Special Expenses To Include or Not Include? Common Mistakes/Misunderstandings Re: Special Expenses

Transcription

1 Special Expenses To Include or Not Include? Common Mistakes/Misunderstandings Re: Special Expenses DivorceMate Software Inc. 28 Eugene Street Toronto, Ontario M6B 3Z

2 Special Expenses To Include or Not Include? Common Mistakes/Misunderstandings re: Special Expenses Prepared by S. Christine Montgomery, B.A., LL.B., for DivorceMate Software Inc., June, 2016 Special Expenses continue to be one of the most commonly miscalculated and misunderstood concepts in our Tools software. There are essentially 3 things to keep in mind regarding Special Expenses: Special Expenses must be included in the calculation in order to determine the appropriate amount of spousal support under the Advisory Guidelines ( SSAG ). Special Expenses must be included in the calculation in order to determine the appropriate apportioning percentages to be paid by the parties. Associated tax deductions and tax credits must be included in the calculation in order to determine the net cost of the Special Expenses to be apportioned according to the Child Support Guidelines ( CSG ). One of the most common mistakes we see relates to arrangements where the parties determine child and spousal support in the absence of Special Expenses, and then simply provide that any Special Expenses will be shared according to the percentages provided. In order to properly calculate spousal support under the SSAG, it is critical that any Special Expenses paid by the parties be included in the calculation. If the Special Expenses are not included, the spousal support figure will be inaccurate! The critical nature of the Special Expenses in determining spousal support stems from the direct connection that exists between child support (ie. Table Amount plus Special Expenses) and spousal support in the With Child Support formulas of the SSAG (which include the Custodial Payor and Adult Children formulas). The more child support being paid, the less money the payor has available to pay spousal support, and the lower the spousal support range will be. Because Special Expenses are an important component of child support, if they are not included in the calculation, the child support will be underrepresented, and so spousal support will be higher than it should be. In other words, spousal support is determined based on the party s reduced after Special Expenses income. If Special Expenses are not included in the calculation, they cannot be deducted from the party s income, and so the spousal support obligations will be based on a higher income for the party than they should be.

3 This concept is best understood by way of example. Example #1 below looks at a situation using the With Child Support formula of SSAG, while Example #2 looks at a situation using the Adult Children formula of SSAG. Example #1 - With Child Support Formula of SSAG Consider a family with two children, ages 5 and 8, living with mom. Annually, dad earns $100,000 and mom earns $20,000. Without inputting daycare costs in the calculation, the spousal support ranges from $341 to $999 per month. If, however, we add in mom s daycare costs of $12,000 per year (and related tax deduction), the spousal support range is lowered significantly to $32 to $687 per month. Without Daycare: With Daycare: Example #2 - Adult Children Formula of SSAG Consider a family with one child, age 19, attending university away from home. Annually, dad earns $110,000 and mom earns $45,000. Without inputting post-secondary education costs (ie. tuition/books/living expenses) into the calculation, the spousal support ranges from $1,788 to $2,383 per month. If, however, we add in the annual post-secondary costs of $20,000 paid by dad (and related tax credit), the spousal support range is lowered significantly to $1,356 to $1,808 per month. Without Post-Secondary Costs: With Post-Secondary Costs: If the parties are not sure of the precise amount of the Special Expenses, at the very least an estimated amount should be included in the software. This is supported by the Child Support Guidelines themselves which expressly provide in s. 7(1) that such expenses may be estimated.

4 Apportioning Percentages Similarly, the apportioning percentages for the Special Expenses provided at the bottom of each Scenario in the Support Scenario details will be accurate only if Special Expenses have been included in the calculation. This is because of the direct interrelationship between Special Expenses, spousal support, the parties incomes for apportioning purposes, and the apportioning percentages: Special Expenses affect the amount of spousal support to be paid under the SSAG (see prior section). Spousal support in turn affects the parties incomes for the purposes of apportioning Special Expenses. In other words, spousal support must be included in the recipient s income (CSG, s. 16) and deducted from the payor s income (see CSG, Schedule III, s. 3.1). The parties adjusted incomes are then used to determine the percentage of the Special Expenses that each party should bear. If the Special Expenses are not included in the calculation, the spousal support will be inaccurate. If the spousal support is inaccurate, then the parties incomes for apportioning purposes are inaccurate, and the percentages themselves are inaccurate. Consider the same examples from the section. Example #1 - With Child Support Formula of SSAG Note that the apportioning percentages at the midpoint of the SSAG range when daycare is not included in the calculation versus when it is included are different: Without Daycare: With Daycare: NDI * Apportioning %

