ae SMG 27 - Wednesday, August 2, 1989 - North Shore News BusINES Save tax and SUMMERTIME — and the living will certainly be easy if you spot even one way to save income tax on our list of tips. And as Elio Luongo has been showing us, those savings can easily total sev- era) thousand dollars So let’s continue ou: .ax tips series, provided exclusively to this column’s readers by Luongo, a senior tax manager with Thorne Emst & Whinney, chartered ac- countants. To give you as many chances as Possible to save, I'll list here only a summary of each tip. Mark those that could apply tc you. Then con- tect Revenue Canada or a tax ad- viser For more details, to help you decide how the tip relates to your situation. * Do you send a child to camp, or pay for babysitting or lodging at a boarding school? You might be able to deduct some or all of the bill as child-care expenses. ® When you move more than 40 km closer to a new job, check if you can claim money spent on real estate and legal fees, transporta- tion, accommodation and meals. Students can also sometimes claim such expenses. Any reiin- bursement of expenses reduces a claim. © If you have an office in your home, you might be able to deduct part of your rent or mortgage in- terest, property taxes, utility bills, maintenance costs and so on. (The law has been interpreted various ways here; get good advice.) If you are self-employed, the of- fice must be your main place of business or be used regularly for client meetings. If you are an employee, your employment contract must require the home office, there is no other office convenient to home and the office is solely for business. * Invest in your principal resi- dence. Both the personal pleasure and. any financial profit are tax- free — without limit. So, for example, if you work 100 howrs to improve the place and increase its sale value by $7,000, you have been earning $70 an hour tax-free — the same as earning $95-$130 an hour before tax. ® When a marriage breaks up, structure both lump sum settle- ments and alimony/maintenance to the best tax advantage. © If you are single, do you support a dependent in your own home? Claim the equivalent-to-married amount/credit. A single parent should claim about $1,325 for a qualifying child as a ‘‘spouse”’ in- stead of only $100 as a child. ® Defer tax by investing in a term deposit or GIC that matures the fellowing year. ® Consider buying a compcund GIC, Canada Savings Bonds or He EPER CARLOAD Fillup at Shell and receive quick summer livin’ will be easy doliars and sense Michael Grenby other instrument by the end of this year, You may then choose to wait three years to declare the interest — a good idea if you'll be in a lower (or even the same) tax bracket then. With any compounding instru- ments you buy after this year you will have to declare the interest annually. © Contribute to an RRSP as early as possible each year (for that year) so all the income wil! be sheltered from tax. © Invest for capital gains, especial- ly if you can then claim the capital gains exemption and so pay no tax. Note that any cumulative net in- vestment loss (CNIL) could reduce this claim. Re SERVICE Fram meg «Oil Filters Save up to 25%! Depend- able quality filters for most domestic and imported cars. Limit 4 per customer. Sorrey no rain checks. Sampie Savings: PH8 Our reg. price 3.96 96 wwe. orm Ow om eAm | FRONT DISK BRAKE Metallic Pads Extra Price is just the beginning. © Invest for dividends, which are taxed more favorably than interest -- and which can help offset the CNIL. ® Realize that while a tax shelter might produce losses and so reduce tax, those losses could also (as a CNIL) reduce or wipe out the availability of the capital gains deduction. © A tax sheiter might reduce your regular tax bill, but it could also result in an AMT (alternative min- imum. tax) bill. Make the calcula- tions before you invest. © If you retire (even from your own company) or are laid off, try to have any final payment struc- tured as a retiring allowance so it may be rolled over (within limits) to your RRSP. ¢ When both spouses have reached 60, they may split their CPP benefits with each other. This saves tax if one spouse receives more CFP and is in a higher tax bracket than the other. 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