Part 1: Salaried employees
In order to calculate the amount of child support payable, we need to consider many factors.
Let’s talk about income for salaried employees.
The Child Support Guidelines require us to use the line 150 income on your tax return to determine child support. The Guidelines give a specific figure payable as child support based on that income and on the number of children.
There is a difference, though, between line 150 income and your salary. Even in situations when the payor parent is on salary, his or her line 150 income may be more than the income shown on her or his T4.
An essential step when determining child support, and it is a step you are required to take every year, is to provide each other with your Notice of Assessment and your complete tax return, including attachments. It is only by reviewing both documents that we can properly assess the amount of child support that ought to be paid.
For example, is part of the line 150 income generated by cashing in an RRSP? By dividends? By interest on investments? Are any of these income sources likely to be recurring?
Can any expense be legitimately deducted from the line 150 income before calculating the child support owing? For example, you are entitled to deduct union dues from your line 150 income before calculating child support. You are not, however, necessarily allowed to apply deductions that are permitted under the Income Tax Act.
Separating, or divorced, parties are often reluctant to give the other party copies of tax returns and Notices of Assessment but doing so is not only a legislated requirement when children are involved, it may sometimes result in a different (and more accurate) income being used to calculate the child support amount.
Written by Simonetta Lanzi