DivorceMate Tools One Tips and Tricks Prepared by Christine Montgomery, B.A., LL.B., For DivorceMate Software Inc.

Transcription

1 DivorceMate Tools One Tips and Tricks Prepared by Christine Montgomery, B.A., LL.B., For DivorceMate Software Inc., September, Starting Tools One: Simply click the applicable Client File, click the Tools tab, and click the New Button (located directly to the right of the Tools Tab. The following Welcome Screen will open: PLEASE WATCH THIS VIDEO: We have created a short Introductory Video which should be watched before you venture into your Tools One software. You may also find this video on our website at: 2. Input relevant information in the Merge Information File: Some of the information input in the Merge Information File will be brought directly into the Tools 2K calculation. The information brought into Tools 2K includes: the parties names, birthdates and status (ie. Father /Mother/Husband/Wife and Payor/Recipient - which relate to spousal support if in issue in the case) (under the Court & Parties Tab); the children s names, birthdates and living arrangement (under the Children Tab); the date of marriage, date of separation and date the parties started living together (under the Other Info Tab). 3. Creating Tools One Calculations: Create several Tools One calculations to analyse different scenarios (e.g. sole custody vs. shared custody; husband at $100,000 vs. husband at $80,000). 4. Copy a Calculation: Create a copy of a Tools One calculation by highlighting the applicable calculation and clicking the Copy Button at the right hand side of the Opening Screen. 5. Move Between Different Calculations: You may open more than one Tools One calculation at a time and move between the various calculations. 6. Parties: When you create a new calculation, you must confirm which party is the Payor and which party is the Recipient. If spousal support is an issue in the case, the Payor and Recipient refer to the Payor and Recipient of Spousal Support. In other words, if Fred has primary custody of the children and is the recipient of child support, but pays Wilma spousal support, Fred would be the Payor and Wilma would be the Recipient.

2 Tools One - Tips and Tricks Page 2 7. Blue Links: Click on the blue links to access various inputting fields. 8. Party Information: Under the Calculation Input heading at the top left hand side of the page, click on the blue link to the right hand side of the party to input/edit the party s name, province, gender, age and health status. If spousal support is an issue in the matter, the first party listed MUST be the Payor of spousal support, and the second party listed MUST be the Recipient of spousal support. 9. Printout: What you see is what you print. In other words, you are building your printout based on the information you input. This allows you to easily compare your calculation with another calculation. 10. Taxation Year of Calculation: The taxation year of the calculation may be specified/changed, by clicking on the blue Tools One 2014 link at the top right hand side of the page, and choosing from the dropdown list. This feature is helpful when retroactive support is in issue (but note that it is only available for years 2010 forward). 11. Name/Creator of Calculation: You may change the name of the calculation and the person preparing it while you are in the calculation by clicking on the applicable blue links at the top right hand side of the page. The name of the file and the date that the calculation is printed will also appear in the right hand corner. 12. Page Number Footer on Printout: A footer will appear at the bottom of each page of a printout, indicating the total number of pages in a complete printout of the calculation. 13. Version Footer on Printout: Always check that the most recent version of the software (found on the bottom left hand side of each page) is being used to ensure that all tax rates, benefits, credits etc. are up to date. 14. Income and other Relevant Financial Information: Under the Calculation Input heading, click on the party s name in blue to input all relevant financial information for the party. A screen marked Add Information Item will be displayed with a list of folders containing multiple items to input.

3 Tools One - Tips and Tricks Page Search Feature: Once in the Add Information Item screen, use the search feature to help you find input fields. You may enter the item name or parts of the name, or the section number under the legislation, or even the line of the tax return. 16. Folders: Click on each folder to expand it, and access the input fields under that folder. The Common folder is a collection of the most commonly used items from the other folders below. 17. Inputting Items: Highlight the applicable item from the list, then enter the amount (and description if you wish) in the box in the top right hand side of the screen. 18. Help: As you tab through each input field, help appears on the lower right hand side of the screen to assist you in entering the correct information. If the Help information is highlighted in yellow, please read carefully. This typically indicates that there is an associated tax item that should be considered. Most related items are also linked when inputting. If the Help information is in italics, this indicates that the software is doing an automatic calculation. 19. Built-in Math Calculator: Where annual figures are required, you may input a weekly, bi-weekly or monthly number in the input field, followed by either w, b or m respectively, and the software will automatically convert the number to an annual figure. For example, input 100w and the software will convert the figure to $5,200 when you hit enter or leave the field. 20. Same input field can be used more than once if necessary: For example, if a party has more than one job, the income from each job can be input individually under Employment income. Each input should be distinguished with a description. By further example, if there are several different extraordinary extracurricular expenses, each one can be independently entered.

