| «|. Business TheReview Wednesday, October 23,1991 — Al17_ Much going on in Revenue Canada’s corner office Why does income tax have to be so taxing — in both senses of the word? I don’t expect an answer, but the question is simply to encourage you to keep alert, to watch for developments that could _ affect you. Most people consider their income tax situation for a few hours each March or April, when they deal with their tax returns. But Revenue Canada, Taxation, works year round, and what occurs at the desk of a tax administrator in a comer office of some ordinary looking building could affect how much tax you pay — or save. There is so much going on in the income tax world that CCH Cana- dian Limited, a major publisher of tax and legal information, now produces The Tax Window, a monthly newsletter service “pro- viding expert commentary on Rev- enue Canada pronouncements that reflect assessing policy.” Newsletter editors Karen Shar- low and Lome Green, of Thor- stemssons, the legal firm which specializes in tax law and related matters, comb cormespondence and even memos and informal opini- ons that emanate from all those comer (and other) offices to find how Revenue Canada is adminis- tering the tax act. ‘Having this “window” on what’s going on is clearly valuable to tax practitioners’ Having this ““window’’ on what’s going on is clearly valuable _ to tax practitioners: they pay $470 for a one-year subscription. (At least CCH has a toll-free number if you want information on the - newsletter: 1-800-263-4983 and ask for the looseleaf sales depart- ment.) Most of the content is quite technical, but occasionally items of interest to ordinary people sur- face. Severance pay is one such exam- ple. When you and your job part company, severance pay (some- times called a retiring allowance) often helps to sweeten the sorrow of parting. However — there’s always a “however” — even this tax-free rollover could end up costing you (QREFORM PARTY... SAANICH & GULF ISLANDS INVITES ITS MEMBERS AND GUEST TO: OFFICIAL OPENING Saanich Constituency Office October 26th, 1991 12:00 pm - 4:00 pm #103-9790 2nd Street Sidney, B.C. V8L 3Y8 A GENERAL MEETING 1:30 pm, Sunday November 24, 1991 Keating Elementary School 6843 Central Saanich Road Saanichton, B.C. ee more information Call: 656-4700 if you become subject to the AMT (altermative minimum tax). One strategy to reduce and even avoid the AMT is to split receipt of your severance pay over two tax years — part now, for example, and part in January, 1992. If you take the cash, you end up paying tax on the amount because it is simply added to your income for the year. But if you transfer the money to your own RRSP (which you may do, within limits), you may claim an offsetting deduction. Or to defer and possibly save tax, you might take only the amount you may roll tax-free to your RRSP now, and the balance, which will be fully taxable income, in January, 1992. Check with your financial adviser to see if these approaches could make sense for you. And tell him or her that Revenue Canada has given its blessing to dividing the money this way. “Once an amount has been established as a retiring allowance, Revenue Canada considers that it may be paid in one or more installments over any period of time and that it will not be included in the employee’s income until received,” reports The Tax Window. In the past, there was some question about how Revenue Can- ada would view breaking up the retiring allowance payments. So this reassurance is welcome. Note that if you have a choice between taking, for example, $25,000 severance pay or staying on the payroll for 25 weeks with- out having to come into the office, the 25 weeks’ pay would not qualify for the tax-free RRSP rol- lover. The Tax Window also touches on payments to employees to offset the cost of tools. must be pre-paid. “Tn Revenue Canada’s opinion, when an employer makes pay- ments to employees to help offset the cost of tools which the employees are required to have, those payments must be included in the employees’ income.” Also, added the newsletter, employees cannot deduct either the cost of the tools or the costs of repairing them. A phantom stock plan is a benefit for employees: the employ- ers pays them an amount equal to the increase in the fair market value of a specified number of shares, as well as the value of dividends paid on those shares during a specified period. Normally, the employees pay tax only when they receive this money. But if the plan is designed to defer salary (typically to a lower-income year, possibly after retirement), then the employees could be taxed on the amounts eamed each year — even if no money was paid out to them. CENTURY 21 “GREAT PUMPKIN” CARVING CONTEST Don’t forget to pick up your pumpkins at Century 21 Saanich Peninsula Realty Ltd. ‘2395 Beacon Avenue and return them by 5 p.m. Friday, October 25 _ Categories: Up to 5 years old; 6 - 8 years old; 9 and up; Seniors, 60 and up. The Review GREAT INVESTMENT 1 Year Cashable Guaranteed Investment Certificate 8.00% *Cashable after 90 days for full value *Great Alternative to Canada Savings Bonds SUITE 6 - 9843 2nd St., SIDNEY (In Marina Court) 1205 ( Verdier Ave, (Brentwood Bay Shopping Centre) 652-1482 (Rate Subject to Change Without Notice) GURNEY SMITH & ASSOCIATES LTD. FINANCIAL CONSULTANTS © LIFE UNDERWRITERS 656-2411 |FATHOM’S LOUNGE is pleased to announce This week’s winner in our weekly BUSINESS CARD DRAW! BC the waterfront “Enter to win LUNCH j for TWO! e i 2537 Beacon Avenue a Sidney, B.C. = 2) bad 656-1131 Sidney. WHARF DINING ROOM Catch You in the act? ...1f sO, we can custom print your own copies of any photo taken by The Review staff. Photo Reprints 5x All photos taken by Review staff can be ordered through the Review office. Orders 9x10” $ Q95 $ 10” Additional prints at the same time from the same negative are $5.95 each. (tax included). 9726 First Street 656-1151 _ WINNERS TO DATE Date Amount Name June 05 $20 C Clutesi June 06 $20 B. McToldrick June 07 $50 R. Sharpe June 08 $20 J Stone June 09 $20 S. Birch June 10 $20 P Shaw June 11 $20 R. Sigfuson June 12 $20 M. Wilson June 13 $20 MHunt June 14 $50 T Hubert June 15 $20 B. Burns ‘June 16 $20 BD Dwinnell June 17 $20 J. Strong June 18 $20 S. Bolster June 19 $20 B. Wingfield June 20 $20 S. 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