous receivers like to cherry pick to maximize support payments and payors do the same to minimize.

 

[billm]

...

If you are just starting out in the Sep/Divorce hell hole, they take your last 3 yrs NOA ... the reason being is lets say you separated in Mar 2012 and got fired or quit your job. Your 2011, 2010 & 2009 NOA's all suggest you earn $80,000 (give or take a couple grand) ... suddenly you are in court in Jan 2013 and you say "hey judge, look I only make $25,000 in 2012" ... (see where I'm going with this?).
...

Yes I see where you're going with this and I couldn't disagree more.

If you make $25,000, you should pay support based on $25,000.

 

[Tayken]

Child support is payable based upon the most accurate and recent information.

Most people are comfortable using the last year's notice of assessment so that is the gold standard.

The "gold standard" for disclosure I would reckon is Section 21 of the Federal Child Support Guide Lines (FCSG). Correct me if I am wrong. The gold standard to Section 21 would be the NOA but, it is my understanding that under Section 21 there are a number of acceptable documents which can be provided that provide proof of gross income other than just the NOA.

The gold standard to Section 21 would be the NOA in my opinion. But, it is my understanding that a justice is obligated to rule in accordance with the law and therefor can accept a T4 as proof of gross income. I have seen it done a few times. I even saw a justice order on employment contracts and fixing income of both parents based on their employment contracts.

The key thing I think everyone should consider is that child support should be calculated on a go-forward basis. If income increases over the year it will be reflected in T4s, NOAs, and then gets used in the next years.

You never know when one of the parents is going to become unemployed or change employment or get a smaller bonus. Where I find this gets complicated is with performance bonus compensation paid at the discretion of the employer. This is where I see most justices hammer down the above pattern I described most.

Many people's income isn't static and changes. Yearly adjustments cover for this. Well, when they are being reasonable of course...

Good Luck!
Tayken

 

[Tayken]

To expound further on the above:

Child support is to be paid based upon the current income of the payor. It is for this reason that a loss of employment should result in a substantial decrease in child support - nothing in, nothing out.

To expand further... To change often requires a motion (Form 15) to have adjusted if the parties are unable to agree. There isn't an automatic systemic approach. In the absence of there being a proper agency that receives both parent's payroll notice for each payroll and then adjusts it in near-real-time you will have to deal with (in most cases) yearly adjustments on a go-forward basis.

People often choose to use the tax documents from the previous year since they are a clear indication of what last year's income was. Should this year's income differ, that will be accounted for in the next year, and so on moving forwards.

The key differentiating factor that I would add to the excellent advice given is that it should start off reading "Reasonable people often choose to use..."

At law, the "most accurate" way to assess child support would be a monthly determination of income followed by the corresponding child support payment. However, as this would lead to uncertainty for all parties and require an unreasonable amount of work to determine the monthly amount, this is not ever done in (sensible) practice.

Further to this point, if the courts want to administer justice "at law" then the system of government has to provide the service to do such. FRO can't do this. So, the justice has their hands tied when enforcing "at law". The counter argument is that there is no system in place that could support the definition "at law". Jurisprudence speaks to the go-forward basis of calculating child support.

Unfortunately, for unreasonable people this fact often doesn't sink in. Even after a qualified lawyer explains this to them. They go right back into the court room to demonstrate their "highly conflicted" pattern of dispute resolution through the courts.

If there are issues with the T4 or NOA that are not of substantial impact, one way to address the issues is to go through the income tax return when it is received the following year, calculate what child support ought to have been the previous year and see a payment flow from one party to the other if there was an overpayment or underpayment.

Again, a threshold should really be applied for "reasonableness" of this kind of pattern. If we are talking a small % difference, it is often better to just move on and not create conflict as it all washes out in the long run of calculating child support.

It all boils down to "penny wise pound foolish".

@ 250-500 an hour for a lawyer you could be looking at 8 hours of effort to recover money that may not even match the cost (2,250 - 4,520). Likely that a cost award being made is low. Especially if the costs and amount being sought are close (or the costs are higher than the amount). Doing something like this would just be evidence to the justice that you are highly conflicted and seeking nothing but more conflict rather than thinking logically about the situation.

All litigants need to realize "how" they litigate a matter is often evidence to the conflict in a matrimonial dispute and the justices take note of this. They may not talk to it but, it does impact the balance of probabilities and who is the "reasonable" party in the matter is.

Is it reasonable to litigate for a small % difference because someone got a better than expected bonus the previous year? Nope. Just take the calculation and move forward as the child support increases.

Not sure how litigating a minimal adjustment to child support demonstrates the moving party is really considering the "best interests" of the children involved. Conflict is know to be the worst thing for children. Court is from the onset a adversarial (conflicted) situation. Why start the conflict and not settle. A reasonable compromise always is in the children's "best interests".

As always, OrleansLawyer serves to impress.

Good Luck!
Tayken

 

[stripes]

I asked a similar question a little while ago on this forum, and the answer I got (boiled down) was something like "child support amounts are based on most recent verified income (line 150 or NOA), and change when income changes". I hope I understood that correctly.

In July, I'm going to get my annual raise and I will start paying a different (higher) amount of offset child support at the same time. The amount of offset I will be paying from July onwards is based on my 2012 tax return, even though I will be earning my 2013 income at the time I'm paying it.

This works because the increase in my income is slow and gradual (I'm not going from $20K to $80K on July 1, or worse, the other way around), so the "lag", in terms of CS, isn't much. In most cases, it makes sense to pay based on last year's income because that's a known quantity, whereas the upcoming year's income isn't (I could get hit by a bus tomorrow and have to go on disability, for instance). If either party has big swings in income from year to year, I've heard either use the three-year rolling average figure, or come to some sort of agreement with the other party each year based on past and projected income, which sounds like real fun time for all involved.