5 *Also note that by including the daycare expense in the calculation, a much more accurate picture of parties net disposable incomes is provided. Example #2 - Adult Children Formula of SSAG Compare the apportioning percentages at the midpoint of the SSAG range when postsecondary schooling costs are not included in the calculation versus when they are included: Without Post-Secondary Costs: With Post-Secondary Costs: NDI * Apportioning % As with the determination of spousal support, if the parties are not sure of the precise amount of the Special Expenses, then an estimated amount should be included in the software at the very least to more closely approximate the apportioning percentages. Tax Deductions and Tax Credits When dealing with Special Expenses, it is also important to remember that it is the net cost of the Special Expenses that is to be apportioned under the CSG. In other words, before the Special Expenses can be apportioned between the parties, the court must take into account any subsidies, benefits or income tax deductions or credits relating to the expense (CSG, s. 7(3)). It is therefore necessary that any such tax deduction or credit be input into the software when determining Special Expenses. Virtually all Special Expenses have some possible associated tax deduction/credit, as evidenced in the following chart:

6 Child care expenses Tax Deduction - Child care expenses (deductible portion) Child s portion of health insurance premiums Tax Credit - Medical Expenses Child s portion of medical expenses Tax Credit - Medical Expenses Educational expenses (religious only) Tax Credit Donations and gifts (religious schools only) Post-secondary expenses Tax Credit - Tuition/education/textbook credits (child)* Extraordinary extracurricular expenses Tax Credit - Children s fitness amount*; Tax Credit - Children s arts amount*; Tax Credit - Children s activities (Ontario only)* (*Note that some of the tax credits have been reduced for 2016 and/or will be eliminated in 2017 pursuant to the recent 2016 Federal and Provincial Budgets. Refer to the help in the software for further details.) It is important that only tax deductions or credits actually being claimed by the party be input in the calculation. It is up to the user to determine if the Special Expenses meet the tax eligibility requirements. For example, money paid to a neighbour for after school care (not claimed by the neighbour on an income tax return), would be input as a Special Expense, but would not be eligible for the child care tax deduction. Also, any limits/maximums for the tax deductions/credits must be observed. Refer to the help associated with the various items in the software for any applicable limits. Conclusion Without including all Special Expenses (or at the very least an accurate estimate of all Special Expenses), the software will not accurately calculate spousal support, the apportioning percentages, and the parties net disposable incomes. Without including all tax deductions or credits associated with a Special Expense and claimed by a party, the net cost of the Special Expenses will not be determined for the purposes of apportioning, and the s.7 component of the Child Support will be inaccurate. It is important to keep all of these things in mind when dealing with Special Expenses.

