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HomeMy WebLinkAboutThe Citizen, 2001-02-07, Page 1141(2 V.71.4 th piptiapip INCOME $ TAX SERVICE • farm, business, or personal • complete year-round service including tax audit representation • E-File available Over 19 years experience Quality work at reasonable rates "FREE CONSULTATION" Stephen Thompson R. R #2, Clinton 482-7551 You may also drop off or pick up your tax information at Stitches by MJ, Queen St., Blyth Building Wealth...one step at a time! With proper financial planning, your goals become clear! LINDA E. BURNS Financial Planning Consultant 152 Josephine Street, Box 191 Wingham, ON NOG 2W0 519-357-4511 Owen Sound Office 1209 - 16th Street East 519-376-7216 DID YOU KNOW we think retirement should be fu • At Clinton Community Credit Union, we have trained investment professionals to help you save money for your future. Personal attention to your hopes and dreams, investment options like GICs and mutual funds, make us an option that saves you money. Visit us to discuss how we can help you reach your financial goals. 48 Ontario St, Clinton Tel. (519) 482-3466 Mon. -Thurs. 9am - 5pm Fri. 9am - 8pm 118 Main St N., Exeter Tel. (5 i 3) 235-0640 Mon. -Thurs. 9am - 5pm Fri. 9am - 8pm 165 Main St W., Dashwood T I. (519) 237-3777 10am - 3pm Fri 2prn - 7pm Clinton Community Credit Union Limited z A different way of banking.'" THE CITIZEN, WEDNESDAY, FEBRUARY 7, 2001. PAGE 11. si Financial 2001 Retiring allowance taxable into year received If you receive a retiring allowance due to the termination of employ- ment or in recognition of long serv- ice, it is taxable in the year it is received. "However, if you directly con- tribute a portion of the retiring allowance into your Registered Retirement Savings Plan (RRSP), you can defer taxes," says chartered accountant Alan Mak of Toronto. The amount eligible for transfer to an RRSP is the lesser of: the contri- bution room available in the RRSP immediately prior to the transfer; and $2,000 for each year of full- or part-time service prior to 1996; plus $1,500 for each year of service prior to 1989 for which the employer's contributions to a Registered Pension Plan (RPP) or Deferred Profit Sharing Plan (DPSP) on the employee's behalf have not vested. "You can defer tax and possibly avoid withholding taxes that might otherwise be deducted by directing the eligible portion of the allowance into your RRSP," says Mak. A char- tered accountant can help you complete and file the appropriate forms. Brought to you by the Institute of Chartered Accountants/of Ontario. Establish RESP to save for child's education Worried about saving money for your children's post-secondary edu- cation? Consider establishing a Registered Education Savings Plan (RESP). "Establishing an RESP is a good idea, given the way post-secondary education costs are rising," says CA Rob Tatangelo of Vaughan. "The income earned on the funds in the RESP compound tax-free, and then can be used to help fund the chil- dren's.education. However, contributions to an RESP are not tax deductible for the contributor." You can contribute up to $4,000 per year per child to an RESP, to a lifetime maximum of $42,000 per child. You can contribute to the plan for up to 21 years. The plan must be collapsed after 25 years. "As an added bonus, the federal government will match an RESP contribution with a Canada Education Savings Grant," adds Tatangelo. "The grant is 20 per cent of the first $2000 of annual contributions made to the RESP in a year. Therefore, if you make an RESP contribution of $2,000 for each child by the end of each calendar year, the government will contribute $400 per child per year for each year the ben- eficiary is under 18, to a maximum of $7,200 per beneficiary. " Brought to you by the Institute of Chartered Accountants of Ontario. Spousal RRSPs can save tax dollars Contributing to a spousal Registered Retirement Savings Plan (RRSP) may make sense if your spouse will have a lower retirement income than you. "A spousal RRSP allows you to shift income from the spouse with the higher potential retirement Self- employed should consider RRSP Self-employed Canadians are less likely than other people to have Registered Retirement Savings Plans (RRSPs), according to Statistics Canada. "Many self-employed people say they are too busy building their busi- nesses to put money into RRSPs or plan for retirement," says chartered accountant John Wonfor of Toronto. "But if self-employed individuals want to maintain a certain income level after retirement, they need to develop a financial plan." Besides providing post-retirement income, regular contributions to an RRSP can also help self-employed individuals reduce their taxes, adds Wonfor. Ask a chartered accountant for details. Brought to you by the Institute of Chartered Accouhtants of Ontario. income to the spouse with the lower income," explains chartered accountant Andrew Tran of Toronto. "This income-splitting leads to reduced taxes when retirement withdrawals are made." Spousal RRSPs are available to both married and common-law cou- ples. If you make a contribution to a spousal RRSP, you get the income tax deduction. Your deduction is capped by your own contribution limit for the year, but your contribution to a spousal RRSP does not affect your spouse's contribution limit. The spousal RRSP and any earnings it generates are the property of your spouse. "When you contribute to a spousal RRSP, any withdrawals made during that year or the follow- ing two calendar years may be taxed as your income," adds Tran. "Withdrawals at other times are taxed as your spouse's income." Brought to you by the Institute of Chartered Accountants of Ontario.