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The Lucknow Sentinel, 1982-07-14, Page 7news Luclmow Sentinel, Wednesday, July 14, '982—Page 7 Farm 'Business Management Topics The recent Federal budget intro- duced some new, items.. It also involved the tabling of legislationto implement the November 12; 1981 budget and its December 18, 1981 modifications. As CREDIT AND FINANCE 1: Small Business Bonds That were made available to propri- etorships, partnerships, or corpora- tions in orpora.tions.in financial difficulty, which were announced in November continue unchanged until December 31, 1982. 2: The Farm Credit Corporation Had a plan from the last budget to provide 5% interest rebate for up to .2 years. The June budget introduces a similar program, It is available for those in financial difficulty today with. a good "chance of success in : the long run. The rebate for this new effort is "4% for two years, after•which interest rates revert to the normal rate at time of_ borrowing. This program began. immediately. It is, a two year program. with about $100 million available each year. 3: Small Business Financing 'The business that buys new deprec- iable property (not including autos and. property for lease) can receive up to 4% 'from the federal government. The rate of interest cannot . be reduced below '12%. General criteria include:`. —available to partnerships, /propriet- orships and corporations; including farmers, ' —guidelines somewhat similar -to the old Small Business Developmeft Bonds. -to financeexpenditures after June By Ralph Winslade, Area Coordinator and Farm Management Specialist 28, 1982 and before March 31, 1983. —the government will repay the lender up to 4% on an instalment basis. —only the . net interest cost can be used as an expense. —will likely require considerable ne- gotiations before implementation. B: TAXATION l • 1: Personal (a) Indexing of personal exemptions, and tax rates at 6T in 1983 and 5% in 1984 will lead to a net increase in taxes. • (b) (1) Forward averaging annuity contracts and general, averaging re- main unlimited. (11) The new, refundable averaging tax will apply. Some technical changes are being made for special incomes. 2: Corporations " (a) The new 121 corporate distri bution. tax on dividends paid out of small business earnings has Sin delayed one year until 1983. With the provincial budget waiver of provincial corporate taxes in 1982 and 1983,, 1982 looks like a good tax year for the profitable corporation. (b) The November increase in annual earnings to $200,000 and retained earnings to. $1,000,000 for •the low 25% rate of corporate tax remains. 3: Capital Cost Allowance (a) One , half of the normal rate of capital cost allowance in year of 'purchase remains. Exceptions 'include transfers to children or rollovers into partnerships and corporations for • property owned 12 months. 4: Capital Gain Reserves Changed Again (a) Five. Year Reserve The reserve was eliminated in ti f' 11111511Voik ,:.;kkkkintigirl ¢1111111111/t November and reintroduced in. Dec- ember: The . December modification has again been modified. Now the 5 year reserve appears to be . the ' lesser of two figures: (i) 4/5 of capital gain 1 (ii) Proportion of mortgage to selling price x gain. Let's use an example to illustrate -the reserve. . Sale: $150,000 1971 Value: $60,000 Gain: $90,000 , Mortgage Back $100,000 Year .One . . Reserve is lesser of (i) 4/5 of 90,000 = $72,000 or (ii) 100,000 divided by 150,000 times ' 90,000 =. S60,000. Thus, the first reserve is $60,000. Gain in year of sale = 90,000 - 60,000 = 530,000. Taxable gain ='ls' (30,000) $15.,000. ' .Year Two . (Assume S10,000 principal payment reduces mortgage to S90,000) Reserve is lesser of (i) 3/5 of 90,000 = ,S54,000 or (ii) 90,000 divided by 150,000 times 90,000 = $54,000. Thus the second year reserve is $54,000. Capital gains reported in year two = Year one reserve - year two reserve = $60,000 - $54,000 = $14,000, Taxable gain = ' (14,000) = $7,000. Years, Three, Four and Five Taxablegain in each of the next three years is $9,000. The result is that all taxis paid after five years even .though the mortgage runs for 10 years. (b) Ten Year Reserve A similar reserve applies on the transfer of farm pr,operty to a child.. Should the transfer • trigger capital gains, the gains canbe spread over ten ,years., U esPivaIof 1111 imole, thursday july 22 friday july 23 saturday july 24 courthouse park goderich,ont • art gallery painting,drawing,sculpture • crafts displays and demonstrations • old fashioned tea garden • photography gallery • flower show oderich,ontario THE PRETTIEST TIDWN IN CANADA Exhibitors from all over Ontario Display and Demon-. strafe Art, Sculpture, Jewellery, .Stained Glass, Pot. tory, Woodworking and 'Other crafts. items available for sale. Musk and fun on The Square A - Retail Advertismg Strategy For ' Tough Times .. :. WITH DA YE CRAVIT RETAIL SPECIALIST , • Retailers often think that spending more advertis- ing dollars in economically difficult times is the quick cure for "slow business". • . David Cravit, executive vice-president, creative services of Saffer Cravit & Freedman, one of the largest agencies in North America specializing in have're lin maintains that "in hard times retailers • to take a hard look at themselves: "If in the past they had no coherent merchandising -marketing program, throwing more money into advertising Cannot bail them out." ' The key to surviving these difficult times, said Cravit, "is a history of consistent advertising bas- on an aggressive :merchandising and marketing strategy". Such retailers need not alter their overall strategy. But for retailers without an established merchan- dising and advertising program and lit hard by the current recession, Cravit suggested the following. 