The Federal Child Support Guidelines: Step-by-Step
Worksheet 1: Calculate your annual income
Remember, as explained in Step 5, you may both agree, in writing, about your annual income.
Depending on your situation, you may need to calculate one parent’s income only or both. In other situations, you may also need to calculate the income of the child or of another member of your household. It is best to use a separate worksheet for each person whose income needs to be calculated.
How annual income is calculated under the Federal Guidelines
As a general rule, to calculate income for child support, you must identify the updated amounts related to the sources of income used to calculate your “Total income” on line 15000 (150 for 2018 and prior years) of the T1 General Form issued by the Canada Revenue Agency. You can find that information on your T1 Income Tax and Benefit Return or your notice of assessment or most recent notice of reassessment (if applicable) issued by the CRA. If you do not have a copy of those documents, you should contact the CRA’s individual income tax enquiries line at 1-800-959-8281. You may also find it helpful to refer to the General Income Tax and Benefit Guide located on the CRA’s website.
In certain situations, you may need to use a different amount from the one on line 15000 (150 for 2018 and prior years) of your return, notice of assessment or reassessment (if applicable) – for example, if you are self-employed, a director, officer or shareholder of a corporation, or if your income has various patterns and is not always consistent.
To determine the total income used to calculate child support, you may also need to adjust your annual income based on Schedule III of the Federal Guidelines. The line-by-line help for this worksheet provides additional information about the various adjustments.
Please note that this worksheet refers to the Universal Child Care Benefit (UCCB). The UCCB is a taxable amount included in your annual income. In July 2016, the UCCB was replaced by the Canada Child Benefit, a monthly tax-free amount. For 2017 and subsequent tax years, any UCCB amounts paid are lump-sum payments with parts that relate to one or more prior tax years which can go as far back as 2006. If you receive UCCB lump-sum payments, please follow the directions in the line-by-line help.
The Canada Child Benefit is a non-taxable amount and is not deducted or included in your total income for child support purposes.
Documents you need
Step 5 in the guide lists the kind of information and documents that you may need to calculate your annual income. You may not need all of those documents to complete Worksheet 1 or you may need more. Your employment situation could have an impact on how you adjust your income and the number and kind of documents needed to make those adjustments—for example, if you own a corporation, are self-employed, or are a seasonal worker.
You will need at least the following documents to complete Worksheet 1:
- your tax return and related schedules for each of the three most recent taxation years
- notices of assessment and reassessment issued by the CRA for each of the three most recent taxation years
It is important that the information used be accurate and up-to-date. This is to help ensure that your calculations are based on a true picture of your current situation and your financial ability to contribute.
Total income before adjustments
Line 1 – total income
Write down your total income on this line:
- You can use the amount of total income on line 15000 (150 for 2018 and prior years) of your most recent return or your notice of assessment issued by the CRA if it accurately reflects your current income; or
- Line 15000 (150 for 2018 and prior years) in those documents might not accurately and fairly reflect your current income or include all the money available to you for child support purposes. Depending on the reason for this, you may wish to consider one or more of the following options:
- If your income fluctuates a lot from year to year, then you may need to calculate the average of your income over the last three years.
- If your income has gone up or down since you filed your last return, then it would be better to use pay slips and other records of income to find your most recent income information.
- If you received a one-time or infrequent amount (for example, a bonus) that is not reflected in line 15000 (150 for 2018 and prior years) of your return, then you may want to include all or part of that amount to ensure that it is the fairest determination of your income.
- If you have incurred a non-recurring capital or business investment loss, then you may want to adjust the loss to arrive at an appropriate amount to ensure that it is the fairest determination of your income.
- If you are a director, officer or shareholder of a corporation and your return does not fairly reflect all the money available to you for child support, then you would need to consider various factors and include the following in your income:
- all or part of the corporation’s gross income for the most recent taxation year (such as income before deducting payments for salaries, wages, management fees and similar expenses); or
- what you would earn if you were being paid for the services you provide to the corporation (as long as that amount is less than the corporation’s pre-tax income).
- If line 15000 (150 for 2018 and prior years) in your most recent return or notice of assessment includes pension or RRSP income, then you may need to adjust that income. You cannot deduct the amount you put into an RRSP or any other pension plan from the amount of income used to calculate child support. However, if you withdraw money once or rarely from a plan, including an RRSP, you or a court may decide that it is a non-recurring amount that should not count as income to determine child support. These matters should be decided case by case, and you may wish to get advice from a legal adviser.
Adjustments to total income
(use annual amounts)
Line 2 – taxable child support received
If you receive child support based on an order or agreement made before May 1, 1997, it is generally income that is taxable. You are required to report this child support amount at line 12800 (128 for 2018 and prior years) (Support payments received) of your return.
