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The Times Advocate, 2004-12-29, Page 27Wednesday, December 29, 2004 Exeter Times–Advocate 27 Classifieds/Community Top year-end tax planning tips to help make money By Irene Pawlik, B.Sc; B.Ed; B.Comm. FINANCIAL CONSULTANT To truly appreciate just how much taxes eat into your ability to generate significant wealth, look at the follow- ing example. If you double a penny every day for 30 days, you wind up with a whopping $5,368,709.12. But you won't believe how much you'd have if you paid 28% in income taxes every day that penny doubles. You'd have a paltry $48,714.41. I kid you not. Thus, it's clear that reducing the tax you pay and using tax-deferred retirement accounts can add a lot of money to your long-term wealth. And don't worry about the taxes due on your $5.3 mil- lion. Even if your now -huge net worth pushed you into the top estate tax bracket, you'll still have more than $2.6 million left over after taxes — a lot more than the $48,000 you'd have by paying taxes each day on the pay- as-you-go system. I . KnowYourTax Changes for 2004. Once again there are many tax changes, which could significantly affect your investment planning decisions before year end. For example, did you know the defini- tion of "spouse" has changed once again? Also, Canadian forces personnel and police deployed in high risk opera- tions outside of Canada can take advantages of a lucra- tive new tax reduction, while business loss carry forward rules have been changed. Likely most significant to the majority of Canadians is the enhanced medical expense credit which will allow supporting individuals to make claims for other dependent adults. 2.Adjust for Errors or Omissions before December 31. Under the Fairness Provisions, it was possible to adjust for missed tax provisions all the way back to 1985. This generous provision will be curtailed in 2005—adjust- ments will only be allowed for the preceding 10 year period, so if you think you missed claiming capital losses, disability credits, medical expenses, safety deposit boxes or any other eligible provisions that may give you a tax benefit, check with me about making an adjustment request. 3.Tax Loss/Tax Gain Selling May Make Sense. Consider disposing of losers in your non -registered accounts to offset capital gains in the current year; or if you have no gains, carry back losses to prior years' capi- tal gains to recover taxes previously paid. 4. Contribute to your RRSP. Count yourself out of this statistic: 90% of Canadians fail to top up their RRSP contribution room with actual contributions. Instead, get in line for double digit returns resulting from the tax savings offered by an RRSP contri- bution. Remember, the RRSP contribution is also instru- mental in increasing refundable tax credits like the lucra- tive Child Tax Benefit, which is based on family net income. So this Christmas, don't blow your budget... always make sure you can invest in an RRSP for every family member. 5. Contribute to your Child's RRSP. Make your child's first RRSP contribution. This requires the creation of RRSP contribution room, which comes from filing a tax return for each year your child had employment or self employment earnings. This is the gift that keeps on growing! Remember, you don't have to take the RRSP deduction now... it can be saved for a future year when tax savings are present. 6. Buy New Income-ProducingAssets. In the market for a new car, computer or office furni- ture? Buy now to maximize your capital cost allowance write-offs for 2004. 7. Fill up the Car. Small business owners with December 31 year ends should make sure they spend on recurring operational items on or before December 31. .111 up the car, buy the paper supplies for the office, including thank -you notes and toner for the computer, reward special clients with gifts or pay year-end bonuses to staff. 8. MakeYour Dentist Appointment. Paying for medical or dental services—even eyeglasses or batteries for your hearing aids—before year end can help reduce taxes. 9. Be Charitable. Donations made before year end can be claimed on the 2004 tax return. Make charitable gifts now and claim your tax benefits sooner than if you wait until January 2005. 10. Gather Receipts Now for allYour Deductions. Taxpayers chronically under -report eligible deductions, including moving expenses, child care expenses, employ- ment deductions, and carrying charges. This can help minimize exposure to clawbacks, refundable and non- refundable tax credits too. So, at year end, take some time to harvest all the documents needed for real tax savings results in filing your 2004 return! Municipality of Bluewater STRATEGIC PLAN CALL FOR COMMUNITY BRIEFS The Municipality of Bluewater is launching a strategic planning initiative to assist Council in identifying key strategic priorities and initiatives over the next three to five years. This is an important planning process to assist your municipality in charting the future. One of the consultation processes for the project is the opportunity for community organi- zations and individual residents to provide input through e-mails or in writing to our Consultant who is facilitating the strategic planning process. Everyone is encouraged to provide input and to assist us in this regard. Three questions are being put forward for your consid- eration: What are the key strengths and assets that Bluewater has to build on for the future? What are the key concerns, challenges and issues that the community will need to address in the next three to five years? What do you believe are the community's strategic priorities over the next three to five years? Please send your briefs by Friday, January 28, 2005 to Fred Galloway of F. J. Galloway Associates Inc. at 203-350 Oxford Street West, 1 London, ON N6H 1T3 or via e-mail: galloway@ccl-london.com If you have any questions in regards to this ini- tiative, please contact Janisse Zimmerman, Clerk -Administrator at 236-4351 extension 231. Ask TheEx ert Learn more from those who have the answers! REACH THOUSANDS OF POTENTIAL CUSTOMERS WITH YOUR MESSAGE CALL 235-1331 Ask TheExert Learn more from those who have the answers! INSOLVENCY ■ ■■■■■ ■ ■■■■ ■ ■■■ • • • IIS • II • PAUL J. 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