1. TAKE STOCK. Take a hard look at your entire opera- tion — locations, merchandising, people, resources, competitors and your customers. At the end of stock taking, one of two conclusions will be drawn. Either you have a. business which does not deserve . to survive and which cannot be . made competitive in the short -run; or ydu have pro blemsbut can identify strengths which can be used to move your business into a morecompetitive posi- tion. 2. COMPETITIVE FRAME OF MIND Put yourself into a competitive frame of mind: Pick an enemy. To survive in this economy you have to take away business from someone else. Decide who that someone else is going to be. Identi- fying a competitor forces you to narrow your focus and concentrate on your resources. 3. CATEGORY DOMINANCE ,Look for opportunities for category' dominance: Identification of an enemyy,�forces an assessment of • your merchandising strengths ° and weaknesses: Your competitor will be someone . you can out- merchandise in one or more categories. Make those .categories the focalpoint of your merchandising' . planning and your advertising. 4. MERCHANDISING STRATEGY Let your merchandising strategy lead your adver- tising. • 5. DOMINATE ONE MEDI'1JM Dominate one medium. Don't scatter your dollars. Concentrate your effort. 6. CREATIVE TALENTS. Secure the best possible creative talents you can find. Once you've' identified an enemy who is vulnerable, if you've built a strong category - dominated. merchandising package, you'll have something of substance to say. ' How you say it is important, because if the message doesn't get through, you'll be out of business. , Cravit warned that with all this advice, it's still not going to be smooth sailing. But with aggressive promotion during the recession, you'll stand to benefit even more when the economic tide takes an upswing. c $ $ # / S $ t. ,iiliI -`., _ A/ / f 'fi- `ter ... ' � To all those who worked or donated equipment, helping to make the ,Tractor • Pull a success. - , Lucknow Tractor. Pullers Association , I A - Retail Advertismg Strategy For ' Tough Times .. :. WITH DA YE CRAVIT RETAIL SPECIALIST , • Retailers often think that spending more advertis- ing dollars in economically difficult times is the quick cure for "slow business". • . David Cravit, executive vice-president, creative services of Saffer Cravit & Freedman, one of the largest agencies in North America specializing in have're lin maintains that "in hard times retailers • to take a hard look at themselves: "If in the past they had no coherent merchandising -marketing program, throwing more money into advertising Cannot bail them out." ' The key to surviving these difficult times, said Cravit, "is a history of consistent advertising bas- on an aggressive :merchandising and marketing strategy". Such retailers need not alter their overall strategy. But for retailers without an established merchan- dising and advertising program and lit hard by the current recession, Cravit suggested the following. 1. TAKE STOCK. Take a hard look at your entire opera- tion — locations, merchandising, people, resources, competitors and your customers. At the end of stock taking, one of two conclusions will be drawn. Either you have a. business which does not deserve . to survive and which cannot be . made competitive in the short -run; or ydu have pro blemsbut can identify strengths which can be used to move your business into a morecompetitive posi- tion. 2. COMPETITIVE FRAME OF MIND Put yourself into a competitive frame of mind: Pick an enemy. To survive in this economy you have to take away business from someone else. Decide who that someone else is going to be. Identi- fying a competitor forces you to narrow your focus and concentrate on your resources. 3. CATEGORY DOMINANCE ,Look for opportunities for category' dominance: Identification of an enemyy,�forces an assessment of • your merchandising strengths ° and weaknesses: Your competitor will be someone . you can out- merchandise in one or more categories. Make those .categories the focalpoint of your merchandising' . planning and your advertising. 4. MERCHANDISING STRATEGY Let your merchandising strategy lead your adver- tising. • 5. DOMINATE ONE MEDI'1JM Dominate one medium. Don't scatter your dollars. Concentrate your effort. 6. CREATIVE TALENTS. Secure the best possible creative talents you can find. Once you've' identified an enemy who is vulnerable, if you've built a strong category - dominated. merchandising package, you'll have something of substance to say. ' How you say it is important, because if the message doesn't get through, you'll be out of business. , Cravit warned that with all this advice, it's still not going to be smooth sailing. But with aggressive promotion during the recession, you'll stand to benefit even more when the economic tide takes an upswing.