7 Example #1 DivorceMate Printouts

8 Calculation Input Annual $ Dad Male, 41, Resident of ON Income Employment income 100,000 Mom Female, 40, Resident of ON Income Employment income 20,000 Children Age Lives with Table Amt Claimed by Child 1 5 Mom Yes Mom Child 2 8 Mom Yes Mom Youngest child attends full time school 1 year and finishes high school 13 years from the date of separation. Dependant credit claimed by Mom. Tools One 2016 Special Expenses Paper: Example 1 - without daycare Prepared by: Smith & Gordon June Child Support Guidelines (CSG) Monthly $ Dad Mom Annual Guidelines Income Child Support (Table) 1,416 0 Advisory Guidelines (SSAG) Monthly $ Length of marriage/cohabitation: 10 years Recipient's age at separation: 40 years Low 341 "With Child Support" Formula Mid 653 High 999 The formula results in a range for spousal support of $341 to $999 per month for an indefinite (unspecified) duration, subject to variation and possibly review, with a minimum duration of 5 years and a maximum duration of 13 years from the date of separation. SSAG Considerations: The results of the SSAG formula must be interpreted with regard to: Entitlement; Location within the Ranges; Restructuring; Ceilings and Floors; and Exceptions. Support Scenarios Monthly $ A. SSAG Low B. SSAG Mid C. SSAG High Dad Mom Dad Mom Dad Mom Gross Income Taxes and Deductions Benefits and Credits Child Support (Table) (2,225) (120) 0 1,319 (341) 341 (1,416) 1,416 (2,090) (156) 0 1,291 (653) 653 (1,416) 1,416 (1,951) (208) 0 1,227 (999) 999 (1,416) 1,416 Net Disposable Income (NDI) 4,351 4,623 4,174 4,871 3,967 5,101 adult in household child in household shared/summer child in household Payor's NDI/Contribution Percent of NDI 48.5% 51.5% 46.1% 53.9% 43.7% 56.3% CSG Special Expenses Apportioning % After-tax Cost/Benefit of 79.9% 20.1% (193) % 23.2% (370) % 26.7% (577) 890 v (c) 2016 DivorceMate Software Inc. Page 1 of 3

9 Tools One 2016 Example 1 - without daycare June Child Support Calculation Details Dad Mom Gross Employment Income Line 150 Total Income Annual Guidelines Income # of Children for whom party pays CSG Table Amount 2 0 CSG Table Amount 1,416 0 Child Support (Table) 1,416 SSAG Details Monthly $ SSAG Low SSAG Mid SSAG High Dad Mom Dad Mom Dad Mom Guidelines Income (341) 341 (653) 653 (999) 999 Child Support (Table) (1,416) 0 (1,416) 0 (1,416) 0 Notional Table Amount 0 (306) 0 (306) 0 (306) Taxes and Deductions (2,225) (120) (2,090) (156) (1,951) (208) Benefits and Credits 0 1, , ,227 INDI ($) 4,351 2,901 4,174 3,149 3,967 3,379 INDI (%) 60.0% 40.0% 57.0% 43.0% 54.0% 46.0% Notional Table Amount Monthly $ # of Children for Notional amount Notional Table Amount 0 (306) 0 (306) 0 (306) Taxes and Deductions Annual $ Line 260 Taxable Income 95,910 24,090 92,162 27,838 88,011 31,989 Federal Income Tax (15,045) 0 (14,071) (380) (13,131) (1,003) Provincial Income Tax (8,160) (245) (7,508) (300) (6,785) (300) CPP and EI (3,499) (1,193) (3,499) (1,193) (3,499) (1,193) Taxes and Deductions (Annual) (26,704) (1,438) (25,077) (1,873) (23,415) (2,496) Taxes and Deductions (Monthly) (2,225) (120) (2,090) (156) (1,951) (208) Benefits and Credits Annual $ Line 236 Net Income (Family) 95,910 24,090 92,162 27,838 88,011 31,989 Combined Child Benefits (Fed/Prov) 0 14, , ,244 GST/HST Credit(s) 0 1, , ,485 Benefits and Credits (Annual) 0 15, , ,729 Benefits and Credits (Monthly) 0 1, , ,227 SSAG Duration Information Years of marriage/cohabitation 10 Mom's age at separation 40 Years until youngest child attends fulltime school 1 Years until youngest child finishes high school 13 Marriage/cohabitation period of 20 years or more no "Rule of 65" (Mom's age plus marriage/cohabitation period) no Support Scenario Details Monthly $ A. SSAG Low B. SSAG Mid C. SSAG High Dad Mom Dad Mom Dad Mom Gross Income Taxes and Deductions (2,225) (120) (2,090) (156) (1,951) (208) Benefits and Credits 0 1, , ,227 (341) 341 (653) 653 (999) 999 Child Support (Table) (1,416) 1,416 (1,416) 1,416 (1,416) 1,416 Net Disposable Income (NDI) 4,351 4,623 4,174 4,871 3,967 5,101 v (c) 2016 DivorceMate Software Inc. Page 2 of 3

