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HomeMy WebLinkAboutThe Citizen, 2004-02-12, Page 15Dwayne Laporte ZURICH Appointments at your convenience 236-7494 236-7277 s n Mutual Funds • Annuities • RRIFs • Estate Planning IN Education Plans I RESPs II Group Plans n GICs RRSP DEADLINE: MONDAY, MARCH 1 Investors Group Building futures since 1940 INVESTORS GROUP FINANCIAL SERVICES INC. Jake DeRuyter CLINTON Appointments at your convenience 482-7808 ij We GUARANTEE our work or it's FREE Ul Fast, next-day pick-up D We provide tax saving advice fora 1 refund and a better future q We also prepare business, rental & farm returns Ll Permanent year-round business in Listowel for the past nine years lj Students & seniors receive a 25% discount q Senior Special: Can't come to us? Let us come to you. We can pick up your information at your home no charge ours: Mon. - Thurs. 9 a.m. - 6p.m. &810p.m.; -Aw Bruce & Sherri Gilkinson 291-9880 256 fain St E. Listowel Across from Golden Barrel) THE CITIZEN, THURSDAY, FEBRUARY 12, 2004. PAGE 15. Financial 2004 Principal place of business may be tax write-off ,A4 "If your home doubles as your office you may qualify to deduct the maintenance costs if you meet one of two tests set by the government," says Chartered Accountant John Wonfor, of Toronto. "Your home office must be your principal place of business or it must be used exclusively for business purposes and used on a regular and continuous basis for meeting clients, customers or patients." "As long as you work primarily out of your home office (defined as more .than 50 per cent of the time) you don't have to use your home office exclusively for business purposes to qualify to deduct home office expenses. The office can be combined with personal living space. When doing this, you would pro-rate the expenses related to your home office according to how much it's -used for business and how much for personal," explains Wonfor. "Having said that, a business loss cannot be created by claiming home office expenses. However, the undeducted amount of expenses can be carried forward indefinitely and can be deducted from income from the same business in the future." — Brought to you by the Institute of Chartered Accountants of Ontario. Pros and cons of IPPs If you're an owner of an incorporated business, should you make an Individual Pension Plan (IPP) part of your retirement planning strategy? Toronto chartered accountant Sam Zuk, describes some of the advantages. "The company can make a single. one-time contribution for past service and obtain a tax deduction without taxing the employee. It's a method of recognizing individual contribution of senior management If you earn income from non- resident or offshore trusts (NRT), there are some important tax changes scheduled to come into effect this year. "Those affected would be wise to review all their existing tax structures to ensure they comply and that they are aware of the relevant reporting obligations," says chartered accountant Sonja Chong, of Toronto. • • Even if you're not expecting a tax refund, filing a return could provide some welcome tax relief in the future. According to chartered accountant Louis Provenzano, of Toronto, students should always file a tax return because it will generate Registered Retirement Savings Plan (RRSP) contribution room and tax credits that can be carried forward indefinitely. "For students filing a return, remember that the first $3,000 of a scholarship, fellowship, bursary, or prize from a program that entitles the student to the education tax credit is tax-free. If you moved to attend school, your moving expenses may be deductible and if you attended a foreign university, your tuition fees may be eligible for a tuition credit in Canada. " If you have any unclaimed education and tuition fee credits, carry them forward to reduce your or owners and the plan is creditor proof. Given that it's a defined benefit plan, if the investments aren't performing well, a further contribution can be made by the company to financially augment the plan. The costs of administering the plan are tax deductible." Some of the disadvantages include the fact that you cannot make withdrawals at your discretion. The company making the contribution must have the taxable income to take advantage of any "Among the many complex changes to the taxation rules for NRTs, some key areas stand out. For instance, a NRT funded by Canadian tax residents will now be considered resident in Canada even though all its beneficiaries are non-residents. So, if a grandparent who resides in Canada sets up a NRT under the laws of a tax haven jurisdiction (for example, Barbados) for the benefit of their grandchildren who reside in taxes in the future when income is higher. You have five years to claim tax credits for student loan interest, but you, can claim education and tuition fee credits indefinitely," advises Provenzano. — Brought to you by the Institute of Chartered Accountants of Ontario. Tax shelter other residences If you own a cottage, ski chalet or even a foreign home, consider applying your principal residence exemption to that residence to shelter any capital gains. "The exemption is available on any property that you regularly inhabit, even for shorter periods of time. But remember each family is limited to just one principal residence," says chartered accountant Sam Zuk, of Toronto. — Brought to you by the Institute of Chartered Accountants of Ontario. deductions and must have the cash flow to continue to meet its contribution responsibilities. "In addition, detailed government reporting is required which can be costly (although costs have gone down significantly in recent years). Once you're a member of the plan, you can no longer contribute to a RRSP; instead, the company makes contributions to the IPP," advises Zuk. — Brought to you by the institute of Chartered Accountants of Ontario. England; worldwide income earned by the trust will now be subject to Canadian tax because the trust would be considered resident in Canada." "Another important change affects the use of a NRT to fund growth shares of Canadian private companies in connection with an estate freeze. Such NRTs are typically formed in tax haven jurisdictions that have an international tax treaty with Canada and qualify for treaty relief. Canada Customs and Revenue Agency (CCRA) has announced that treaty relief would not apply and the NRT would be considered to be resident in Canada and subject to Canadian tax," explains Chong. — Brought to you by the Institute of Chartered Accountants of Ontario. JACQUIE GOWING ACCOUNTING SERVICE Accounting & Income Tax Preparation j Monthly Bookkeeping Tailored To "YOUR" Needs • Reconciliations • Personal, Farm • Government Remittances Business & Corporate • Payroll • Electronic Tax Filing All services available on site or at our office RR 2 Bluevale (519) 887-9248 Fax 887-9454 CHARTERED ACCOUNTANT 306 Josephine St., PO Box 300 Wingham ON NOG 2W0 Phone: (519) 357-1522 Toll Free: (866) 756-4770 Fax: (519) 357-1551 Email: reidca@scsinternet.com B.W. REID, C.A. - R.M. TAYLOR, C.A. Tips for working students Tax changes coming for NRTs