4 Tools One - Tips and Tricks Page Grossing up non-taxable income: Certain types of nontaxable income in the Income folder are automatically grossed up by the software (eg. Workers compensation benefits; Social assistance; Disability benefits (non-taxable); Other non-taxable income (auto gross up)), as explained in italics in the Help for these items. In other words, the software determines the amount that an employed person would have to earn on a gross basis, in order to have the same amount of net income. The software s automatic gross-up takes into account only the income tax the party would be required to pay if he/she were employed, as evidenced in the Note below the Calculation Input section. You can, however, toggle the blue link in the Note to provide that in addition to income tax, the gross-up should also consider the CPP and EI payments that the party would be required to make to earn the same amount of net income. 22. Dividends and Capital Gains Income: If entering Dividends or Capital Gains income from an income tax return, use the input fields preceded by Taxable. If entering these types of income based on the amounts that the party actually received, use the input fields preceded by Actual. Because these types of income are taxed at a lower rate than other types of income, you may wish to gross-up the tax savings (pursuant to s. 19(1)(h) of the CSG) by toggling the blue link in the Note below the Calculation Input section.

5 Tools One - Tips and Tricks Page Special Expenses and Associated Tax Items: Find the applicable special expense from the list in the Special Expenses (s.7) folder and enter the full amount paid by the party toward that special expense. You must then enter any associated tax deduction or tax credit in either the Tax Deductions or Tax Credits folder. Any associated tax item to be considered will be highlighted in yellow in the Help for the special expense. As well, once a special expense is input, if there is an associated tax item, a green link will appear under the entered item on the main screen. Simply click on the green link and it will take you to the appropriate input area for the tax item. If, however, there is more than one associated tax item (eg. extraordinary extracurricular expenses have 3 possible tax credits), the green link will only take you to one tax item; you must remember to input the second (or third) tax item. The Help information for the tax deductions/credits will indicate the maximum amounts that may be claimed. For example: $7,000/child tax deduction for childcare expenses for children under 7; $4,000/child tax deduction for childcare expenses for children 7-15 inclusive; $500/child under 16 for fitness program qualifying for federal children s fitness tax credit; $500/child under 16 for arts program qualifying for federal children s arts tax credit; $500/child under 16 for activity qualifying for Ontario s provincial children s activity tax credit; $5,000/child for child s tuition, education, textbook amounts transferred to party for tax credit. 24. Children: Click on the Children blue link to input/edit information related to the children, including names, ages, living/custody arrangements, whether child support is to be paid pursuant to Child Support Guidelines tables, who will be claiming child on income tax return, health status, number of years until youngest child starts school full time and/or finishes high school, and who will be claiming the dependant credit. If the children are in shared custody, you must also indicate if the child related benefits (Canada Child Tax Benefit, Universal Child Care Benefit, and HST/GST credits related to the child) will be shared between the parties according to the CRA policy or not.

6 Tools One - Tips and Tricks Page Eligible Dependant Credit in Shared Parenting Situation: In shared parenting situations, as long as both parties agree and both are paying child support (which may ultimately be offset into one payment for convenience), the Eligible Dependant Credit can be allocated to the higher income parent. This will not affect child support but may affect spousal support under SSAG. The software default will allocate the credit to the net recipient of child support. To change this default, the payor should be selected from the Dependant Credit dropdown list. If there are two or more children in a shared parenting situation, it is arguable that both parties can claim this credit. See the CRA Guide on Support Payments 2013, specifically Example 2 in the section on Shared custody and the amount for an eligible dependant ( For further information on all considerations in shared parenting situations, see the paper Shared Parenting and DivorceMate April 2014 on the DivorceMate website under Resources at: Overriding child support Table Amount or s.7 Special Expense apportioning: The Table Amount of child support and the s.7 Special Expense apportioning may be overridden under the Child Support Guidelines (CSG) Options blue link. Using the dropdown lists under Child Support (Table), specify a different amount of child support or no child support whatsoever. Under Child Support (s.7 Payment), specify a different apportioning percentage, a specific amount to be contributed to the special expenses, or no apportioning. These amounts will be carried through the rest of the calculations unless otherwise specified. A caution will also appear alerting the reader of any amounts overridden. If you do not wish the child support Table Amount override amount to affect spousal support under the SSAG (eg. reduced child support because payor is a step parent, or payor has income over $150,000, or payor has high access costs), check the box marked Do not override Table Amount for SSAG found in the Child Support Guidelines (CSG) Options blue link. Spousal support under SSAG will then be calculated as if the CSG Table Amount is being paid, despite the Override.

