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HomeMy WebLinkAboutThe Huron Expositor, 1972-01-27, Page 8Tao Farmers 8-THE HURON EXPOSITOR, SEAFORTH, ONT:, JAN. 27, .1972 It took a lot of concentration to achieve the right effect as stuueiRs ouLain s•.:nuoi on their entry In the Optimist Snow Sculpture Competition on Saturday.' Busy on the entry are Mary Helen O'Rourke, Maureen Delaney and Karen Cronin. (Staff Photo) The working girl complaining about her stingy landlord: "MY apartm?nt is so cold that every time I open the door, the light goes on." Little bey: "Dad, did grand- pa pat4dle you when you were a little boy?" Father holding paddle:- "He certainly did," Little boy: "And did great grandpa paddle grandpawhen lie was a 'little boy'!" Father: "Yes , Son." • Little boy: And did great- great-grandpa paddle' gr'eat- grandpa'?" - Father: "Yes.." Little boy: "Well, don't -you think that with a little encourage- ment from me you could over- come this inherited rowdyism.?" SEAFORTH . JEWELLERS for DIAMONDS, WATCHE S JEWELLERY, FINE CHINA GIFTS FOR EVERY OCCASION All Types of Repairs Phone 527-0270 * LET'S /))) :40r- - * TOSS OUT S • ME REAL BARGAINS LOOK at THESE *CERTIFIEFDromUSED CARS * 0416 Motors * '70 Chev. HT., AT., and R., low -mileage, * * ,70 Chev. HT., A.T. and R. * '70 Olds. Custom, HT., PS. - PB. - R. * '76:Pon'tiac Catalina Sedan, PS. P.B. * '69 Chev. Station Wagd4i, F, P. f68 ,Pontiac Sedan, P:S.-P.B.- R. • * "68 Chev. Sedan, P.S. and R., AT. '67 Chev. "8" Sedan, A.T. - P. '67 Chev. "6" Sedan, A.T...* No Reasonable Qffer Refu:rd . * * at * * 1 SALES cohae. SERVICE Ait ' * • P4‘46 527-1750 • SEAFORTH Lot Oven Evenings to 9 p,m, 4*• ************** • You're Invited to Attend v -"Farming fFrontiers72 MON. Et TUES. J;in 31 and Feb 1 1 DO to 5 00 AT OUR SHOWROOM " FARMING FRONTIERS '72 JOHN DEERE •••' TO ALL FARMERS ON DISPLAY INSIDE • 7700 Combine • 2120 Tractor • 4320 Tractor with Saddle Tank Sprayer FREE COFFEE and DONUTS u 101.1 Sr \11 R111 TICI Ft 213‘.11PIIVIENIT COMPANY. EXETER. 235-1115 TERM INSURANCE on the REST of TERMS ROY L. IIA1STNON Occidental Life PHONE 345.2274 rate compared to the rate if taxed when first received. 8. Basic Herd No new basic herds can be established after pecember 31st, 1971 and no further increases made to existing, herds (appli- cation covering 1971 may be made when filing returns for 1971 prior to April 30th). - A Basic Herd will be val- ued as of V-day. Following this date, if a HaSic Herd is sold for the V-day arneunt.or less, this income will not be subject to Capital Gain or Income Tax. If Basic Herd is selsi_ for more than the V-day • value, the in- creased value will be subject to Capital Gains but not Income Tax. - Livestock sold outside the Basic Herd will be treated as income rather than Capital Gains. - There is a privilege of electing to decrease the Basic Herd a limited amount each year. This' decrease must not be greater than 10 per cent of the size of the Basic Herd as of December 31st, 1971 nor may it be greater than the number of animals sold. The4allowing example shows how cattle sales will be taxed. Basic Herd - 60 animal units average value on December 31st, 1971 - $500.00; Herd of 100 animal units sbld 1972 or later Average selling price $700.00 per aninial units; Total returns, 100 x 700 equals $70,000; Non basic herd, $28,000 (Taxable as income); Basic Herd,. $42,000; Valuation Day value Basic Herd $30,000; Capital Gain, $42,090 minus $30,000 equals $12,00101,- (Taxable as Capital Gain) 9. Quotas Quotas Will :..)e included in the "nothings" class like goodwill. How this class will be handled varies depending upon whether the quota is now owned or whe- ther It is purchased in 1972 or later. - For quota, purchased in 197 2 or later, one-half will be a non-depreciable capital asset as has been the case for the entire calcite in the past. The other half will be depreciated at10 per cent on a diminishing bal- ance basis. For quotas owned prior to 19'7 2 they will be treated as follows; Quotas sold in the first year of the new system, 20 per cent of the proceeds will be included in income and this . percentage- will Increase at the rate of 2 1/2 -.per cent each year until the thirteenth, year, when '50 per cent of the proceeds will be included in income. - The Ontario Milk Market.