{"id":864,"date":"2019-12-10T09:00:48","date_gmt":"2019-12-10T14:00:48","guid":{"rendered":"http:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/?p=864"},"modified":"2020-06-04T14:56:16","modified_gmt":"2020-06-04T18:56:16","slug":"didivorcemate-two-key-gross-ups","status":"publish","type":"post","link":"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/didivorcemate-two-key-gross-ups\/","title":{"rendered":"DivorceMate \u2013 Two Key Gross-Ups"},"content":{"rendered":"<div class=\"wpb-content-wrapper\"><p>[vc_row][vc_column][alternating_content_container]\t<div class=\"alternating-content-item-wrapper bg-light\">\n\t\t\t\t\t\t\t\t\t<div class=\"alternating-content-item-image center-center\" style=\"background-image: url('https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/app\/uploads\/2019\/12\/DivorceMate-Blog-Image-LG-800x533.png'); background-size: cover;\"><\/div>\n\t\t\t\t\t\t\t<div class=\"alternating-content-item-content-container\">\n\t\t\t<div class=\"alternating-content-item-inner\">\n\t\t\t\t\t\t\t\t\t<span class=\"alternating-content-item-decor\">\n\t\t\t\t\t\tBlog\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<h2 class=\"alternating-content-item-heading\">\n\t\t\t\t\t\tDivorceMate \u2013 Two Key Gross-Ups\t\t\t\t\t<\/h2>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"alternating-content-item-content\">\n\t\t\t\t\t\t<p>In this blog, we discuss two key gross-ups available in DivorceMate, and when it may be appropriate to use each.<\/p>\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t<\/div>\n[\/alternating_content_container][basic_container container_size=&#8221;container container-narrow&#8221;][vc_column_text]Since DivorceMate began providing family law software solutions in 1987, it has since become ubiquitous in the Canadian marketplace. Simply enter a little information, hit a few buttons, and voil\u00e0 \u2013 spousal support calculations in accordance with the\u00a0<em>Spousal Support Advisory Guidelines (SSAGs)<\/em>\u00a0and child support calculations in accordance with the<em>\u00a0Federal Child Support Guidelines<\/em>, all in a blink of the eye.<\/p>\n<p>As with most software solutions, however, the results are only as accurate as the inputs relied upon. \u201cGarbage in, garbage out\u201d is a true maxim when relying on DivorceMate calculations. One area of common confusion when entering information into DivorceMate is the concept of \u201cgross-ups.\u201d We discuss and differentiate two different gross-ups available within DivorceMate, which we refer to as the \u201cIncome Tax Act (ITA) Gross-Up\u201d and the \u201cTax Savings Gross-Up\u201d.<\/p>\n<h4>ITA Gross-Ups<\/h4>\n<p>Dividends paid from taxable Canadian corporations (public or private) are paid from after-tax corporate funds. To avoid double-taxation (corporate tax plus personal tax), the Income Tax Act attempts to \u201cintegrate\u201d the two tax rates. This is partially accomplished on a personal tax return by reporting not the actual dividend received, but rather a \u201cgrossed-up\u201d amount to reflect what dividend would have been paid if it was paid from pre-corporate tax funds. For example, if Dave receives a $1,000 eligible dividend from Microsoft, he would report $1,380 \u201cgrossed-up\u201d dividends on his personal tax return.<\/p>\n<p>When determining income for purposes of child or spousal support, the starting point is often \u201ctotal income\u201d or \u201cLine 150 income,\u201d as reported on the personal tax return. In Dave\u2019s situation, his Line 150 income would include the $1,380 grossed-up dividend rather than the actual dividends received of $1,000. Without removing the gross-up, his income would be overstated.