provided by Patricia Lalonde
Tax returns show Total Income and Taxable Income and Deductions to Business Income and Earned Income and Dividend Income and Pension Income etc. But nowhere does it say “Guideline Income.”
How do you calculate “Guideline Income” for the purposes of Spousal and Child Support in the case of Separation? It’s complicated.
Many Canadians now are self-employed professionals or own their own businesses large and small. CRA allows many deductions from income as a cost of doing business. That’s great for the business person to reduce their taxes on an annual basis. Along with their accountants and lawyers they strategise to reduce their taxable income in a variety of ways such as splitting income with a spouse and deducting a portion of home expenses. These and many other deductions to income are legitimate expenses allowed by CRA.
However, when it comes to a calculation of real income, we know that the figure on line 236 of the tax return is not the figure that most self-employed people should use for Guideline Income.
While creating a Separation Agreement, you and your lawyer benefit from using a financial specialist to clarify “Guideline Income.”
All the very best in your transition
Patricia Lalonde, CFP