= ing Board sent out"V`iiiViVai L to all milk producers regarding quotas - with examples. to show how they might be• handled in the future. ; 10. Corporations , • • ' Farms thlt are now incor- pOrated Will be able to avoid some of the hardships that will fall upon single proprietorships or partnerships upon the death- of the principle OWner. Capital gains and the value of inventories and quotas will not suddenly be added to one years income. - Small corporations. will par tax at 25 per cent on the first $50,,000 of annual inceme.until $400',000 of accumulated income has been reached., plerpE cent.rvo Everything tning 'elSe taxed at- 50 be, trans- terred to a corporation without incurring, Capital gain. - 'Three valid reasons for incorporating: (1) Income Tax savings (2) Capital Gains Tai savings (3) Canada Pension plan ad- vantages. • - On incorporation, of a pro- prietorship or partqership, Cap- ital Gaihs may be deferred pro- vided the person transferrintthe assets • retain a 'certain per- centage interest in the corpora- tion (at least, 80 per oent inter- est). 11. Partnerships Capital Cost' Allowance' will be taken by the partnership rather than by the partners. Net income will , be diVided out to various partners for tax pUrposes.°Cap- ital gain' or loss will usually result from' the liquidation of a partnership. 12. Summary - Personal Exemptions are in- creased. No- Federal Estate or Gift Taxes - A new Succession puty and - 'Provincial Gift Tag. - Capital Gable, Tax effective January 1St, 1972...z - Depreciation will be deter- on the diminishing bal- ance method (double present rate) rather than the straight line method. - More averaging provisions allowed, especially forward averaging, quite useful for those retiring. - The last Chance to establish Basic Herd - up to the end of April 1972 for the 1971 year. - One-half of quotai will now be depreciated at 10 per cent on a diminishing • balance '-basis. Corporations will continue to be a valuable tool in farm management. Partnerships are still use- ful, but some confusion. may exist In determining, Capital Gain or Loss for individual partners on death. - Plenty of records should be kept and realistic values placed on all assets. -4+ Former Huron Rep. Passes Stephen Baxter Stothers of Lucknow passed away at, Wing- ham and District Hospital on Wednesday, January 12th in his ' 87th year. , He was a son of William and Mary. Stothers and was born in Ashfield Township on Jun 12, 1885. ' Mr. Stothers was twice mar- ried. He married Agnes Cleg- horn-in October 1919. She passed ... .... away in 1956. In January 1962 he •married Elizabeth Stewart Rose, who sur- vives; also four daughters, Mrs. W. A. (Agnes) Bradbury of York- shire, England, Mrs. R. C. (Eliz- abeth) passmore.of Ottawa, Mrs. W. B. (Kathleen) 'Whale of Sask- atoon, Sasketchewan, 'Mrs. J.D. (RUH* Schultz of Mississauga, a son Stephen of Winliipeg, Man- itoba, a stepson ,Dan.., Rose of Ghana,' Africa ' and a brother, Dr. C. E. Stothers of Toronto. • Besides his -first wife he was predeceased by two -sisters and three brothers, Jessie A., Rachel John C., W. Bailie, Isaac. F. Steve, as he was. familiarly , well, !graduated, from Onta.rip___ gricultural College in 1916 -and was an Agri'cultural Representa- for 34 years. He opened the Hurn County office at Clinton i in 918; wee' Agricultural Rep- res ntative 'for Essex County 1926 to t 932 Ad ,was Repre- sentative for Wellington .County . from '1932 to 1551. FollOwink his retirement he returned to his home community and "'has. resided in Lucknow since ,that time. ' He acted -as secretary-trea- . surer for Canadian Swine Breed- ers AsSociation from 1950 to 1964. . In his earlier years he was an active church worker; was a ,-Charter member of the Arthur-7- . . Lions Club and at one time was a Deputy District Governor. • Steve, as• an.W.ive extension worker for over 30 years, gave help to Many County Agricultural' Groups. He assisted' with Many School Fairs, Fall. Fairs and Short Courses and helped organ- tize some of the first Junior Farmer Associations. 44 The funeral service was held ,, at MacKenzie Memorial Chapel, Lticknow„on Friday, January 14th. Rev. R. G. Nicholls of Lucknow United Church and Rev. W. A. Young of Elora were ministers. Temporary 'entombment was at Dungannon Mausoleum. Honourary pallbearers were W. B. Anderson; .1, W. Joynt, Alex .Hackett, A. E. McKim, W. J. Stothers.' Active4allbearers were Lane Gardner, Gordon: Kirkland, Alex Andrew, .13t11 Andrew, Donald `MacKinnon, Clayton Alton. 