South Surrey high net worth and business property division lawyer Lorne MacLean, Q.C. leads Vancouver’s top rated family law firm. 604 576 5400.
Mr. MacLean practices out of our downtown and South Surrey offices. Calculation of guideline income for child support purposes is a hotly contested issue in many of the cases our South Surrey White Rock Child Support Lawyers handle.
South Surrey White Rock Child Support Lawyers RRSP Income Disputes
Ontario’s Court of Appeal decided in Fraser case that RRSP income from cashing out RRSP’s is income for child support purposes. This income certainly is declared on your tax return whenever you cash out an RRSP but is it fair to use this income for increased child support payments?
No Credit to Payor For RRSP Deduction In Year Contributed
A problem of “double dipping” (getting paid twice from the same source) arises in this situation even for child support purposes. First RRSP contributions in a calendar year while deductible for income tax purposes are not allowed as a deduction to reduce income for child support purposes. So in the year the paying child support paying spouse makes his RRSP contribution his income on his tax return is corrected to add back the RRSP deduction.
To Add Insult To Injury When A RRSP Is Withdrawn The Withdrawal Is Added To Income To Increase Child Support
The result of the Fraser decision in Ontario means that a payor is essentially paying child support twice on the same income, since the RRSP contributions are not proper deductions for support purposes in the year they are made and when withdrawn they get added. Yikes!
To make matters worse RRSP’s are generally not withdrawn until retirement unless a payor has greatly reduced income and is forced to cash out RRSP’s to make ends meet. Then the person who is struggling financially is required to pay child support from the RRSP cash out.
Is this fair? In my next blog I’ll explain what our BC Court of Appeal says about RRSP income and how its treatment can differ for spousal and child support purposes. If you want to meet with me, Lorne MacLean, Q.C. call either my Surrey 605 576 5400 or my Vancouver office at 604 602 9000.