<\/p>\n<p><em>The Federal Child Support Guidelines\u00a0specifically address this issue in\u00a0Schedule III, indicating to \u201creplace the taxable amount of dividends from taxable Canadian corporations received by the spouse by the actual amount of those dividends received by the spouse.\u201d<\/em><\/p>\n<p>To simplify the calculations, DivorceMate allows users to clearly indicate whether they are using the actual dividends received or the \u201cgrossed-up\u201d amounts. The end result for the calculations remains the same, as long as users clearly indicate what option they are using. Whether you report $1,000 in actual dividends or $1,380 in \u201cgrossed-up\u201d taxable dividends, the support calculations should provide the same quantum of support determination.<\/p>\n<h4>Tax Savings Gross-Up<\/h4>\n<p>Dividends and capital gains are taxed in Canada at lower tax rates than most other types of personal income. As a result, someone who receives significant dividend or capital gain income will pay less tax than if they had received the same amount of employment income.<\/p>\n<p>For example, Lucy and Michael each earn $100,000 per year, but Lucy is paid through a salary and Michael is paid through dividends. Because Lucy will pay more tax than Michael, their $100,000 incomes are not equivalent to each other. In Ontario in 2019, Lucy would need to receive a salary of $131,800 to have the equivalent after-tax funds that result from Michael\u2019s $100,000 dividend.<\/p>\n<p>To account for the differences between incomes that look similar on the surface, section 19(1) of the\u00a0<em>Federal Child Support Guidelines<\/em>\u00a0indicates:\u00a0<em>\u201cThe court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following \u2026 the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax.\u201d<\/em><\/p>\n<p>To enable users to easily perform this calculation, DivorceMate includes an option to \u201cinclude and gross-up tax savings\u201d. The end result for the support calculations can be significantly different if the tax savings gross-up option is chosen.<\/p>\n<p>In the above example, where the \u201cinclude gross-up tax savings\u201d option is chosen, Michael\u2019s $100,000 dividend is treated as if it were actually $131,800 of regular income. Depending on each circumstance, it may be appropriate to include the \u201ctax savings gross-up\u201d within income when determining support obligations.<\/p>\n<p><strong>Whether your income is simple, complex, or anywhere in between, the experts at Davis Martindale can help determine an appropriate income to calculate support.\u00a0<a href=\"http:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/services\/business-valuation-services\/\">Call us today<\/a>\u00a0for a personalized discussion.<\/strong>[\/vc_column_text][\/basic_container][\/vc_column][\/vc_row][vc_row][vc_column][basic_container container_size=&#8221;container container-narrow&#8221;]<div class=\"templatera_shortcode\"><div class=\"vc_row wpb_row vc_row-fluid\"><div class=\"wpb_column vc_column_container vc_col-sm-12\"><div class=\"vc_column-inner\"><div class=\"wpb_wrapper\"><div class=\"basic-container row   \" >\n\t<div class=\"bg-overlay none\"><\/div>\n\t<div class=\"container\">\n\t\t\t<div class=\"text-left\">\n\t\t<a class=\"general-button btn  btn-info \" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/subscribe\/\" rel=\"\" target=\"\" title=\"Subscribe\">\n\t\t\tSubscribe to Davis Martindale's Valuation Blogs\t\t<\/a>\n\t<\/div>\n\n\t<\/div>\n<\/div>\n<\/div><\/div><\/div><\/div><div class=\"vc_row wpb_row vc_row-fluid\"><div class=\"wpb_column vc_column_container vc_col-sm-12\"><div class=\"vc_column-inner\"><div