10 Tools One 2016 Example 1 - without daycare June Support Scenario Details (cont'd) A. SSAG Low B. SSAG Mid C. SSAG High Gross Income Annual $ Line 150 Total Income Received Gross Income (Annual) Gross Income (Monthly) Taxes and Deductions Annual $ Line 260 Taxable Income Federal Income Tax Provincial Income Tax CPP and EI Taxes and Deductions (Annual) Taxes and Deductions (Monthly) Benefits and Credits Annual $ Line 236 Net Income (Family) Combined Child Benefit (Fed/Prov) GST/HST Credit(s) Benefits and Credits (Annual) Benefits and Credits (Monthly) 100,000 24,090 0 (4,090) 95,910 24,090 (15,045) 0 (8,160) (245) (3,499) (1,193) (26,704) (1,438) (2,225) (120) 95,910 24, , , , , ,000 27,838 0 (7,838) 92,162 27,838 (14,071) (380) (7,508) (300) (3,499) (1,193) (25,077) (1,873) (2,090) (156) 92,162 27, , , , , ,000 31,989 0 (11,989) 88,011 31,989 (13,131) (1,003) (6,785) (300) (3,499) (1,193) (23,415) (2,496) (1,951) (208) 88,011 31, , , , ,227 v (c) 2016 DivorceMate Software Inc. Page 3 of 3

11 Calculation Input Annual $ Dad Male, 41, Resident of ON Income Employment income 100,000 Mom Female, 40, Resident of ON Income Employment income 20,000 Special Expenses (s.7) Child care expenses 16,000 Tax Deductions Child care expenses (deductible portion) 13,000 Children Age Lives with Table Amt Claimed by Child 1 5 Mom Yes Mom Child 2 8 Mom Yes Mom Youngest child attends full time school 1 year and finishes high school 13 years from the date of separation. Dependant credit claimed by Mom. Tools One 2016 Special Expenses Paper: Example 1 - with daycare Prepared by: Smith & Gordon June Child Support Guidelines (CSG) Monthly $ Dad Mom Annual Guidelines Income Child Support (Table) 1,416 0 Special Expenses (s.7) 0 1,333 Child Support (s.7 Payment) See Support Scenarios Advisory Guidelines (SSAG) Monthly $ Length of marriage/cohabitation: 10 years Recipient's age at separation: 40 years Low 0 "With Child Support" Formula Mid 205 High 531 The formula results in a range for spousal support of $0 to $531 per month for an indefinite (unspecified) duration, subject to variation and possibly review, with a minimum duration of 5 years and a maximum duration of 13 years from the date of separation. SSAG Considerations: The results of the SSAG formula must be interpreted with regard to: Entitlement; Location within the Ranges; Restructuring; Ceilings and Floors; and Exceptions. Support Scenarios Monthly $ A. SSAG Low B. SSAG Mid C. SSAG High Dad Mom Dad Mom Dad Mom Gross Income Taxes and Deductions Benefits and Credits Special Expenses (s.7) Child Support (Table) Child Support (s.7 Payment) (2,373) (99) 0 1,346 0 (1,333) (1,416) 1,416 (1,111) 1,111 (2,284) (99) 0 1,346 0 (1,333) (205) 205 (1,416) 1,416 (1,061) 1,061 (2,143) (99) 0 1,346 0 (1,333) (531) 531 (1,416) 1,416 (977) 977 Net Disposable Income (NDI) 3,433 4,108 3,367 4,263 3,266 4,505 adult in household child in household shared/summer child in household Payor's NDI/Contribution Percent of NDI 45.5% 54.5% 44.1% 55.9% 42.0% 58.0% CSG Special Expenses Apportioning % After-tax Cost/Benefit of 83.3% 16.7% 81.3% 18.7% (116) % 22.0% (301) 531 v (c) 2016 DivorceMate Software Inc. Page 1 of 4

