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income tax pitfalls

IF YOU expect to retire soon, you should be aware of some
serious pitfalls to watch for if you want to avoid sending
thousands of dollars to Ottawa in the form of unnecessary

income tax.

Our tax system is graduated.
This means we pay no tax below a
certain level of income. On the
other hand, the more taxable in-
come we have, the higher the rate
of tax until, at the highest level, we
pay over 55 cents on the dollar.

retirement
planning

by Bert Wickham

Unfortunately, most people are

in their highest tax bracket in the .

year they retire. This is their final
year of full employment income
and also the year in which they
may start to receive a company
pension or superannuation, Old
Age Pension, Canada Pension,
Holiday Pay, Accumulated Sick
Pay, a retiring or termination
allowance and maybe even
Unemployment Insurance. The
resulting taxes can be disastrous if
they are not very careful.

What can be done? First of all,
remember that mos: of the items
mentioned can be ‘‘tax-sheltered”’
or deferred by taking advantage of
the various concessions in the Tax

Act designed to relieve the tax-
payer of this onerous situation.

Unfortunately, the taxman is not
going to do it for you. The tax
department puts out tax guides
and information booklets but, if
you don’t take the necessary steps
yourself, ahead of time, you will
find that thousands of your
tetirement dollars will be sent to
Ottawa when you make your tax
return.

So, the most obvious step is to
roll over any retirement allowance
or termination payment into a
Registered Retirement Savings
Plan (RRSP).

This need only be until after the
end of the calendar year.
Remember, you’ll probably be in a
much lower tax bracket by then.
Your pension income, including
Old Age Pension and Canada Pen-
sion can also be contributed to an
RRSP, so there is no need to pay
tax at inflated rates on these items
in the year you retire.

So, what are you going to live
on if you put all these items into
your RRSP? Remember that this
money will be waiting for you next
year when your tax bracket will be
lower. It can then be used to sup-
plement your retirement income by
cash withdrawal, transfer to a Reg-
istered Retirement Fund (RRIF),
annuity purchase of a combination
of all three..In the meantime, cash

in some Canada Savings Bonds or -

other investments or even take a
loan from the bank.

Using some capital or borrowed
money to get you through to the
end of the year or to take a holiday
is much better than using 50 cent
dollars after taxes.

Two points to note:

*Remember not to rollover all
your pension income. Keep back
$1,000 to retain the qualified pen-
sion income deduction.

Are you paying too much tax?

Last chance for 1986 Tax Shelters

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“if your income in the year of
retirement is substantial, you may
be hit by the recently introduced
Alternative Minimum Tax (AMT).
However, most of the excess tax
could be recovered in future years
by means of the carry-forward
provision. Professional help would
be needed.

If you are pianning to retire
soon, do some careful planning. It
could save you a lot of money.

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27 - Sunday, December 14, 1986 - North Shore News

THE CORPORATION OF THE CITY
OF NORTH VANCOUVER

DEPARTMENT OF ENGINEERING
& OPERATIONS

NOTICE
SEWER SMOKE TESTING

Please be advised the City of North Vancouver will be testing
sanitary sewer tines by the use of smoke during the week of
December 15th to 19th. The test area will be bounded by the
West Grand Boulevard and St. Andrews between 13th Street
and 8th Street.

THE SMOKE SHOULD NOT ENTER PREMISES UNLESS A
LEAK IS PRESENT DUE TO IMPROPER OR DAMAGED
PLUMBING.

The smoke used is non-toxic and will leave no residue -to
damage the interior of buildings. it is irritating to breathe, but
any irritation quickly disappears once exposure has ceased.

The presence of invalids or persons with respiratory problems
should be reported prior to the tests by phoning 987-7155.

The presence of smoke in the premises should be reported to
the men conducting the tests or by phoning 987-7155.

Please realize that smoke entering any premises can warn the
owners that a problem exists that may be dangerous to the
occupants and should be remedied.

More detailed information will be delivered to each house
connected to the sanitary lines being tested.

A. Phillips
City Engineer

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