class=\"wpb_wrapper\"><div class=\"basic-container row   \" >\n\t<div class=\"bg-overlay none\"><\/div>\n\t<div class=\"container\">\n\t\t\n\t<div class=\"wpb_text_column wpb_content_element\" >\n\t\t<div class=\"wpb_wrapper\">\n\t\t\t<h4><strong>Co-Authors<\/strong><\/h4>\n\n\t\t<\/div>\n\t<\/div>\n\n\t<\/div>\n<\/div>\n<\/div><\/div><\/div><\/div><div class=\"vc_row wpb_row vc_row-fluid\"><div class=\"wpb_column vc_column_container vc_col-sm-12\"><div class=\"vc_column-inner\"><div class=\"wpb_wrapper\"><div class=\"basic-container row   \" >\n\t<div class=\"bg-overlay none\"><\/div>\n\t<div class=\"container\">\n\t\t<div class=\"vc_empty_space\"   style=\"height: 25px\"><span class=\"vc_empty_space_inner\"><\/span><\/div><div class=\"vc_row wpb_row vc_inner vc_row-fluid\"><div class=\"wpb_column vc_column_container vc_col-sm-3\"><div class=\"vc_column-inner\"><div class=\"wpb_wrapper\"><!DOCTYPE html PUBLIC \"-\/\/W3C\/\/DTD HTML 4.0 Transitional\/\/EN\" \"http:\/\/www.w3.org\/TR\/REC-html40\/loose.dtd\">\n<html><body><div class=\"wpb_single_image wpb_content_element vc_align_center wpb_content_element\">\n\t\t\n\t\t<figure class=\"wpb_wrapper vc_figure\">\n\t\t\t<div class=\"vc_single_image-wrapper vc_box_border  vc_box_border_grey\"><img decoding=\"async\" class=\"vc_single_image-img \" src=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/app\/uploads\/2020\/03\/Ron-Martindale-02-2020-200x200.jpg\" width=\"200\" height=\"200\" alt=\"Head shot of Ron\" title=\"Ron Martindale - Valuation &amp; 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in other words, the value of a business or asset is based on the returns ...<\/p>\n\t\t\t\t<\/div>\r\n\t\t\t\t\t\t\t\t\t<span class=\"btn btn-primary btn-sm post-listing__item__button\">Read More<\/span>\r\n\t\t\t\t\t\t\t<\/a>\r\n\t\t\t\t\t\t\t\t<a class=\"post-listing__item\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/business_valuation_engagement_joint_retainer\/\">\r\n\t\t\t\t<div>\r\n\t\t\t\t\t\t\t\t\t\t\t<div class=\"post-listing__item__image\" style=\"background-image: url(https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/app\/uploads\/2020\/06\/Engagement-Process-Part-2-768x768.png)\"><\/div>\r\n\t\t\t\t\t\r\n\t\t\t\t\t<h2 class=\"h3 post-listing__item__title\">\r\n\t\t\t\t\t\tThe Process of a Business Valuation \u2013 Engagement by Multiple Parties\t\t\t\t\t<\/h2>\r\n\r\n\t\t\t\t\t\r\n\t\t\t\t\t<p>Chartered Business Valuators (\u201cCBV\u201d) are often jointly retained by parties in an attempt to identify and resolve issues in dispute. When properly conducted, joint engagements ...<\/p>\n\t\t\t\t<\/div>\r\n\t\t\t\t\t\t\t\t\t<span class=\"btn btn-primary btn-sm post-listing__item__button\">Read More<\/span>\r\n\t\t\t\t\t\t\t<\/a>\r\n\t\t\t\t\t\t\t\t<a class=\"post-listing__item\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/business_valuation_engagements\/\">\r\n\t\t\t\t<div>\r\n\t\t\t\t\t\t\t\t\t\t\t<div class=\"post-listing__item__image\" style=\"background-image: url(https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/app\/uploads\/2020\/06\/Engagement-Process-Part-1-747x747.png)\"><\/div>\r\n\t\t\t\t\t\r\n\t\t\t\t\t<h2 class=\"h3 post-listing__item__title\">\r\n\t\t\t\t\t\tThe Process of a Business Valuation \u2013 Engagement by One Party\t\t\t\t\t<\/h2>\r\n\r\n\t\t\t\t\t\r\n\t\t\t\t\t<p>You\u2019ve decided to engage a Chartered Business Valuator (\u201cCBV\u201d) to value your business. Perhaps you\u2019re looking to\u00a0sell your business\u00a0and want to get an idea what ...