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The Citizen, 1998-02-11, Page 9INCOME $ TAX SERVICE • farm, business, or personal • complete year-round service including tax audit representation • E-File available Over 16 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 There are no limits on the number of RRSPs you can have; the limits are on the total amount you can deduct. According to John Wonfor, CA, national tax director of BDO Dunwoody, most people find it simpler to have only one or two plans, making it easier to keep track of their RRSP investments. If you are investing in assets which are insured by the Canada Deposit Insurance Corporation (CDIC), though, he advises that it may make sense to have more than one RRSP with different RRSP issuers. "The CDIC only insures up to a specified limit of assets with each member financial institution. Therefore, by having RRSPs with more than one institution, you can increase the amount of your investments that are covered by the CDIC." Ask your chartered accountant what makes sense in your circumstances. — The Institute of Chartered Accountants of Ontario. JACQUIE GOWING ACCOUNTING SERVICE Computerized Accounting & Income Tax Preparation Monthly Bookkeeping Tailored To "YOUR" Needs • Reconciliations • Government Remittances • Payroll • Personal, Farm Business & Corporate • Electronic Tax Filing All services available on site or at our office RR 2 Bluevale (519) 887-9248 Did you know! What is Investing? Investing Is putting your money instead of your muscle to work. REGAL 406 Wallace Ave. N. CAPITAL PLANNERS Usk", Ont N4W 1L3 LTD. Bus. 1-800-291-1353 Res. (519) 347-2569 Independence & Trust Susan Carter 'Serving Canadians Since 1968" Financial Consultant Some of our products and services. Retirement & tax planning, mutual funds, GIC's, RRSP's CHECK OUT THIS RATE o Ili) FOR 15 MONTHS Annual Interest Paid at Maturity 48 Ontario Street CLINTON 482-3466 at, SERVING THE COMMUNITY SINCE 1952 118 Main Street North EXETER 235-0640 THE CITIZEN, WEDNESDAY, FEBRUARY 11, 1998. PAGE 9. /71 a ri Ce Tips to help you plan RRSP contributions Self-Directed RRSPs Are you short on cash but still want to make your annual contribution to your registered retirement savings plan (RRSP)? If you have a self-directed RRSP, you might consider transferring some of your investments to it. This will allow you to make your annual contribution without actually laying out any money. There can, however, be some drawbacks to doing this. Ask a chartered accountant for details. When to take RRSP deductions To be deductible for a particular taxation year, an RRSP contri- bution must be made on or before the 60th day of the following year. Therefore, the last day an RRSP contribution can be made to be deductible for 1997 is March 1, has to be made to your own RRSP, not a spousal plan, and is in addition to your regular contribution limit. Ask a chartered accountant for details. Using your RRSP to buy a home First-time home buyers can take advantage of the newly revamped RRSP Home Buyer's plan, which allows you to withdraw up to $20,000 toward the purchase of a house from your RRSP without paying tax. You can do this as long as neither you nor your spouse have .owned a house and lived in it for the five years preceding the withdrawal. The money you take out is considered a loan, which must be repaid over a period of 15 years or less. If the required repayment is not made in the timeecified the sP , 1998.a mount outstanding will be RRSP contributions do not have included in income. Ask a to be deducted in the year in which chartered accountant for details. they are made, however. They can Using unused also be deducted in any future year. RRSP contribution room You might consider deferring the If you don't make an RRSP deduction of your contribution if contribution this year or you you don't have much taxable contribute less than your maximum income in the current year and limit, the unused amount is carried using it in a year when your forward and can be used in any marginal tax rate is higher. You future year. Under previous rules, will then save more in taxes. But you could carry forward your there are other factors to consider unused contribution room for only before doing this. Ask a chartered seven years. The 1996 Federal accountant for details. budget eliminated this restriction. Extra RRSP contributions The RRSP contribution room that If you will receive or have Revenue Canada shows on your received an amount from a former Notice of Assessment includes all employer on your dismissal or your unused room from prior years. retirement in 1997, you may be Ask a chartered accountant how to eligible to contribute extra money use your unused contribution room to your RRSP or registered pension to save the most taxes. plan (RPP). This extra contribution How many RRSPs? Are you investing enough? Over half of Canadians (5/9 per their RRSP little 1.4 little every cent) are unaware of their RRSP year. contribution limit for this year, and "Those who contribute sooner fewer than four in 10 plan to rather than later — even if they have maximize their RRSP contributions to take out a loan — typically this year, according to this year's benefit more from the power of tax- Scotiabank Investment Poll, free compounding of interest. And conducted by Goldfarb Consultants this should be reflected in the and released in December, 1997. ultimate size of their RRSP Still, more than eight in 10 (85.6 portfolio," said Armstrong. per cent) of Canadians who are not- The Scotiabank survey found that yet-retired expect to live better or most people expect to earn at least the same in retirement. nine per cent on their investments. "Clearly, there's a disconnect "Therefore, if they can earn more here," says Bruce Armstrong, than six per cent on their Scotiabank's director of retirement investment, they'll come out even services. "The majority of further ahead by borrowing," said Canadians expect to maintain or Armstrong. improve their standard of living in retirement, yet they do not appear to be using all the tools available to them to maximize their unused RRSP contribution room, and the amount continues to grow. Armstrong is particularly concerned about Canadians' lack of propensity to borrow. Of those who have never borrowed to make an RRSP contribution, more than eight in 10 *(82.6 per cent) said they are not likely to take out a loan to make an RRSP contribution. Armstrong otters two good tips when borrowing to invest in an RRSP - using the tax refund to pay down the loan and keeping the loan's repayment period to a minimum. That way, a person's investment immediately starts generating returns, which accrue tax-free until retirement, and the loan is repaid as soon as possible. Even factoring in RRSP loan interest costs, Armstrong says a person could expect to earn greater RRSP returns by catching up on their unused RRSP contributions — rather than trying to catch-up on RRSP's 1 1 I I 1 *It Ot Karen Kleist Pauline Atton 357-4378 335-3979 224 Josephine St. WINGHAM • 357-2669 CLINTON COMMUNITY CREDIT UNION asks WHERE YOU BANK, do they allow you to share in the profits they make? Or do they keep it for themselves? WHERE YOU BANK, do they reinvest your deposits in the Community? Or do they send it to a Head Office or to a foreign country? WHERE YOU BANK, do they insure each and every individual RRSP's or RRIF you have to $60,000.00? Or do they only insure the total of all RRSP's or RRIF's to $60,000.00? AT YOUR CREDIT UNION, YOU share in the profits, YOUR deposits are put back in to the community to our borrowing members, and YES each and every one of your individual RRSP's and RRIF's are insured to $60,000.00. Call Us For Details We will keep your investment in the community.