40 - Wednesday, October 31, 1990 - North Shore News BUSINESS Ottawa may not like husband’s alimony scheme MARRIAGE BREAKDOWNS, tax cred- its for the retired — we have it ail in today’s reader mail. “| am legally separated from my wife who moved away with our sons, age seven and nine. I claim the $600 a month alimony ! pay, but can I also deduct the teavel expenses when I visit? Rather than mail the alimony, I feel more secure delivering it in person exch menth."’ — W.G. No, you may not deduct your travel expenses. However, you mignt change your separation agreement to increase the alimony by the amount of your travel ex- penses. Your wife could then pay for a similar expense like the boys’ visits to you (which now you might be paying). You could then deduct the higher monthly payment; of course, your wife would have to add this increase to her income, so her tax bill would probably rise. Ottawa might consider this ag- gressive tax planning. So get ex- pert advice to make sure Revenue Canada has no grounds for challenging you under GAAR — the general anti-avoidance rule which can void arrangements made only to save tax. “Why does Ottawa give us only 17 per cent of exemptions fike pension income and donations? We used to get 100 per cent.”” — V.P. That 17 per cent figure you see in your tax return is only the fed- eral tax credit. By the time you add the provincial tax credit, you end up with a tax saving of about 27 per cent. That means if you are in the lowest (27-per-cent) tax bracket, you receive the first $1,000 of privaie (not CPP or OAS) pension income tax free. Note that with charitable dona- tions, on every dollar over $250 your federal tax credit jumps to 29 per cent, which translates into a total tax saving of more than 45 per cent. To maximize the amount Why people are showing more interest in a Montreal Trust GIC 11" Minimum deposit $500 Rates subject to change without notice ste MONTREAL TRUST Member of Canada Deposit Insurance Corporation 1524 Lonsdale Ave., Tel: 980-3355 a The Responsibility is Yours. 1-800-663-1441 Michae! Grenby DOLLARS AND SENSE over $250, combine several years’ donations into one claim. “Pm a 67-year-old widow with one-third of my income from pen- sions. Married people can put up to $6,000 a year of private pen- sion into a spousal RRSP but what can widow/widowers do?" —M.L. Not much, I’m afraid. Howev- er, you might get some tax breaks if you have any self-employment activities and so can deduct related expenses. Or you might save some tax by helping adult children with housing finances — if (a) you would feel comfortable with such arrangements, (b) everything is carefully documented and (c) all parties are protected. A prescribed annuity produces higher after-tax income but locks in your money for life and is vul- nerable to inflation. “1 am a 56-year-old woman, divorced without any support. ! own a house without a mortgage and have $45,000 in my RRSP. I need more income. Should 1 sell the house so I can rent a modest apartment and invest the money in GICs? Or should I cash in my RRSPs, pay the tax and invest the balance in GICs?”’ — J.J. and Winter Season is the Fall Inspection. It’s usually better to own your home. Inflation and income tax can do considerable damage over the years if you rent and live off interest investments. Renting makes sense only if you can count On reasonable rent for a long period and can reinvest some of your after-tax interest < a hedge against inflation. Could you rent out part of your home to provide some income? Could you move to a less expen- sive place (again, ideally with rental income possibilities) to free up at least some funds? {f you expect to receive a pen- sion starting between 60 and 65 and that, together with CPP and OAS will provide for your needs, then you might: cash in your RRSP in small chunks ($5,000 or less) each year to keep you going until your pensions start. Are you supporting a handi- capped family member? What will happen when you die? Concerned by the answer to that second question, parents of handicapped children have formed a Planned Lifetime Advocacy Network (PLAN) in B.C. to pro- vide ongoing personal, legal and financial support for their adult disabled children. PLAN held its first annual gen- eral meeting earlier this year. Fall workshops have been held on wills and estate planning; a financial planning seminar will be held Nov. 28. For information contact Al Etmanski, PLAN's executive director, in Burnaby at 439-9566; fax 439-7001. Mike Grenby is a Vancouver- based columnist and independent financial adviser who will answer your questions as space allows in his column. Write to him c/o North Shore News, 1139 Lonsdale Ave., North Vancouver V7M 2H4. 1 YEAR TERM DEPOSIT 983-3773 Lonsdale Quay Next to Seabus North Vancouver E Citizens Trust MEMBLEK CANADA DPLPOSTT INSU KANCE CORPORATION ae ST T THE PRICES? If you're asking how the proposed GST will affect prices, we're here to tell you. Call us toll-free Monday to Friday 9am-9pm. 1-800-668-2122 The answer is to call your GST Consumer Information Office. Hearing Impaired 1-800-465-7735 A | Governmentof Canada Gouvernement du Canada nos Canada PROTECT YOUR LUNGS British Columbia Lung Association MERCEDES-BENZ INVITES AND REMINDS... Service Inspection Reminder The key to satisfactory performance of your Mercedes-Benz during the coming Fall We invite all Mercedes-Benz owners to call our service department now and arrange an appointment to have your car properly checked over and prepared for Fall/Winter driving. Please call Service direct at 984-9701 af Mercedes-Benz, Ene 1375 MARINE DRIVE, NORTH VANCOUVER 984-9701