nclude your

to reduce taxes

DEATH AND taxes might be in-
evitable, but you can often reduce
the taxes at death if you designate
who should inherit your registered
retirement savings plan.

A survey of Certified General
Accountants on the North Shore
drew the comment that people with
RRSPs often fail to designate a
beneficiary.

“If a husband leaves his RRSP
to his wife, then she may rol! over
his RRSP when he dics into her
RRSP," said one CGA.

“Otherwise, if there is no desig-
nation, his RRSP would be paid to
his estate. That means the full
value of his RRSP would be added
to his income in the year of his
death ~— and would be fully tax-
ed.”

This CGA explained that leaving
an RRSP to a spouse avoids this
taxation.

“If it’s a small RRSP and the
wife has little or no income, she
could take the money as cash, and
probably pay little or no tax," the
CGA said,

rs
can pay
less tax

From pago 40

He warned, however, if large
amounts are rolled over, the person
could be subject to the alternative
minimum tax. ‘‘So get expert ad-
vice in this area,’* he added.

It could make sense to roll over
pension income into an. RRSP if
you do not need the income. ..

If you were to invest this money
outside the RRSP, you might have
to pay. tax. on. the investment
return. But if you invest inside the
RRSP, the return is tax-sheltered,
so your money grows more quick-
ly.

This rollover provision, which
the government has announced will

end around 1990, also allows you
to create your own private pension
income if you don’t already have
such a pension, and so claim the
pension income deduction, which

- turns into a tax credit starting with
the 1988 tax year.

“Let's say your only income is
Old Age Security and Canada
Pension Plan. That means you could
not claim the pension income
deduction. .

**You could roll over your CPP
and OAS pensions into an RRSP.
Then use the RRSP to buy an an-

. huity or registered retirement in-
come fund (RRIF). The annuity or!
RRIF. income does qualify for the:
pension income deduction.”’

The CGA noted that certain age
and other restrictions apply and
that it may be wise to seek profes-
sional advice prior to embarking
on such strategies.

Also, the CGA added, consider
kecping $1,000 of your pension in-
come as income and not rolling it
over, so you can claim the $1,000
pension income, again a tax credit
starting with the 1988 tax year.

This article was prepared by the
Certified. General Accountants
Association of British Columbia,
the province’s largest professional
accounting body. For further in-
formation the association can be
reached at 1555 West 8th Avenue,
Vancouver, B.C. V6J 1T5, or by
telephone at 732-1211.

“OF course, tax would sll be
withheld at source, so she wouldn't
get the full amount of the RRSP.
She would then have to file a tax
return and possibly get a refund of
the withheld tax the following spr-
ing or summer.

“It's usually a better idca, how-
ever, to transfer the husband's
RRSP on his death directly into
the wife’s plan.

“That way, no tax is withheld
and the moncy can continue to
grow tax-free. The wife can then
withdraw the funds as needed.**

You can usually designate a
beneficiary on the RRSP contract
itself. But the CGAs recommend
you leave the RRSP to your spouse
through your will as well.

Under certain circumstances,

Cc

you may also leave your RRSP to
dependent children or grandchil-
dren. The amount depends on the
children's age.

This money would then be taxed
in the children’s hands — possibly
at a lower rate than in a spouse's
hands.

Also, if a dependent child or
grandchild is mentally or physi-
cally handicapped, the entire
RRSP could be rolled over into an
RRSP for the child/grandchild.

So cheek both your RRSP and
your will. You might seek profes-
sional help to make sure you are
leaving as much moncy as possible
to your heirs — and as little as
possible to the tax man.

This article was prepared by the

Ne all accountants are the same.
For more than 70 years the CGA designation
has stood asa hallmark of accounting excellence.
Indeed, in the field of public practice in British
Columbia, CGAs have established for themselves a
leadership role as expert counsellors.

CGA firms offer their small business clients a full
range of professional services, including accounting,

43 - Wedsesday, January 13, 1988 - North Shore News

m your

1n you

Certified General Accountants
Association of British Columbia,
the province's largest professional
accounting body, For further in-

| CAN HELP

tam an Investors professional financial
§ planner it’s my job to halo you create and
follow a personal tmancial ptan
{ can help with
¢ Investment Funds
© Guaranteed Investment Certificates
© Regtstered Retirement Savings Plans
© Registered Home Ownership Savings
4 Plans
fF ° Estate Planning
B © Lite and Drsatilty Insurance
© Annuities

formation the association can be
teached at 1555 West 8th Avenue,

Vancouver, B.C., V6J 1T5, or by
telephone at 732-1211.

" Bill Thompson
736-4324 or 737-2124

auditing, tax advice, management consulting, estate
and personal financial planning.
So when youare looking for an experienced

financial advisor, choose
someone with the three
best letters of
recommendation:

CGA.

Professional accountants, shaping tomorrow,

CGA

Certihed General Accountanis
Association of Brush Columbia
1555 West ath Avenue
Vancouver. BC VoplT4

APH) F322