12 Tools One 2016 Example 1 - with daycare June Child Support Calculation Details Dad Mom Gross Employment Income Line 150 Total Income Annual Guidelines Income # of Children for whom party pays CSG Table Amount 2 0 CSG Table Amount 1,416 0 Child Support (Table) 1,416 SSAG Details Monthly $ SSAG Low SSAG Mid SSAG High Dad Mom Dad Mom Dad Mom Guidelines Income (205) 205 (531) 531 Child Support (Table) (1,416) 0 (1,416) 0 (1,416) 0 Notional Table Amount 0 (306) 0 (306) 0 (306) Special Expenses (s.7) 0 (1,333) 0 (1,333) 0 (1,333) Child Support (s.7 Payment) (1,111) 1,111 (1,061) 1,061 (977) 977 Taxes and Deductions (2,373) (99) (2,284) (99) (2,143) (99) Benefits and Credits 0 1, , ,346 INDI ($) 3,433 2,385 3,367 2,540 3,266 2,783 INDI (%) 59.0% 41.0% 57.0% 43.0% 54.0% 46.0% Notional Table Amount Monthly $ # of Children for Notional amount Notional Table Amount 0 (306) 0 (306) 0 (306) Child Support (s.7 Payment) Annual $ Special Expenses (s.7) 0 (16,000) 0 (16,000) 0 (16,000) Change in Benefits Change in Taxes Net Special Expenses 0 (16,000) 0 (15,655) 0 (15,029) Guidelines Income (2,463) 2,463 (6,376) 6,376 Guidelines Income for Apportioning 97,537 22,463 93,624 26,376 Special Expenses Apportioning % 83.3% 16.7% 81.3% 18.7% 78.0% 22.0% Contribution to Other's Special Expenses 13, , ,723 0 Child Support (s.7 Payment) (Annual) (13,328) 13,328 (12,728) 12,728 (11,723) 11,723 Child Support (s.7 Payment) (Monthly) (1,111) 1,111 (1,061) 1,061 (977) 977 Taxes and Deductions Annual $ Line 260 Taxable Income 100,000 7,000 97,537 9,463 93,624 13,376 Federal Income Tax (16,109) 0 (15,468) 0 (14,451) 0 Provincial Income Tax (8,872) 0 (8,443) 0 (7,762) 0 CPP and EI (3,499) (1,193) (3,499) (1,193) (3,499) (1,193) Taxes and Deductions (Annual) (28,480) (1,193) (27,411) (1,193) (25,712) (1,193) Taxes and Deductions (Monthly) (2,373) (99) (2,284) (99) (2,143) (99) v (c) 2016 DivorceMate Software Inc. Page 2 of 4

13 Tools One 2016 Example 1 - with daycare June SSAG Details (cont'd) SSAG Low SSAG Mid SSAG High Benefits and Credits Annual $ Line 236 Net Income (Family) 100,000 7,000 97,537 9,463 93,624 13,376 Combined Child Benefits (Fed/Prov) 0 14, , ,472 GST/HST Credit(s) 0 1, , ,683 Benefits and Credits (Annual) 0 16, , ,155 Benefits and Credits (Monthly) 0 1, , ,346 SSAG Duration Information Years of marriage/cohabitation 10 Mom's age at separation 40 Years until youngest child attends fulltime school 1 Years until youngest child finishes high school 13 Marriage/cohabitation period of 20 years or more no "Rule of 65" (Mom's age plus marriage/cohabitation period) no Support Scenario Details Monthly $ A. SSAG Low B. SSAG Mid C. SSAG High Dad Mom Dad Mom Dad Mom Gross Income Taxes and Deductions (2,373) (99) (2,284) (99) (2,143) (99) Benefits and Credits 0 1, , ,346 Special Expenses (s.7) 0 (1,333) 0 (1,333) 0 (1,333) (205) 205 (531) 531 Child Support (Table) (1,416) 1,416 (1,416) 1,416 (1,416) 1,416 Child Support (s.7 Payment) (1,111) 1,111 (1,061) 1,061 (977) 977 Net Disposable Income (NDI) 3,433 4,108 3,367 4,263 3,266 4,505 Gross Income Annual $ Line 150 Total Income Received Gross Income (Annual) Gross Income (Monthly) Taxes and Deductions Annual $ Line 260 Taxable Income Federal Income Tax Provincial Income Tax CPP and EI Taxes and Deductions (Annual) Taxes and Deductions (Monthly) Benefits and Credits Annual $ Line 236 Net Income (Family) Combined Child Benefit (Fed/Prov) GST/HST Credit(s) Benefits and Credits (Annual) Benefits and Credits (Monthly) 100,000 7,000 (16,109) 0 (8,872) 0 (3,499) (1,193) (28,480) (1,193) (2,373) (99) 100,000 7, , , , , ,000 22,463 0 (2,463) 97,537 9,463 (15,468) 0 (8,443) 0 (3,499) (1,193) (27,411) (1,193) (2,284) (99) 97,537 9, , , , , ,000 26,376 0 (6,376) 93,624 13,376 (14,451) 0 (7,762) 0 (3,499) (1,193) (25,712) (1,193) (2,143) (99) 93,624 13, , , , ,346 v (c) 2016 DivorceMate Software Inc. Page 3 of 4

