QRLSP Questions and Answers.

Sisip gives you the option of taking the payment themselves or you can receive it from CPPD directly. Sisip will send you a form asking for permission to get the payment sent to them. I took my back pay diectly and then gave Sisip $50 a month to pay back the 18K I owed them for overpayment whereas if they get it directly, they take the whole amount right away.

CPPD doesn't deduct any taxes from my husbands monthly amount... not sure about retro though.

I am also straining my brain to remember back to 2004, but I think that CPPD may have sent the retro directly to CFSA and SISIP... I am 100% sure about he the CFSA portion being sent directly, not as confident about the sisip... that was such a crazy, stressful time that some things are kind of blurry.

Alright here it goes.... For those who have 3 years or so of SISIP Retro like me, here are my predicted figures. An estimate so far, to be revised I am sure.

For approx $64 000 owing.

Interest offset for 2010 to present
+$9065

CRA Tax adjustment
-$3200

Taxes 20%
-$14 683

Legal Fees 17.7%
-$12 994

Total Deductables = $30 877
Total in pocket (Net) = $42 538

This is what I think will happen for those, like me, who have just applied to CPPD. If CPPD grants this allowance the base amount a month is about $819 dollars gross. SISIP will take this back from us. So when you get your CPPD retro you will have to hand it over to SISIP at the gross amount. Remember that CPPD deducted taxes. So you will have to save the tax amount from the previous SISIP retro to pay the taxes back on the CPPD retro.
BUT this then means we would have paid taxes twice on the same amount of money. These taxes will come back to us on the 2013 tax year.
AND since we claim the lawyers fees for 2013 taxes this will mean that in the spring of 2014 the tax return should be large.

Legal fees
A recipient can deduct, on line 221 of their income tax and benefit return, legal fees paid to:

•collect late support payments;
•establish the amount of support payments from your current or former spouse or common-law partner;
•establish the amount of support payments from the legal parent of your child (who is not your current or former spouse or common-law partner) where the support is payable under the terms of a court order; or
•try to get an increase in support payments.
A recipient can also deduct, on line 232 of his or her income tax and benefit return, legal fees paid to try to make child support payments non-taxable.

A recipient cannot claim legal fees incurred to:

•get a separation or divorce; or
•establish child custody or visitation rights.
Legal fees paid to collect a lump-sum payment, which does not qualify as a support payment, are not deductible (see Lump sum payments).

If you received a lump-sum support payment, parts of which were for previous years, you have to report the whole payment in the year the lump-sum payment is received.

However, if the amount that applies to previous years is $3,000 or more (not including interest), you can ask us to tax the parts for the previous years as if they were received in those years.

We will do this for the amount that applies to years throughout which you were resident in Canada, and only if it is to your advantage for tax purposes.

The payer of the support payments should give you a completed Form T1198, Statement of Qualifying Retroactive Lump Sum Payment. Include this form with your income tax and benefit return to ask us for this special tax calculation on a retroactive lump sum payment. We will tell you the results on your notice of assessment or notice of reassessment.

Greatfoot.
This only means that we can either, spread the lump sum out over a longer time period, providing the lump sum was for previous years in the past........or claim the full amount in the year recieved..ie current year.

Generally, a lump-sum payment is included in income in the year when the recipient receives it.
This may result in a greater tax liability than if the payment had been received in the year or years to which it related.

Cheers
John.

As for deemed taxes where is the information for this? Is there a table that tells us what percentage they are going to nail us with for each year?

Example year 2010 deemed taxes at 5%
2011 deemed taxes at 10%

Has anyone found out what the deemed tax amounts are going to be?

From the CRA website, about Qualifying Retroative Lump Sum Payments:

"Certain lump-sum payments totaling $3,000 or more (not including interest) are eligible for a special tax calculation when an individual files his or her income and benefits return."

- Anyone have any idea what this 'special tax calculation' is?

"Eligible sources of income are:
•Income from an office or employment received under the terms of an order or judgment of a competent tribunal, an arbitration award, or an agreement to terminate a legal proceeding (including amounts received as damages).
•Wage loss replacement benefits."

- We seem to fit this definition.

Anyone find any more information on this? I am curious about this 'special' taxation, but their offices are closed right now. I'll call on Monday and ask about it.