Key to all of these calculations are the Federal Child Support Guidelines, which take as its starting point the gross incomes of both parents, subject to certain allowable deductions.
The challenge comes from the fact that the deductions allowed under the Income Tax Act do not line up perfectly with those permitted under the guidelines, so it is not unusual for parents calculating their taxable income to come up with a completely different number for the purposes of a child support calculation.
Schedule III of the guidelines sets out the deductions allowed for employed spouses, which could include sales and travel expenses, as well as certain fees and dues associated with professional memberships.
The calculation can become even more complex in cases involving self-employed parents because of the potential for mingling personal and business expenses. However, the guidelines leave room for recipient spouses to challenge the reasonableness of a payor’s expense deductions, even if the Canada Revenue Agency has already accepted them.
In addition, when it comes to salary, benefits and any other payments made by a self-employed person to a close family member or other non-arm’s length individual, the guidelines place the onus on them to establish the payments were reasonable in the circumstances if they want them deducted from their income for child support purposes.