What is treated as surplus income?

It sounds like you are referring to the threshold that is set by the Office of the Superintendent of Bankruptcy that are used when determining surplus income (i.e. payments that must be made when someone files for bankruptcy). For 2014 the Superintendent set the threshold for 1 person in a household is $2014.00. So it has changed from the $1870.00 that you are referencing.

In terms of your income and expense statements (I assume this is what you are referring to when you use the term budget), you are required to list all of your expenses. This will include housing costs, personal costs, vehicle costs, essentially anything you spend money on each month. But where it appears there is some confusion is that your normal expenses do not impact your surplus income obligation as set by the government. This formula is tied directly to your income. Now there is an allowance for a few things that can be deducted off your income before your surplus payment is calculated, but there are very few things that are included in this (i.e. day care costs, specialized medical expenses etc.).

Hopefully this clarifies both your first and second questions. But from the sounds of it there is a little confusion, so I would recommend that you discuss things directly with a trustee to ensure you understand how this formula operates.