<\/p>\n\t\t\t\t<\/div>\r\n\t\t\t\t\t\t\t\t\t<span class=\"btn btn-primary btn-sm post-listing__item__button\">Read More<\/span>\r\n\t\t\t\t\t\t\t<\/a>\r\n\t\t\r\n\t\t\t\t\t<div class=\"blogs-paging\">\r\n\t\t\t\t<div class=\"nav-previous\"><\/div>\r\n\t\t\t\t<div class=\"blog-page-count\">\r\n\t\t\t\t\t<a class=\"page-count-link\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/wp-json\/wp\/v2\/posts\/864\/\">1<\/a><a class=\"page-count-link\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/wp-json\/wp\/v2\/posts\/864\/page\/2\/\">2<\/a><a class=\"page-count-link\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/wp-json\/wp\/v2\/posts\/864\/page\/3\/\">3<\/a><a class=\"page-count-link\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/wp-json\/wp\/v2\/posts\/864\/page\/4\/\">4<\/a><a class=\"page-count-link\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/wp-json\/wp\/v2\/posts\/864\/page\/5\/\">5<\/a><a class=\"page-count-link\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/wp-json\/wp\/v2\/posts\/864\/page\/6\/\">6<\/a><a class=\"page-count-link\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/wp-json\/wp\/v2\/posts\/864\/page\/7\/\">7<\/a><a class=\"page-count-link\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/wp-json\/wp\/v2\/posts\/864\/page\/8\/\">8<\/a><a class=\"page-count-link\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/wp-json\/wp\/v2\/posts\/864\/page\/9\/\">9<\/a><a class=\"page-count-link\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/wp-json\/wp\/v2\/posts\/864\/page\/10\/\">10<\/a><a class=\"page-count-link\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/wp-json\/wp\/v2\/posts\/864\/page\/11\/\">11<\/a><a class=\"page-count-link\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/wp-json\/wp\/v2\/posts\/864\/page\/12\/\">12<\/a><a class=\"page-count-link\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/wp-json\/wp\/v2\/posts\/864\/page\/13\/\">13<\/a><a class=\"page-count-link\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/wp-json\/wp\/v2\/posts\/864\/page\/14\/\">14<\/a><a class=\"page-count-link\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/wp-json\/wp\/v2\/posts\/864\/page\/15\/\">15<\/a><a class=\"page-count-link\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/wp-json\/wp\/v2\/posts\/864\/page\/16\/\">16<\/a><a class=\"page-count-link\" href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/wp-json\/wp\/v2\/posts\/864\/page\/17\/\">17<\/a>\t\t\t\t<\/div>\r\n\t\t\t\t<div class=\"nav-next\"><a href=\"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/wp-json\/wp\/v2\/posts\/864\/page\/2\/\" >Next<\/a><\/div>\r\n\t\t\t<\/div>\r\n\t\t\t<\/div>\r\n[\/basic_container][\/vc_column][\/vc_row][vc_row][vc_column][vc_empty_space][\/vc_column][\/vc_row]<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"Blog The Benefits and Pitfalls of Jointly Retained Engagements This blog outlines the six important steps to your business valuation engagement with Davis Martindale Advisory Services. You\u2019ve decided to engage a Chartered Business Valuator (\u201cCBV\u201d) to value your business. Perhaps you\u2019re looking to\u00a0sell your business\u00a0and want to get an idea what it may be worth. [...]","protected":false},"author":2,"featured_media":2880,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-864","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-valuation-blog"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>DivorceMate \u2013 Two Key Gross-Ups - Davis Martindale Blog<\/title>\n<meta name=\"description\" content=\"In this blog, we discuss two key gross-ups available in DivorceMate, ITA Gross-Ups and Tax Savings Gross-Ups, and when it may be appropriate to use each.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"DivorceMate \u2013 Two Key Gross-Ups - 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