7 Tools One - Tips and Tricks Page Brainstorming Spousal Support: It is possible to brainstorm up to 6 different amounts of spousal support in the Support Scenarios (including the SSAG low, mid, high defaults) and to analyze the parties Net Disposable Incomes ( NDI ) in each scenario. Add the additional scenarios or change the default scenarios by first selecting the appropriate number from the scenarios dropdown list under the Support Scenarios Options blue link. Then select the desired support option for each scenario A through F as applicable. The available options are found in the dropdown list. You may set your own spousal support amount, assume no spousal support (as a baseline) or let the program determine the amount of spousal support to be paid so that: the parties have the same net disposable income; the parties have a set percentage of the combined NDI; a party has enough NDI to meet his/her budget/needs. 28. Net Cost/Benefit of Spousal Support: By checking the box marked Net Cost/Benefit of Spousal Support under the Support Scenarios Options blue link, the after tax cost to the payor and after tax benefit to the recipient of the spousal support payment will be determined for each scenario. 29. Net Increase/Decrease NDI: A party s NDI in the Support Scenarios may be adjusted for source deductions, taxable benefits, or any other expense that is reasonable in the circumstances (eg. payor carrying a large family debt in interim before property equalized), by inputting the amount under the Cash Flow Adjustments folder in the Add Information Item list for each party. (Note that only the first 3 adjustments related to life and health insurance will also affect spousal support under SSAG in the With Child Support formula by reducing INDI.)

8 Tools One - Tips and Tricks Page Life Insurance Calculations: Calculate the amount of life insurance necessary to secure the periodic payments of child and spousal support by checking the box marked Life Insurance (to secure support) in the toolbar at the top of the screen. A new section will then be added to the bottom of each scenario in the Support Scenarios section, showing the amount of life insurance necessary to secure the Table Amount of child support (ie. not the s. 7 special expense contribution) and the recipient s after-tax spousal support benefit for each different scenario. The insurance calculation determines the net present value of the periodic support payments, based on a number of different assumptions listed (eg. default duration for spousal support is midpoint of SSAG duration range; default for child support duration is age 18; spousal support is not discounted for recipient s life expectancy; and the discount rate is based on the rate set for indexed Government of Canada 30 year real return bonds). Each of these various assumptions/defaults may be changed by the user by clicking the blue link. Keep in mind the calculation s further assumptions: a fixed support amount, and constant level of income (and marginal tax rate) for each party, for the entire duration of the child and spousal support. 31. Spousal Support Lump Sum (NPV) Calculations: Similar to the life insurance calculations above, the lump sum present value of the periodic spousal support payments can also be determined by the software, by checking the applicable box in the toolbar at the top of the screen. A new section will then be added to the bottom of each scenario in the Support Scenarios section, showing the payor s after-tax cost of spousal support considering his/her income level and marginal tax rate, the recipient s after-tax benefit considering his/her income level and marginal tax rate, and the midpoint of the two amounts for reference purposes only. Net Present Value Assumptions similar to those used in the Life Insurance section will be applied, with the ability to alter these assumptions as necessary. The same additional assumptions also apply regarding fixed support amounts, income levels and marginal tax rates for the duration of support.

9 Tools One - Tips and Tricks Page Restructuring Spousal Support: The periodic payments of spousal support may be restructured to determine a different amount and/or duration than that determined by the SSAG, but still within the parameters set by the SSAG. Check the box marked Restructuring Scenarios in the toolbar at the top of the screen. Then brainstorm up to 4 different amounts and durations of spousal support. Within each restructuring scenario, you may also adjust the amount/duration up to 4 times. The Lump Sum (Net Present Value) calculations provided for each restructuring scenario at the bottom are useful in comparing all of the different periodic payments. For example, in the four scenarios set out above, the different periodic payments considered are fairly comparable when looking at their net present values. The first scenario is based on the midpoint of the SSAG amount and duration. Scenario 2 is based on an amount above and a duration below the SSAG range. Scenario 3 is based on an amount below and a duration above the SSAG range. Scenario 4 is based on a stepped down amount/duration of support ing Tools One Calculations: Click on the Make PDF button in the toolbar at the top left corner of the screen. Name the calculation and save it on your Desktop for easy access (or you can save it in your client file if you would prefer). The document will be converted to PDF format and can be attached to any outgoing . Alternatively, you can an actual working calculation (provided the recipient of the also has DivorceMate Tools One) by attaching the actual calculation. To find out where the actual calculation is saved on your computer, click the Setup button on the bottom left hand side of the main DivorceMate interface screen to see the Default Folder path.

10 Tools One - Tips and Tricks Page Viewing Tools One Calculation Details: Include calculation details in your printout for further clarification by checking the box marked Calculation Details in the toolbar at the top right corner of the screen. The proofs/details of the calculation will be added at the end of your Tools 2K document. 35. Understanding Calculation Details: The calculation details are organized according to the sections set out on the first page of the printout. In other words, details relating to the section marked Child Support Guidelines (CSG) can be found under Child Support Calculation Details ; details relating to the Spousal Support Advisory Guidelines (SSAG) are found under SSAG Details ; details relating to the Support Scenarios are found under Support Scenario Details ; and so on. Within each details section (except for the Child Support Calculation Details), the line items requiring further breakdown are found below in a gray box in the order listed. 36. DM Tools Cloud: Calculations can now be done remotely anywhere (eg. at the office, at home, out of town, in court, etc.) on any device (eg. phone, IPAD, tablet, laptop) as long as the user has 3G or internet access. (Note that a phone can be used as hotspot for a laptop in court if there is no internet access.) The user just needs to sign up to DM Cloud at