14 Tools One 2016 Example 1 - with daycare June Support Scenario Details (cont'd) A. SSAG Low B. SSAG Mid C. SSAG High Child Support (s.7 Payment) Annual $ Special Expenses (s.7) Change in Benefits Change in Taxes Net Special Expenses Guidelines Income Guidelines Income for Apportioning Special Expenses Apportioning % Contribution to Other's Special Expenses Child Support (s.7 Payment) (Annual) Child Support (s.7 Payment) (Monthly) 0 (16,000) 0 (16,000) 83.3% 16.7% 13,328 0 (13,328) 13,328 (1,111) 1,111 0 (16,000) (15,655) (2,463) 2,463 97,537 22, % 18.7% 12,728 0 (12,728) 12,728 (1,061) 1,061 0 (16,000) (15,029) (6,376) 6,376 93,624 26, % 22.0% 11,723 0 (11,723) 11,723 (977) 977 v (c) 2016 DivorceMate Software Inc. Page 4 of 4

15 Example #2 DivorceMate Printouts

16 Tools One 2016 Special Expenses Paper: Example 2 - without post-secondary costs Prepared by: Smith & Gordon June Calculation Input Annual $ Child Support Guidelines (CSG) Monthly $ Dad Male, 44, Resident of ON Income Employment income 110,000 Mom Female, 45, Resident of ON Income Employment income 45,000 Children Age Lives with Table Amt Claimed by Child 1 19 Mom No N/A Dependant credit not claimed. Note: This calculation includes amounts that have been grossed-up; this gross-up accounts for income tax only. Dad Mom Annual Guidelines Income 110,000 45,000 Child Support (Table) Advisory Guidelines (SSAG) Monthly $ Length of marriage/cohabitation: 22 years Recipient's age at separation: 45 years Low 1,788 "Adult Children" Formula Mid 2,085 High 2,383 The formula results in a range for spousal support of $1,788 to $2,383 per month for an indefinite (unspecified) duration, subject to variation and possibly review. SSAG Considerations: The results of the SSAG formula must be interpreted with regard to: Entitlement; Location within the Ranges; Restructuring; Ceilings and Floors; and Exceptions. Support Scenarios Monthly $ A. SSAG Low B. SSAG Mid C. SSAG High Dad Mom Dad Mom Dad Mom Gross Income Taxes and Deductions Benefits and Credits Child Support (Table) (1,968) (1,336) (1,788) 1,788 (1,865) (1,424) (2,085) 2,085 (1,767) (1,525) (2,383) 2,383 Net Disposable Income (NDI) 5,411 4,202 5,217 4,411 5,017 4,608 adult in household child in household shared/summer child in household Payor's NDI/Contribution Percent of NDI 56.3% 43.7% 54.2% 45.8% 52.1% 47.9% CSG Special Expenses Apportioning % 57.1% 42.9% 54.8% 45.2% 52.5% 47.5% After-tax Cost/Benefit of (1,021) 1,246 (1,215) 1,456 (1,415) 1,653 v (c) 2016 DivorceMate Software Inc. Page 1 of 2