If the amount you wrote on line 1 of this worksheet includes taxable child support, enter on this line the child support amount reported at line 12800 (128 for 2018 and prior years) of your return.
Please note that line 12800 (128 for 2018 and prior years) of your return includes both taxable child and spousal support, if any. You can only deduct on this line of the worksheet the portion that relates to taxable child support.
The way child support is taxed was changed in 1997. These changes apply to child support amounts set out in court orders or written agreements made on or after May 1, 1997. Under these rules, a person who pays child support does not claim the amount of child support paid as a deduction, and the person who receives child support does not include the amount of child support received as income.
If you have a child support order or written agreement made before May 1, 1997, you have three options:
- Do nothing: after looking at your amount to determine if it is still appropriate, you can agree not to change your existing child support order or agreement.
- Change the court order or written agreement: you can agree to change the child support amount and get a new court order or negotiate a new written agreement which will then be based on the current tax rules.
- Change the way child support payments are treated for tax purposes: you can agree to keep the amount of child support the same and simply change how it is treated for tax purposes by both signing and filing Canada Revenue Agency Form T1157, Election for Child Support Payments, with the CRA. This action does not change any terms of your pre-May 1, 1997, court order or written agreement, except for the way the payments are treated for tax purposes.
You may want to refer to the Support Payments Guide found on the CRA website for more information about the different tax rules for orders or agreement made before May 1, 1997.
Line 3 – spousal support received from the other parent
Spousal payments received under a written agreement or court order are generally income that is taxable. This income is required to be reported at line 12800 (128 for 2018 and prior years) (Support payments received) of your return.
If this applies to you and the total income amount you wrote on line 1 of this worksheet includes spousal support, enter the spousal support amount you received from the other parent on this line.
Please note that both taxable child and spousal support are reported at line 12800 (128 for 2018 and prior years) of your return. You can only deduct on this line the portion that relates to spousal support received from the other parent.
Line 4 – Universal Child Care Benefit (UCCB)
If you receive UCCB lump-sum payments, you need to report these payments (line 11700 of your return, 117 for 2018 and prior years) as income for tax purposes. But this income is treated differently for child support purposes. If the total annual income you put on line 1 of this worksheet includes UCCB lump-sum payments that you received for any child during the year, you can deduct that amount on this line of the worksheet.
Line 5 – split-pension amount
Enter the amount of eligible pension income that your spouse or common-law partner transferred to you and that you reported on line 11600 (116 for 2018 and prior years) (Split-pension amount) of your return if that amount is included in your total income you put on line 1 of this worksheet.
Line 6 – employment expenses
Enter on this line the total amount of annual union, professional or like dues that are shown on line 21200 (212 for 2018 and prior years) of your return and other employment expenses shown on line 22900 (229 for 2018 and prior years) of your return.
Line 7 – social assistance received for other members of the household
If a portion of the family assistance you received was for other family members, you can deduct that portion from your total income. You cannot deduct any social assistance that was solely for your benefit.
To determine how much of the social assistance payments you can deduct:
- Look at line 14500 (145 for 2018 and prior years) of your return to find the total amount of social assistance payments you received during the year. Line 14500 (145 for 2018 and prior years) includes the amount received for you and for other family members.
- Next, identify what portion of that amount is for other family members. If you are not sure how much that is, you may want to contact the social assistance office. You may also find social assistance rate tables on the websites of provincial or territorial departments responsible for social assistance.
- Finally, enter on this line of the worksheet the amount that was for other family members determined from the bullet above.
Line 8 – excess portion of dividends from taxable Canadian corporations
Find line 12000 (120 for 2018 and prior years) of your return and copy the amount listed there to this line: (A) .
Next, determine the total amount of dividends received (usually found on your T5 slips). Copy that amount to this line: (B) .
Finally, subtract the amount on line B from the amount on line A to calculate the excess portion. Copy the result on this line of the worksheet.
Line 9 – actual business investment losses
Enter on this line the amount of business investment losses you suffered during the year. This amount is shown on line 21699 (228 for 2018 and prior years) of your return.
Line 10 – carrying charges
Enter on this line the carrying charges and interest expenses that you paid and that would be deductible under the Income Tax Act. This amount is shown on line 22100 (221 for 2018 and prior years) of your return.
Line 11 – prior-period earnings
This line relates to transitional rules for off-calendar fiscal periods. These rules no longer apply. The Federal Guidelines have not yet been amended to reflect this change.
Line 12 – partnership or sole proprietorship income
If you earned income through a partnership or a sole proprietorship, deduct any amount included in your income that is required by the partnership or sole proprietorship for capitalization purposes. Enter the result on this line.
