36 - Wednesday, February 15, 1989 AVOIDANCE AND EVASION Ways of paying less tax to change with reform ONCE AGAIN, we return to tax time. Ottawa has reformed many of the ways we pay taxes. So now we must reform many of the ways we use to pay only as little tax as legally possible — despite that new eral anti-avoidance rule). “Tax evasion is the most serious offence contained in the Income Tax Act,’’ said Toronto lawyer Edward Greenspan at a conference on Income Tax Enforcement, Compliance and Adininistration, sponsored by the Canadian Tax Foundation. “Tax avoidance is the successful result of a well-planned tax strate- gy and the goal for which we all Strive each time we file a tax return. “Between these two extremes lies no-man’s land: reassessment by the tax department resulting in higher taxes.”’ This week, let’s review some of the changes tax reform has wrought on your tax return. Next week, we'll continue along the narrow track of tax avoidance, as defined by Greenspan, while also trying to avoid an attack by GAAR. John Gunnell, tax partner of Touche Ross & Co., chartered ac- countants, previewed tax reform for this column’s readers last fall. Now he takes a look at some highlights of dealing with these changes as you file your return. e By law, you must put your social insurance number on your tax return. If you don’t have 2 ~ North Shore News BUSINESS 1 YR. GUARANTEED RRSP Interest compounded annually. Rate subject to change without notice. Counsel Trust Memper Canada Secs tesuran e Coperabon 534 Burrard St., Vancouver 688-7878 Or Call toll Free 1-890-663-0279 people,"’ said Gunnell. A refundable credit (like the feceral sales and child tax credits) can produce a tax refund if you have little or no income. four-letter word GAAR (gen- SIN, apply now to Employment and Immigration Canada to get your number well before the tax filing deadline (May 1 this year because April 30 is a Sunday). *No employment expense deduction means a higher net in- come. So your claim for a depen- dant could be lowered or lost because the dependant’s net in- dollars and sense Mike Grenby come is higher. (Consider an RRSP contribution for the depen- dant to reduce the net income.) eMany people will find themselves in the top two tax brackets because so many of the deductions have been replaced by credits. Whether they pay more or less tax than last year will depend on the credits they can claim. © Seniors who have only modest investment and pension income could end up paying more tax because the $1,000 investment in- come deduction is gone. eThe $1,000 pension income “amount”? still exists. But because it is a credit, only those in the lowest tax bracket stand ‘to receive the first $1,000 of private pension income tax-free. Those in higher brackets will save some but not all of the tax. e“The term ‘non-refundable tax credits’ could really confuse “RRSP results that speak forth iedustrial Dividend Fund industrial Growth Fuad HOTLINE - Looking both wars. To manage © your RESP For growth @ and income. Lf C.M. OLIVER & COMPANY LIMITED OPEN LATE, AND SATURDAY hemselves. 668-6803 UNTIL 8:00 All figures to December 1, 1988 are average annual compound returns Aased on the net income invested and ricluding reinvestment of dividends. Past performance ts not necessarily indicative uf future results, Any offers made only by prospectus which contains complete details ofall charges. Please read tt before making a purchase and retain ut for future reference. All the other tax credits (which have replaced many of the deduc- tions: personal, age, married, child and other dependants, pension, disability, tuition, education, med- ical expenses, charitable donations) can only lower your tax to zero. They cannot produce a refund, which is why they are called **non-refundable.”’ © Once your medical expenses exceed $1,500, you will be able to claim the excess amount, no matter how high your income. Below $1,500, your claim is the amount above three per cent of your net income. © Tuition fees have joined the “transferable amounts.” So if the student doesn’t need the claim to reduce his or her tax to zero, a supporting parent/grandparent or spouse may make the claim. 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