17 Tools One 2016 Example 2 - without post-secondary costs June Child Support Calculation Details Dad Mom Gross Employment Income 110,000 45,000 Line 150 Total Income 110,000 45,000 Annual Guidelines Income 110,000 45,000 # of Children for whom party pays CSG Table Amount CSG Table Amount Child Support (Table) Advisory Guidelines Calculation Details Monthly $ Adult Children Dad Mom Guidelines Income Gross Income Difference 5,417 SSAG Low SSAG Mid SSAG High Percent per year of marriage/cohabitation 1.5% 1.75% 2.0% Years of marriage/cohabitation Percent of gross income difference 33% 38.5% 44% Gross income difference 5,417 5,417 5,417 1,788 2,085 2,383 SSAG Duration Information Years of marriage/cohabitation 22 Mom's age at separation 45 Marriage/cohabitation period of 20 years or more yes "Rule of 65" (Mom's age plus marriage/cohabitation period) yes Support Scenario Details Monthly $ A. SSAG Low B. SSAG Mid C. SSAG High Dad Mom Dad Mom Dad Mom Gross Income Taxes and Deductions (1,968) (1,336) (1,865) (1,424) (1,767) (1,525) Benefits and Credits (1,788) 1,788 (2,085) 2,085 (2,383) 2,383 Child Support (Table) Net Disposable Income (NDI) 5,411 4,202 5,217 4,411 5,017 4,608 Gross Income Annual $ Line 150 Total Income Received Gross Income (Annual) Gross Income (Monthly) Taxes and Deductions Annual $ Line 260 Taxable Income Federal Income Tax Provincial Income Tax CPP and EI Taxes and Deductions (Annual) Taxes and Deductions (Monthly) 110,000 66,450 0 (21,450) 110,000 45,000 88,550 66,450 (13,242) (8,801) (6,879) (4,326) (3,499) (2,900) (23,620) (16,027) (1,968) (1,336) 110,000 70,025 0 (25,025) 110,000 45,000 84,975 70,025 (12,509) (9,534) (6,368) (4,653) (3,499) (2,900) (22,376) (17,087) (1,865) (1,424) 110,000 73,600 0 (28,600) 110,000 45,000 81,400 73,600 (11,776) (10,267) (5,929) (5,130) (3,499) (2,900) (21,205) (18,297) (1,767) (1,525) v (c) 2016 DivorceMate Software Inc. Page 2 of 2

18 Tools One 2016 Special Expenses Paper: Example 2 - with post-secondary costs Prepared by: Smith & Gordon June Calculation Input Annual $ Child Support Guidelines (CSG) Monthly $ Dad Male, 44, Resident of ON Income Employment income 110,000 Special Expenses (s.7) Post-secondary expenses 20,000 Tax Credits Tuition/education/textbook credits (child) 5,000 Mom Female, 45, Resident of ON Income Employment income 45,000 Children Age Lives with Table Amt Claimed by Child 1 19 Mom No N/A Dependant credit not claimed. Note: This calculation includes amounts that have been grossed-up; this gross-up accounts for income tax only. Dad Mom Annual Guidelines Income 110,000 45,000 Child Support (Table) Special Expenses (s.7) 1,667 0 Child Support (s.7 Payment) See Support Scenarios Advisory Guidelines (SSAG) Monthly $ Length of marriage/cohabitation: 22 years Recipient's age at separation: 45 years Low 1,356 "Adult Children" Formula Mid 1,582 High 1,808 The formula results in a range for spousal support of $1,356 to $1,808 per month for an indefinite (unspecified) duration, subject to variation and possibly review. SSAG Considerations: The results of the SSAG formula must be interpreted with regard to: Entitlement; Location within the Ranges; Restructuring; Ceilings and Floors; and Exceptions. Support Scenarios Monthly $ A. SSAG Low B. SSAG Mid C. SSAG High Dad Mom Dad Mom Dad Mom Gross Income Taxes and Deductions Benefits and Credits Special Expenses (s.7) Child Support (Table) Child Support (s.7 Payment) (2,051) (1,208) (1,667) 0 (1,356) 1, (621) (1,953) (1,275) (1,667) 0 (1,582) 1, (649) (1,871) (1,342) (1,667) 0 (1,808) 1, (678) Net Disposable Income (NDI) 4,714 3,277 4,614 3,408 4,499 3,538 adult in household child in household shared/summer child in household Payor's NDI/Contribution Percent of NDI 59.0% 41.0% 57.5% 42.5% 56.0% 44.0% CSG Special Expenses Apportioning % 60.5% 39.5% 58.7% 41.3% 57.0% 43.0% After-tax Cost/Benefit of (767) 943 (895) 1,102 (1,039) 1,261 v (c) 2016 DivorceMate Software Inc. Page 1 of 3

