Business

Answers to tough tour questions

Every time I finish a speaking
tour, somebody wants to know,
“What kinds of financial ques-
tions are people asking these
days?”’

Over the past three weeks I have
spoken to some 6,000 people at 15
money seminars. Their questions
covered a wide variety of topics.

— ‘Should we contribute to
RRSPs or pay off the mort-
gage?”

If your taxable income is more
than $29,000 and the money will
eam a good rate of return in the
RRSP over a long term, go for the
RRSP — and apply the tax. savings
to reduce your mortgage.

— ‘‘What’s the best way for
my father to liquidate his $1.2
million business, then put the
funds into my hands?”

He should try to sell the shares
rather than the assets to benefit
from the $500,000 capital gains
exemption, but consider both
cumulative net investment loss
and alternative minimum tax
implications; there are no gift
taxes when he gives you the
money.

— ‘I’m a single woman with
not enough pension and invest-
ment income to live on when I
retire, though I do own my
home. Any suggestions?”

Could you rent out part of your
home? Move to a less expensive
area — and again, have tenants?
How about a self-employed side-
line now and/or after you retire?
Would you consider a home equity
plan so you can draw an income,
probably tax-free, based on the
value of your home?

— ‘*How should we invest
$25,000/$100,000/$500,0002”

You have four main choices:
guaranteed instruments, the stock
market, revenue property and your
own business. Choose what suits
you, then come back for advice on
the most effective ways to proceed.

Questions from readers also
cover various subjects:

“The capital gains exemption
survived this latest budget. Do
you think it’s now safe??? —
B.M.

No tax break ever leads a
charmed life. If selling or gifting
stocks, property or other invest-
ments makes sense, it’s still a good
idea to take advantage of the
capital gains exemption while it’s
around. And if you have a busi-
ness:

“A taxpayer with accrued gains
on shares of the company can
apply several techniques to use the
capital gains exemption without
selling the shares or losing control
of the company,” says Michael
Byrne, of Walsh King, chartered
accountants, adding this would
also reduce the gain on any future
sale.

“I’m 68, my wife 65. I have
split my CPP with her and she
also has OAS and investment
income. I have always claimed
her on my tax return; does she
now have to file her own??? —
S.M.

She needs to file a return only if

she owes tax or is claiming a tax
refund (whether from tax withheld
at source or through one of the
refundable tax credits).

Make sure she creates enough
private pension income to entitle
her to the $1,000 pension income
amount. Even if she pays no tax,
this and the other transferable
amounts (age, tuition, education
and disability) may be transferred
to you. You might also be able to
save tax by declaring her dividend
income.

““We live on 2.5 acres which
could be developed for town-
houses. Should we put our place
in joint names with our three
adult children to minimize taxes
when we sell?” — A.C.

If you can show your principal
residence included use of all the
property (as opposed to use of
only a small part), you should have
a case for claiming all your profit
as a tax-free capital gain when you
sell.

Changing legal ownership has
no bearing on the tax conse-
quences. Revenue Canada simply
asks whose money was used to
buy the place. Also see the follow-
ing.

“T have not worked outside
the home since our two children
were born. I have continued to
declare the investment income

from our joint savings, because I
pay less tax than my husband
would. Is that legal?” S.L.

Your case illustrates why the
spouse in the lower tax bracket
should always do the saving and
investing. And as long as you can
trace back the source of the capital
to money you earned, inherited or
won, you can declare the invest-
ment income.

“T can buy back some pension
for a period when I worked in
France, before coming to Can-
ada. Can I transfer funds from
my RRSP to make the buyback
in before-tax dollars? And when
I get the French pension, can I
use this money for the $6,000
spousal RRSP contribution??? —

CE.

No, you may transfer RRSP
money only to a pension plan
registered in Canada. And you
may not use your French pension
income for the spousal rollover.

Mike Grenby is a Vancouver-
based columnist and independent
personal financial adviser; he
will answer your questions as
space allows in his column —
write to him clo The Review, P.O.
Box 2070, Sidney, B.C. V8L 385.

Bi Dior

Are you
managing your
money or

just managing
to get by?

Call me today to find out
how Investors can help
you start building your
financial future

DIANE DOBBIN, B. E
656-1004
Investors {

Group

Building futures since 1940. ¢
734 Broughton St.

TheReview

Wednesday, March 20, 1991 qos A16

MOORE ROBERTS & CO.

Chartered Accountants

Accounting and Auditing Services
Income Tax Preparation and Planning
Business and Computer Consulting

FAX LINE 656-2382
200 - 2377 Bevan Ave., Sidney
Postal Code V8L 4M9

656-5547

STRAIGHT TALK | :
ABOUT
YOUR MONEY.

fetal

ja

HiT

Het

CER GRIET RIE
y ug [Seo

ay, pty.

D0
GURNEY SMITH & ASSOCIATES LTD.

FINANCIAL CONSULTANTS e LIFE UNDERWRITERS

SUITE 6 - 9843 2nd St. SIDNEY (In Marina Court) 656-2411
1205 € Verdier Ave, (Brentwood Bay Shopping Centre) 652-1482

Ss

BANK OF MONTREAL
COMMERCIAL SERVICES

Will be relocating to
SIDNEY BRANCH
2461 BEACON AVE.
SIDNEY B.C. V8L 1X5

FOR MORE INFORMATION CONTACT
_ JANE GREEN |
Account Manager 656-9589
or MIKE JOHNSON
Account Manager 389-2322

CAPITAL CONSULTANTS LTD.

Personal - Corporate
INVESTMENT ADVISORS

FINANCIAL PLANNING
LS pays
Complete |
Investors Service
Lee Ann Weigold

Financial Planning

384-8844

or 655-4105 Res.

YOU'VE ALWAYS WANTED
TO TRY SCUBA? @:

 Nowis
- Your Chance

- Our Next Beginner’s

Water Course
Starts

APRIL 3rd

| Open

YOURE INVITED TOA
PUBLIC INFORMATION
DROP-IN CONCERNING
HIGHWAY 1 BETWEEN

TILLICUM ROAD AND

MILLSTREAM ROAD.

WESTBROOK CENTRE

2ND FLOOR, WEST MEZZANINE
7.74 GOLDSTREAM AVE., LANGFORD

(BETWEEN WESTERN FOOD & WALKERS SHOES)

Tues., March 26 & Wed., March 27
3:00 p.m. - 9:00 p.m.

The Ministry of Transportation & Highways is upgrading
Highway 1 to freeway standard between Tillicum Road and
Millstream Road to improve road safety and traffic flow.

Preliminary design is complete and you're invited to view
the plans, which include lane and interchange layouts for
this section of the Island Highway. Members of the Ministry's
Project Team will be on hand to answer any questions.

The Vancouver Island Highway is the largest highway
project in the Province. We appreciate your interest and
participation and look forward to seeing you.

Province of
British Columbia
Ministry of Transportation
and Highways
Hon: Rita M. Johnston, Minister