Line 13 – total deductions from income
To calculate all of the deductions that you can make to your total income, add up all the above deductions that apply to you and enter the total on this line.
Line 14 – capital gains and capital losses
You must replace the taxable capital gains that you realized in a year by the actual amount of capital gains you realized in excess of your actual capital losses in that year.
There are two kinds of capital gains:
- Recurring: a recurring capital gain has an ongoing effect on your income—for example, if you regularly buy and sell stocks.
- Non-recurring: a non-recurring capital gain is a rare, or even a once-in-a-lifetime event—for example, when you sell a cottage.
In most cases, if you have recurring capital gains, you must take into account the entire amount, as the amount on line 1 of this worksheet includes only taxable capital gains. If you have non-recurring capital gains, the amount you include on this worksheet may be excluded from this calculation.
To calculate the necessary adjustment to reflect the entire amount of capital gains that you must include, do the following:
- First, find your total capital gains on line 19700 (197 for 2018 and prior years) of “Schedule 3–Capital Gains (or Losses)” of your return. The amount on line 19700 (197 for 2018 and prior years) (Schedule 3 - income tax return) equals the total of capital gains for the year minus any capital losses. If this amount is zero or less, copy “0” to this line.
- Then, find your reported taxable capital gains on line 12700 (127 for 2018 and prior years) of your return.
- Finally, subtract the amount found on line 12700 (127 for 2018 and prior years) of your return from the amount found on line 19700 (197 for 2018 and prior years) of Schedule 3.
Line 15 – net self-employment income
If you are self-employed and you have a business relationship with an individual like a family member (called a non-arm’s-length relationship), include on this line any income amount for salaries, benefits, wages, management fees or other payments paid to, or on behalf of, the other person.
You don’t need to include the amount if it is reasonable and it was necessary for you to have paid the amount to earn the self-employment income.
Line 16 – capital cost allowance for property
If your return includes a deduction for capital cost allowance for real property (e.g. buildings), you will need to enter that amount on this line.
Line 17 – employee stock options with a Canadian-controlled private corporation
Benefits from a stock option are generally included in an individual’s employment income in the year in which he or she sells or exercises the option. However, where the corporation that issued the stock option is a Canadian-controlled private corporation, the individual does not have to include the benefit in income until he or she disposes of the shares which were acquired with the stock option.
You are required to enter an amount on this line where you have exercised a stock option to purchase shares of a Canadian-controlled private corporation (or a publicly traded corporation that is subject to the same tax treatment regarding stock options as a Canadian-controlled private corporation).
You need to put “0” on this line if you sold the shares in the same year you exercised the stock options to obtain the shares. Otherwise, to calculate the employee stock option benefit to be included:
- first, find the total value of shares acquired by stock option (you can multiply the number of shares by the market value of one of them)
- subtract from that amount the total amount that you paid for the stock options and the shares
The result is the stock option benefit. Enter the amount on this line of the worksheet.
Line 18 – total additions to income
Add all the additions listed above and include the total on this line.
Line 19 – annual income for child support purposes
First, subtract the total amount of deductions on line 13 from your total income on line 1. Then, you need to add the total amount of additions to that calculation. The result is your annual income for child support purposes.
Worksheet 1: Calculate your annual income
You can use this worksheet to estimate the annual income of anyone whose income is needed to determine a child support amount (Step 5). If you need to calculate the income of more than one person, use a separate worksheet for each person. Fill out only the parts that apply.
You can use line-by-line help to help you fill out this worksheet.
This worksheet is to calculate the income of: (Name)
The person is: ☐ paying parent; ☐ receiving parent; ☐ other household member
Note: if you and the other parent agree on the annual income that would be considered appropriate, write that amount on line 19, without filling out any other lines on this worksheet.
Total income before adjustments
Line 1 Total income
Adjustments to total income (use annual amounts)
Line 2 Taxable child support received
Line 3 Spousal support received from the other parent
Line 4 Universal Child Care Benefit (UCCB)
Line 5 Split-pension amount
Line 6 Employment expenses
Line 7 Social assistance received for other members of the household
Line 8 Excess portion of dividends from taxable Canadian corporations
Line 9 Actual business investment losses
Line 10 Carrying charges
Line 11 Prior-period earnings
Line 12 Partnership or sole proprietorship income
Line 13 Total deductions from income (add lines 2 through 12)
Line 14 Capital gains and capital losses
Line 15 Net self-employment income
Line 16 Capital cost allowance for property
Line 17 Employee stock options with a Canadian-controlled private corporation
Line 18 Total additions to income (add lines 14 to 17)
Annual income for child support purposes
Line 19 Annual income for child support purposes (line 1 minus line 13 plus line 18)
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