19 Tools One 2016 Example 2 - with post-secondary costs June Child Support Calculation Details Dad Mom Gross Employment Income 110,000 45,000 Line 150 Total Income 110,000 45,000 Annual Guidelines Income 110,000 45,000 # of Children for whom party pays CSG Table Amount CSG Table Amount Child Support (Table) Advisory Guidelines Calculation Details Monthly $ Adult Children Dad Mom Guidelines Income Special Expenses (s.7) (1,116) (456) Gross up of child support obligations (856) (208) Adjusted Income 7,195 3,086 Gross Income Difference 4,109 SSAG Low SSAG Mid SSAG High Percent per year of marriage/cohabitation 1.5% 1.75% 2.0% Years of marriage/cohabitation Percent of gross income difference 33% 38.5% 44% Gross income difference 4,109 4,109 4,109 1,356 1,582 1,808 SSAG Duration Information Years of marriage/cohabitation 22 Mom's age at separation 45 Marriage/cohabitation period of 20 years or more yes "Rule of 65" (Mom's age plus marriage/cohabitation period) yes Support Scenario Details Monthly $ A. SSAG Low B. SSAG Mid C. SSAG High Dad Mom Dad Mom Dad Mom Gross Income Taxes and Deductions (2,051) (1,208) (1,953) (1,275) (1,871) (1,342) Benefits and Credits Special Expenses (s.7) (1,667) 0 (1,667) 0 (1,667) 0 (1,356) 1,356 (1,582) 1,582 (1,808) 1,808 Child Support (Table) Child Support (s.7 Payment) 621 (621) 649 (649) 678 (678) Net Disposable Income (NDI) 4,714 3,277 4,614 3,408 4,499 3,538 Gross Income Annual $ Line 150 Total Income Received Gross Income (Annual) Gross Income (Monthly) Taxes and Deductions Annual $ Line 260 Taxable Income Federal Income Tax Provincial Income Tax CPP and EI Taxes and Deductions (Annual) Taxes and Deductions (Monthly) 110,000 61,271 0 (16,271) 110,000 45,000 93,729 61,271 (13,728) (7,740) (7,386) (3,852) (3,499) (2,900) (24,613) (14,491) (2,051) (1,208) 110,000 63,983 0 (18,983) 110,000 45,000 91,017 63,983 (13,023) (8,295) (6,914) (4,100) (3,499) (2,900) (23,436) (15,295) (1,953) (1,275) 110,000 66,695 0 (21,695) 110,000 45,000 88,305 66,695 (12,442) (8,851) (6,510) (4,348) (3,499) (2,900) (22,451) (16,099) (1,871) (1,342) v (c) 2016 DivorceMate Software Inc. Page 2 of 3

20 Tools One 2016 Example 2 - with post-secondary costs June Support Scenario Details (cont'd) A. SSAG Low B. SSAG Mid C. SSAG High Child Support (s.7 Payment) Annual $ Special Expenses (s.7) Change in Benefits Change in Taxes Net Special Expenses Guidelines Income Guidelines Income for Apportioning Special Expenses Apportioning % Contribution to Other's Special Expenses Child Support (s.7 Payment) (Annual) Child Support (s.7 Payment) (Monthly) (20,000) 0 1,145 0 (18,855) 0 110,000 45,000 (16,271) 16,271 93,729 61, % 39.5% 0 7,448 7,448 (7,448) 621 (621) (20,000) 0 1,145 0 (18,855) 0 110,000 45,000 (18,983) 18,983 91,017 63, % 41.3% 0 7,787 7,787 (7,787) 649 (649) (20,000) 0 1,076 0 (18,924) 0 110,000 45,000 (21,695) 21,695 88,305 66, % 43.0% 0 8,137 8,137 (8,137) 678 (678) v (c) 2016 DivorceMate Software Inc. Page 3 of 3