'Mr. Stothers was a member of Masonic Old Light Lodge 184 and a service was held at the funeral home on Thursday even- ing. . • RemenTher! I t takes but a moment to place an,-Expositor Want 'Ad and be money in pocket. To advertise, just Dial Seaforth 527-0240. 1. • • by J. J. Hagarty, Area Co-ordin- ator and Farm Management Spec - ialist, Department of Agriculture ',;rite frankly it is too early to tell what all the changes might mean. The new tax legistletion is now law. Many amendments are still to be included,. Just what the official interpretation', might be is open to speculatlea, The administrators are guided by legal advisers and by consider- ations of reasonableness and practicality, The Department of National Revenue states that "where twb interpretations seem to have equal support, having regard to equity, reasonableness, statuatory interpretation and the general intent Of th6 legislation as a whole, the interpretation .is adopted - which gives" the benefit of the doubt to the taxpayer." This is a big mouth full. Ob- viously not everything is "cut and dried". It will be some time before the implications are clear. The Department of Nat- ional:Revenue will be sending out special pamphlets on subjects such as: Valuation Day, Capital Gains, Partnerships, Basic Herd, Goodwill (Quotas) etc. Farmers as a group will receive a pack- age of pamphlets of direct int- erest to them. Each District Taxation office will receive visits, telephone calls and written inquiries. They will be holding special tax reform briefings in various communities and individual 'officers will be available to speak at meetings. They' prefer to do this from next May • oh - following the 1972 filing season. In the meantime we all have a responsibility to inform our- selves of the basic changes. And perhaps put ourselves in a pos- ition of being able to say - what is reasonable and practical. . Farmers should be encour aged to record realistic values on 'all assets as of December 31st, 1971. This is important on records such as CANFARM. These records will be valuable assets in years to come. Some of the major points are as follows: I. Income Tax Exemptions - single exemptions increased from $1,000 to $,1,500 - married . exemptions in- creased from, $24 000 to $2,850 - persons over •a.ge 65 exemp- tions increased from $50010$650 - young people over .16 years of age can earn up to-$1,050 without lessening the $550 ex- emption' received. by their, father 7. Averaging - 5 year averaging for farmers Will not be changed. - Automatic averaging will be used if taxable income is up over 10 per cent of last year and 20 per cent over last four years. - Forward *raging will be permitted. This will be. 'a boon to retiring farmers. Certain large unusual receipts such as Capital Gains on sale -of live- Stock, or inventory of quota can be invested iri an anhuity. ThiS money will then be taxable over a number of years as it is being „received at a greatly reduced , SNOWBOOTS . MEN'S WOMEN'W BOYS' and CHILDREN'S . • $430 to $11.50 $5.00 to $1730 4.00 to $ 6.00 OVER PRICE Regulat Regular Regular . THE 8.98 9.98 7.98 ‘ to to to FOOT 22.95 35.00 11.95 DISCONTINUED LINES OF DRESS 1/ 2 PRICE MEN'S from 5.00 WOMEN'S from 4.00 CHILDREN'S' from 4.00 SHOES • LADIES' MEN'S CHILDREN'S SLIPPERS SLIPPERS SLIPPERS- STORE -$2.00 20n% LINES WIDE and $3.00 $2.00 THIS 3.00 - Regular to 6.00 Regular to 6.00 , Regular to 4.00 ALL REGULAR OFF SALE WEEKEND t ONLY! MAIN DON KEAST STREET ' NAM FOOTWEAR SEAPORT -II 2. Estate Taxes Federal Government have ab- olished Estate Tax as. of Decem- ber 31st, 1971. Main- reason stated fO this move is to avO dOictirraitatriirdireaVei(t 'Pak and Capital Gains) at death. 3 Succession Duties • . The Ontario Government have proposed changes_ in these Dut- ies. Legislation is yet to be introduced, but any changes will be retroactive to 'January 1st, 1972. 