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Financial Divorce Counselling Useful Links

Click on topic of your choice to go to a useful link.  Use of these links is not an endorsement of their products and services.  My goal is only to assist you in finding useful information that is already available on the web.  Blair Corkum Financial Planning Inc. accepts no responsibility for the accuracy or completeness of information presented on these sites.   You should do your own due diligence.

Covid-19 and Parenting your children – shared parenting

Sources of Useful Information

Support and Canada Child Benefit Calculators and Information

Finding Asset Values

Guessing at values and using the wrong one could cost you thousands of dollars; letting legal and accounting professionals argue over values could also cost you many thousands of dollars.  Why not hire a professional appraiser or search the web for resale statistics to get good estimates at a reasonable cost?  Remember, it is the current resale value of your asset – not the original or replacement cost.  A few examples (and for professionals, consider interviewing 2 or 3 to meet your specific needs by way of experience and cost):

  • For vehicles, try your local dealer or the Canadian Black Book site, VMR Canada or Auto Trader
  • Valuations of defined benefit pension plans (those that pay a guaranteed lifetime pension based on your wage, such as from the provincial and federal governments, and certain large companies) require use of an actuary (a pension valuator).  Find an actuary from the Canadian Institute of Actuaries, but ensure they have pension valuation experience.  I have had good experience with Jamie Jocsak of BCH Actuarial Services Inc.
  • Real estate appraisals – Find an appraiser at Appraisal Institute of Canada
  • What are people asking for used furnishings and equipment on Kijiji and similar sites?
  • To value a business, you should use someone trained to do so, unless you are certain it has negligible value.  Your accountant my offer an estimate, but can he/she defend it in court and will it be the right number? Find a Chartered Business Valuator here

Counsellors / Mediators / Lawyers / Financial Divorce Specialists / Other help (for other than PEI, do an Internet search for services in your location)

Legislation and Supporting Information

Income Tax, Canada Child Benefit and Canada Pension Plan Information

  • P102 Support Payments – Canada Revenue Agency publication
  • CRA interpretation related to taxation of child and spousal support – Income Tax Folio S1-F3-C3
  • CRA interpretation related to deductibility of child care expenses, including shared custody information – Income Tax Folio S1-F3-C1
  • CRA Interpretation Bulletin IT-325R2 – Property Transfers after Separation, Divorce and Annulment
  • Find your marginal tax rate and your average tax rate based on your income at Tax Calculators for Personal Taxes – Ernst & Young. See my article on income tax adjustments to know which rate to use.
  • CRA web site to compare business income statements to Canadian statistics by province – help in looking for under-reported income.
  • Forms required for separation and divorce
    •  C65 Marital Status Change – Canada Revenue Agency form to file within one month of separation (after being separated for 90 days)
    • T1213 – Request to Reduce Tax Deductions as Source – to reduce tax withholdings from your income if you have deductions or credits known in advance of the end of the year (e.g.  spousal support payments)
    • T1198 – Statement of Qualifying Retroactive Lump Sum – if prepared by the payer of a lump sum payment of spousal support arrears, the recipient may have their taxes reduced.  CRA will re-calculate prior year tax returns based on what year the retroactive payment relates to and issue a refund if it helps.
    • To have more tax withheld if you are receiving taxable spousal support, update your form TD1 with your employer, or contact payers of other taxable income.
    • T2220 Transfer from an RRSP, RRIF, PRPP or SPP to Another RRSP, RRIF, or SPP on Breakdown of Marriage or Common-law Partnership.  Complete this form for transferring your RRSP type of plans to your former spouse/partner.  Section I is for the person transferring; Section II is for the person receiving; Section III is for the financial institution doing the transfer.  Ensure all of the account numbers are correct, and everyone signs accordingly.  Normally, I suggest that the recipient of the funds complete Section II and then give the form to the former spouse/partner for completion of the balance.  The personnel at the financial institutions should be very willing to  help to you.
    • Canada Pension Plan (CPP) splitting upon separation or divorce (Note that post-retirement benefits cannot be split.)  Application form: Canada Pension Plan Splitting ISP1901
    • T1158 – Registration of Family Support Payments – File this form if you have an agreement or court order that requires payment of spousal support.  It is filed separately from your tax return, with a copy of the agreement or order attached.
    • Canada Child Benefits Application Form RC66 – To apply for a change to the Canada Child Benefit and GST/HST Credit.  Read the instructions – you may not need to complete the form. This will be the case if primary parenting responsibilities have changed from one parent to the other, or to shared custody (between 40% and 60% sharing of physical time with a child). For shared custody, if you already get the benefits, you may use “Apply for child benefits” in My Account at cra.gc.ca; by calling 1-800-387-1193; or by sending Form RC66, Canada Child Benefits Application, indicating shared custody; or sending CRA a letter explaining the shared custody situation
    • The Home Buyer’s Plan is being updated for 2020 to allow separated couples to be eligible to use it even if they previously owned a home.  If conditions are met, one person may purchase the marital home from the other person also.  This CRA site discusses the new rules.
    • NR4 form for payments of spousal support to a non-resident of Canada.  See CRA publication T4061 NR4 for instructions
    • Election to avoid capital gains tax before divorce – Prior to divorce, if a property previously owned by the taxpayer’s spouse is sold and will trigger a capital gain, an election must be filed to prevent the spouse, as original owner, from needing to report the capital gain and pay related taxes.  The election is a letter filed by the transferor of the property, i.e. the original owner / spouse, to elect not to have section 74.2 of the Income Tax Act apply.
    • Election to opt out of an automatic rollover – Properties with capital gains that are transferred to a former spouse because of separation will normally be transferred on a tax-deferred basis to the other spouse (i.e. rolled over).  Taxes will be paid upon sale by that spouse in the future.  If you wish to trigger taxes immediately, the transferor spouse should report the capital gain on their tax return for the year of the transfer – there is no other formal election form.  However, the transfer should be documented in the separation agreement.

Professional organizations

Examples and Precedents

If you are looking for precedents and examples of agreements, you can do an Internet search.  These are a few that I identified using a search for “separation agreement precedent.”  I remind you that I offer no advice on the reliability of information provided by these sites, and that use of a lawyer for preparation of all legal agreements is in your best interest.  Always research issues related to shared custody and pension splitting because the boiler plate wording may not be correct for tax and valuation purposes.  Reasons for using a lawyer, which I recommend you do, are set out in this article.  While I recommend having your agreement reviewed by a tax planner regardless, particularly get tax advice on any agreements that suggest using a set-off amount instead of individual payments for child support payments in a shared parenting arrangement.

 

 

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