With the new school year underway and parents registering their children for activities, many people are asking, "Who pays the bill?" for swimming, hockey, gymnastics or what have you.
The federal child support guidelines contemplate the sharing of certain expenses including daycare, uninsured medical, dental and eye care expenses that exceed $100 annually, certain educational costs and of course, extracurricular activities.
With respect to extracurricular activities, these expense should be shared if the expenses are more than the parent can reasonably cover, taking into consideration the parents’ incomes, the type of activity, the overall cost of the activity and any special needs and talents of the child, among other things.
It is generally accepted that it is good for kids to participate in activities. There is plenty of research out there which shows that kids who participate in sports do better in school, develop good habits for lifelong physical activity and good health. Music and arts programs are also beneficial for kids. Most of all, kids seem to enjoy these activities.
If one parent wants the other to share in the cost of activities, the expense has to be significant enough to be considered "special" and/or "extraordinary."
For many families, this means that a small registration fee of $25 may not be shareable, but more significant fees of $300 may be shareable.
However, even if an expense is extraordinary, it has to be considered "reasonable" taking into consideration what may be reasonable for a higher-income person or family is not necessarily reasonable for persons with lower incomes.
For example, this may mean the difference between house league hockey and AAA hockey.
After parents and their children decide which activities the children will participate in, the next question becomes, "How will the parents share these costs?"
The guidelines say that these expenses are shared by the parent in proportion to their incomes.
However we have to deduct any contribution to these expenses by the child or the government (i.e. Does your teenager buy some of his/her own hockey equipment? What is the cost of the activity after applying for the Fitness Tax Credit offered by the government? Are any grants or bursaries being applied towards these costs?)
The easiest way to calculate a parent’s share of the expense is to add the incomes of both parents together and then figure out what percentage each income is of the total expense.
Sometimes as lawyers we run into parents who do not want to share their personal income information with the other parent, lawyers and the court.
However, if one parent wants the other to share in expenses then they must provide this information. Otherwise, there cannot be any calculation of the proportionate sharing.
If one parent is going to pay the upfront cost of the activity, then that parent can claim the tax credit, etc., toward the expenses while the other parent can simply reimburse the paying parent the net, after tax amount.
Sometimes, it may be possible for both parents to pay their portion of the expense directly to the coach, club, teacher, etc. and each can then obtain a tax receipt for their share of the expense.
However, it is recommended that parents consult with a tax professional before doing this as sometimes only one parent is entitled to a tax credit.
» Kelli Potter is a lawyer with Paterson, Patterson, Wyman and Abel, with offices in Brandon, Neepawa and Virden.
Republished from the Brandon Sun print edition September 29, 2012