'The exemptions are: - to a' spouse• $500,000 - to any other beneficiary $100,000 'There will be no Succession Duties on estates less than $100,000. Any donor making giftsr must survive for 15 years to avoid having them brought back into the estate. (previously • 5 years)., 4. Gift Tax No Federal Gift lax. A new °uteri() Gift Tax wM4 be im- plemented alopg with the Suc- cession Duties. Exemptions al- 10%;Ted will be $2,.00b to any indi- v ideal up to a maximum of $10,000 in any one year. 5. Capital Gains Tax to Com- mence On January 1st, 1972 Two .Evaluation Days - Dec- ember 22nd, 1971 for Stock Mar-, ket Shares; December 31st, 1971 for all .other'assets - The evaluation- date affects only items held prior to and on. Valuation Day. Subsequent acquisition will be measured for gains or losses on ,their acqui- sition costs - a farmer should record a present fair market value of real estate, buildings, existing basic herds and mach- inery as 'of December 31st,1971. If the farm is a limited com- pany, all assets should be given a fair market value as this. value will determine the value of Com- mon Shares. Every valuation of these properties should be sup-. ported with pertinent informa- tion such as (a) land - your purchase price, particularly if recently pur- chased, sales of similar prop- erties - condition of develop- ment, clearing, levelling or til- ing, productivityff property, a detaileci..sketch • howing power lines, roads, permanet buildings, etc,, a few photos to be included with records might be quite use-• ful. (b) Buildings and machinery- structure, material, year con- structed or purchased, major repairs or changes and tiondir lion. • (c). basic herd ,- number of animals, age of animals, pro- dUctivity (R.O.P. or D.1-1.1.A. records), weights of animals, similar sale values. If •a farmer has been carry- ing assets (real es,tate)'on his books at original cost for some time, he should revalue the real estate to a fair market value as of December 31st, 1971. Provide as much documenta- tion 'as possible and keep in a safe place. Remember a funda- mental rule of taxation; a mem- orandum prepared by a taxpayer- may bew acceptable evidence in a tax appeal provided that it was prepared at the time of the trans- action- or event. If the taxpayer reconstructs things later on, the forcefulne,ss,of the memo will not be nearly as strong. - One half the capital gain will be taxed at the regular rate of Per'sonal Income Tax. - Unrealized" (acctred) gains taxed on death. One-half of the capital. losses -in a year firstdeducted against one-half the capital gains in that year. Any deductible ex- cess up ,to $1,000 may be deducted against other income. - No capital gains tax will be imposed on gifts or bequests at death between spouses.CaP- ital g'ains tax would apply when that spouse transfers (sells, gifts or bequests) that asset. - Capital gains tax applies to all other gifts or, bequests • personal residences and one acre. of land are. exempt of capital gains tax when sold. Farmers will be entitled to claim as an alternative to the above, a $1,000 annual deduc- tion against gains on his farm house and all his farm property ii this is to his advantage. Should farmers have ap offic- ial appraisal of their land, livestock or machiPery7 Not likely .unless they are in an area likely to increase dram- atically in value. Appraisals cost money and in many cases the cost may not be justified. Remembs)r $500 today invested at 8 per cent interest Is equal to $4,000twenty-four years from now.'A savingsthat might result from an appraisal will not be realized until the asset -. is' sold, which might she next year or 30 years hence. If a capital gain occurs, a taxpayer may use either the original cost or the value of the asset on Valuation Day - whichever is higher (therefore gains which are simply a re- covery of cost will not be taxed). - if a capital loss occurs, a taxpayer will measure the loss against the lower of original cost or, the value of the asset on V-day. - Alternately, taxpayers may simply elect to use V-day value for all their assets. 6. Capital COst Allowance (Depreciation) - Straight line depreciation may be used for assets pur- chased before December 31st, 1971. - All assets purchased after that date, the diMinIshing balance method must be used., - Straight line depreciation , will be phased out. However, for a number of years' farmers may use both methods. Assets on straight line depreciation which are sold for more than their V-day value or book value will be 'subject to Capital Gains. • - A farmer could switch all 'assets to the diminishing balance method if he wishes. - We would not advise a farmer to make this Move because if V-day is greater than book value e.g. a tractor book value $1,500, V-day value $2,500, the trade-in value for the tractor could be up to $2,500 without being subject to Capital Gains. If the tractor was trans- ferred to diminishing balance Method, the $1,500 value must be used. What Tax Changes May Mean