The first step to complete in your financial statement relates to your income. Your income is important in order to determine the amount of child support you will pay in accordance with the Federal Child Support Guidelines.
Determining what your income is is usually fairly straight forward if you are a T4 employee. You state what your income is based on your pay stubs or your T4 from the previous year. Remember that these are monthly figures so divide your annual income by 12 and if you max out on your CPP and EI divide the maximum payment by 12. You will need to provide a copy of your pay stub with year to date income, as well as your last three years income tax returns and notices of assessment. You will note the other boxes for such things as interest income earned on your investments, Child Tax Benefit, rental income etc. Refer to your tax return from the previous year to see if you received any income from these areas in the past.
If you are not a salaried employee but are self-employed, i.e. a sole proprietorship, partnership or a corporate entity, your income becomes much more difficult. Although your tax returns may indicate a line 150 income, this income is not generally what is used for support purposes. In a sole proprietorship or partnership, it will be necessary to review the Statement of Professional Income or Business Activities. Many of the expenses which you are able to write off for income tax purposes cannot be deducted for support purposes. It may be necessary to add back a portion of those deductions i.e. meal allowance, travel, car allowance, home office expenses etc. You may wish to seek the assistance of your accountant to determine your income for support purposes.
In a corporate situation it may be necessary to request the assistance of a valuator to perform an income determination. Your lawyer will discuss these requirements with you when you meet and initially talk about your income for support purposes. You will be required to provide in addition to your personal tax returns, copies of the corporate tax returns, financial statements, shareholder agreements, and loan agreements, to assist the valuator in making that determination.
It is important to be truthful about your income. Attempts to hide income will always come back to bite you as the other side will continue to dig and request further disclosure in an attempt to prove that you are hiding income. If you gather the income information to the best of your ability and hire experts as may be required to assist in determining your income, the process will be smoother and hopefully save you money in the long run.
You can view the child support guidelines and suggested disclosure lists at: http://www.attorneygeneral.jus.gov.on.ca/english/family/divorce/support/